TASC has found an elegant self-sustaining solution that enables them to distribute cookstoves in rural communities, protect the environment, and improve quality of life.

The stoves reduce carbon emissions, which allows TASC – officially called The African Stove Company – to generate carbon credits. The cookstoves and their distribution are then funded through the sale of carbon credits to companies that want to combat climate change by offsetting their emissions.

However, it doesn’t solve the cash flow problem many carbon credit projects face due to the fact that they require upfront capital to launch. It also takes time to generate emission reductions and issue carbon credits that can be sold.

For example, in South Africa’s compliance market, corporate buyers tend to buy credits in June or July to fulfil their yearly carbon tax responsibilities.

If a project’s issuance is delayed until August or September – which is common due to lengthy verification processes – developers must wait until the following year to see revenue from their project.

Banking on future carbon credits

The financing package Standard Bank arranged for TASC established a new benchmark for funding projects of this nature.

By providing finance based on expected carbon credit sales, the bank enabled TASC to scale up from an initial 400 000 stoves to 950 000. It also helps manage the inherent unpredictability of carbon projects, from regulatory delays to verification timing with standards bodies.

The transaction delivered tangible results. Lawrence Cole-Morgan, Lead: Carbon Credit Trading at Standard Bank, notes that TASC’s ongoing involvement has resulted in higher stove usage as communities adopt better cooking techniques.

The company conducts kitchen performance tests that measure actual biomass consumption, offering precise data that is often lacking in other projects when validating emission reductions for third-party auditors.

Shelley Estcourt, TASC’s CEO Africa, emphasises that enhanced cash flows empower the team to conduct rigorous financial modelling and establish contingency plans for every possible scenario.

Since TASC was established in 2019, they’ve learnt to anticipate the unexpected, such as global steel shortages, port strikes, or communities prioritising social grant collections over scheduled visits to audit usage.

Financing that takes into account these realities is vital for the project’s success.

Community engagement ensures greater uptake

To move away from the “dump and run” approach that has compromised many cookstove projects, TASC employs permanent staff who actively engage with communities to oversee compliance and guarantee that beneficiaries do actually benefit from the stoves. They take care to understand local needs, honour social structures, and foster authentic partnerships with everyone, from village chiefs to individual households, which they can only do through consistent, on-the-ground engagement.

From the bank’s point of view, two primary risks had to be mitigated: the potential that projects could fail to deliver the expected carbon credit volumes, and uncertainty around offtake – both critical in de-risking revenue streams.

“We addressed the first through rigorous statistical analysis and ongoing monitoring protocols. For the second, we mitigated offtake risk via a creditworthy offtake agreement that provided upfront price certainty,” says Sasha Cook, Standard Bank Group Head of Sustainable Finance.

“Maintaining carbon credit integrity was equally important. The project’s registration under the Verified Carbon Standard Program operated by Verra, assured that emission reductions met high third-party verification standards. This is crucial for ensuring the deal’s environmental and social credibility.”

Emphasis on credibility helps developers stand out

The African carbon credit market, especially in the voluntary sector, is known to be highly volatile. Furthermore, cookstove projects have faced scrutiny due to measurement difficulties and the activities of bad actors, which have decreased demand and driven down carbon credit prices.

Nonetheless, Estcourt believes that these market disruptions ultimately prompted positive change.

Cole-Morgan states that the emphasis on integrity distinguishes high-quality developers from those who cut corners. Projects that demonstrate rigorous monitoring, authentic community involvement, and compliance with evolving standards fetch higher prices in a competitive market.

TASC’s compliance strategy, which includes biannual auditing and involves extensive kitchen performance tests in addition to their consistent field presence, underscores their aim to remain a trusted carbon project developer.

South Africa’s compliance market provides investors with relative stability. Gazetted carbon tax rates valid until 2030 enhance pricing predictability and facilitate project financing.

This regulatory certainty stands in stark contrast to the volatility of the voluntary market, which is why TASC strategically focuses on countries that are developing strong carbon frameworks.

Africa offers natural capital assets for project financing

Both TASC and Standard Bank recognise the substantial potential of nature-based solutions.

Africa’s natural assets, such as available land, at-risk forests, and degraded sites present opportunities to sequester large quantities of carbon dioxide affordably while creating jobs and revitalising biodiversity.

The partnership demonstrates how financial institutions can promote large-scale climate action. By building expertise in carbon project risks and designing suitable financing models, banks can help developers to overcome implementation hurdles, regulatory issues, and cash flow problems.

As Cole-Morgan highlights, project finance banks in Africa are especially well equipped to support initiatives that safeguard and restore ecosystems while earning revenue from natural capital assets.