MicroEnergy Credits Help Speed Adoption of Clean Tech Worldwide
One family shows off a new Solar Water Heating system; Photo via Abri Beluga via Flickr CC
Described as "providing the handshake" between the carbon market and the microfinance industry, MicroEnergy Credits is a business solution that holds the potential to speed along clean tech adoption globally by making it much more accessible. The company has used the business model of microfinancing - handing out small loans to small businesses that wouldn't otherwise have access to captial - and reapplies it to the carbon market. By facilitating the adoption of green tech, MicroEnergy Credits hopes to give a shot of adrenaline to clean tech adoption. Traders in the carbon market are usually looking for the biggest investments they can find, such as giant solar farm or wind farm start-ups. However, there are billions of people on the planet who can't get access to clean energy - or energy at all - for daily living. MicroEnergy Credits wants to fix this, providing a path between the carbon markets and small scale adoption of clean tech. They take their inspiration from the microfinancing industry.
Microfinancing institutions usually loan to traditional businesses - a Peruvian woman who sews purses from her home, or a Brazilian farmer who needs funds to purchase additional livestock - but the industry could start moving into the sustainable energy markets as well, if given the right help. Using the same system as microfinancing, MicroEnergy Credits is starting to bridge this gap, helping poor households get access to green tech, which earns carbon offsets that can be sold on the carbon market by the microfinancing institution. It's a way to reward microfinancing institutions for brokering clean energy investments among households.
Poorer households who can't afford green upgrades like better insulation, solar panels, fuel-efficient cook stoves and so forth could get financing from the microfinancing institutions for the upgrade. By installing greener systems in their home, they earn credits for reducing their carbon emissions. Those credits can then be collected and sold on the carbon market by the financing institution so that not only do poor households benefit from green tech upgrades, but the microfinancing institution can gain more funds by leveraging the carbon market.
Here's how it works:
MicroEnergy Credits is a social enterprise which links microfinance institutions to the carbon markets when they lend for clean energy. MEC sells the carbon credits earned by replacing dirty fuels like kerosene, wood, coal and dung on the voluntary carbon markets and passes the carbon revenues along to its partner institutions. The institutions can then use the revenues to offset their costs of running the clean energy program or can pass the savings along to the client in the form of reduced interest rates, free battery replacements or other benefits. In 2008, MEC won the Global Social Venture Business Plan Competition for its innovative business model which makes accessing the carbon markets easy for MFIs.
MicroEnergy Credits also has to verify that the loans for green tech are installed as they're supposed to be, and that the household is continuing to use the clean energy technology and have indeed reduced their carbon footprint. The company has tools for the microfinancing institution to monitor emissions reductions on their loans: "When MFI loan officers monitor clean energy loans, they use their handheld device to report the operational status of the investment. These loan officers also record the GPS location of each investment. By leveraging existing microfinance loan monitoring processes, MEC's mobile phone-based technology reduces the audit and verification costs that typically drive up the costs of carbon credits for small projects."
It is a brilliant idea for speeding up the adoption of green technology to households that are currently using the dirtiest fuels out of necessity. They're providing the ability for poor households to not only get lights for the first time in their home, but lights that use clean, renewable energy.