2. Charcoal Financial and Economic Assessment.pdf

APRIL 5, 2023

This report was made possible by the support of the American people through the United States Agency for International Development (USAID). It was prepared by Management Systems International (MSI), a Tetra Tech company, for the USAID-funded E3 Analytics and Evaluation Project.

Photo Credit: Gérard Imani, MSI

FINANCIAL AND ECONOMIC ANALYSIS OF

CHARCOAL AND WOOD USE FOR COOKING

AND DEMAND- AND SUPPLY-SIDE

ALTERNATIVES FOR FOREST CONSERVATION

IN FOUR URBAN AREAS OF THE DEMOCRATIC

REPUBLIC OF THE CONGO

Recommended Citation: Krieger, Douglas; Irene Velez; Gérard Imani, and Eric Hyman. 2022.

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of the Democratic Republic of the Congo. Arlington, VA: Management Systems International, Prepared for the USAID-funded E3 Analytics and Evaluation Project.

Management Systems International (a Tetra Tech company) 200 12th Street South, Suite 1200 Arlington, VA 22202 USA Tel: +1 703 979 7100 Msiworldwide.com

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo i

FINANCIAL AND ECONOMIC ANALYSIS OF

CHARCOAL AND WOOD USE FOR

COOKING AND DEMAND- AND SUPPLY-SIDE

ALTERNATIVES FOR FOREST CONSERVATION

IN FOUR URBAN AREAS OF THE

DEMOCRATIC REPUBLIC OF THE CONGO

April 5, 2023

Contracted under AID-OAA-M-13-00017

E3 Analytics and Evaluation Project

Prepared by:

Dr. Douglas Krieger (Management Systems International);

Irene Velez (Management Systems International);

Dr. Gérard Imani (Management Systems International); and Dr. Eric Hyman (USAID)

DISCLAIMER

The authors’ views expressed in this publication do not necessarily reflect the views of USAID or the United States Government.

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo ii

TABLE OF CONTENTS

Acronyms and Abbreviations .......................................................................................................................................... v

Acknowledgments ........................................................................................................................................................... vii

Executive Summary ........................................................................................................................................................ viii

1 Background and Context

1.1 Methods

2 Assumptions for the Cost-effectiveness Analyses

2.1 Assumptions for the Financial Analysis of Stoves and Fuels

2.2 Assumptions for the Financial Analysis of Charcoal Kilns

2.3 Assumptions for the Economic Analysis of StoveS and Fuels and Kilns

2.3.1 Deforestation and Forest Degradation from Unsustainable Wood Harvesting

2.3.2 Costs of Deforestation and Forest Degradation

2.3.3 Commercial Tree Plantations for Fuelwood and Charcoal

2.4 The Financial Cost of Producing Wood on Plantations

2.4.1 Costs of Premature Death Risks from Exposure to Fine Particulates

2.5 Results of the Base Case Analysis of Charcoal Kilns

2.6 Results of the Base Case Analysis of Fuels and Stoves

2.6.1 Financial Costs Per Household

2.6.2 Economic Costs Per Household

2.7 Sensitivity Analysis of Charcoal Kilns and Stoves and Fuels

2.7.1 Assumptions

2.7.2 Financial Sensitivity Analysis

2.7.3 Economic Sensitivity Analysis Results

3 Conclusions, Recommendations, and Further Research Needs

References

Annex A: Statement of Work

Annex B: Data Collection Instruments Interview Guide for Charcoal Producers Interview Guide for Plantation Operators

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo iii

LIST OF TABLES

TABLE S-1: Present Value of the Financial Costs of Charcoal Production by Kiln Type at a 12 Percent Discount Rate (U.S. Dollars Per Ton of Charcoal) .......................................................................... ix

TABLE S-2: Present Value of the Economic Costs of Charcoal Production by Kiln Type at a 12 Percent Discount Rate (U.S. Dollars Per Ton of Charcoal) .......................................................................... ix

TABLE S-3: Present Value of the Financial Costs of Stoves and Fuels by Charcoal Price at a 12 Percent Discount Rate (U.S. Dollars Per Household) .................................................................................... xi

TABLE S-4: Present Value of the Economic Costs of Stoves and Fuels by Charcoal Price at a 12 Percent Discount Rate (U.S. Dollars per Household) ................................................................................... xii

TABLE 1: Household Stoves and Fuels in the Four Cities

TABLE 2: Descriptions of the Types of Stoves Included in This Analysis

TABLE 3: Average Stove Prices in the Four Cities (2020 U.S. Dollars)

TABLE 4: Thermal Efficiency and Average Annual Household Cooking Fuel Consumption by Stove and Fuel and Location

TABLE 5: Heating Value of the Fuels

TABLE 6: Prices Per Kilogram of Fuelwood, Charcoal, and LPG and Per Kilowatt-Hour of Electricity (2020 U.S. Dollars)

TABLE 7: Characteristics and Costs of Charcoal Production, by Location (2020 U.S. Dollars)

TABLE 8: Median Wood Prices by Source and Location (2020 U.S. Dollars Per Metric Ton)

TABLE 9: Carbonization Efficiency and Carbonization Times for Charcoal Kilns

TABLE 10: Wood Input Capacity and Production Cycle Time by Location and Kiln Type

TABLE 11: Charcoal Production, Wood and Labor Costs, Cycles Per Year, Capital Cost, and Expected Life by Location and Kiln

TABLE 12: Total Tariffs and Value-Added Tax Rates for Stoves and Fuels

TABLE 13: GHG Emission Factors for the Stoves and Fuels Analyzed

TABLE 14: GHG Emission Factors for Kilns, Per Kilogram of Charcoal Produced

TABLE 15: Woodfuel Sources by Location

TABLE 16: Average Above Ground Biomass in the Areas That Provide Wood for Charcoal Production in the Four Cities

TABLE 17: End-Use PM2.5 Emission Factors for Stoves and Fuels

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo iv

TABLE 18: Present Value of Financial Costs of Kilns by Discount Rate (U.S. Dollars per Ton of Charcoal Produced)

TABLE 19: Present Value of Economic Costs of Kilns at a 12% Discount Rate (U.S. Dollars per Ton of Charcoal Produced)

TABLE 20: Present Value of Financial Costs of Stoves and Fuels at Two Charcoal Prices and a 12 Percent Discount Rate (U.S. Dollars Per Household)

TABLE 21: Present Value of Economic Costs of Stoves and Fuels at Two Charcoal Prices and a 12 Percent Discount Rate (U.S. Dollars Per Household)

TABLE 22: Main Assumptions for the Base Case and Sensitivity Analysis of Kilns and the Stoves and Fuels

TABLE 23: Base Case and Sensitivity Analysis Assumptions on Annual Cooking Fuel Consumption Per Household

TABLE 24: Effects of a 25 Percent Increase in Wood and Charcoal Prices and a 50 Percent Increase in LPG Prices on the Present Value of Financial Costs of the Stoves and Fuels at a 12 Percent Discount Rate (U.S. Dollars Per Household)

TABLE 25: Effects of a 25 Percent Increase in Average Annual Consumption of All Cooking Fuels on the Present Value of Financial Costs of Stoves and Fuels at a 12 Percent Discount Rate (U.S.

Dollars Per Household)

TABLE 26: Effects of a 25 Percent Increase in Wood and Charcoal Prices and a 50 Percent Increase in LPG Prices on the Present Value of Economic Costs of Stoves and Fuels at a 12 Percent Discount Rate (U.S. Dollars Per Household)

TABLE 27: Effects of the Social Cost of Greenhouse Gases on the Present Value of Economic Costs of Kilns at a 12 Percent Discount Rate (U.S. Dollars per Ton of Charcoal Produced)

TABLE 28: Effects of the Social Cost of Carbon on the Present Value of Economic Costs of Stoves and Fuels at a 12 Percent Discount Rate (U.S. Dollars Per Household)

TABLE 29: Effects of Increasing the Value of Forest Environmental Services on the Present Value of Economic Costs of Stoves and Fuels at a 12 Percent Discount Rate (U.S. Dollars)

TABLE 30: Effects of the Two Values of a Statistical Life on the Present Value of Economic Costs of Stoves and Fuels at a 12 Percent Discount Rate (U.S. Dollars Per Household)

LIST OF FIGURES

FIGURE 1: Photos of Typical Stoves Available in the Four Cities

FIGURE 2: Photos of the Analyzed Kilns

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo v

ACRONYMS AND ABBREVIATIONS

CBA Cost-benefit analysis

CDF Congolese Franc

CO2 Carbon dioxide

CO2e Carbon dioxide equivalent

DDI USAID Bureau for Development, Democracy, and Innovation

DRC Democratic Republic of the Congo

EEI Center for Environment, Energy, and Infrastructure (USAID/DDI)

EMD Center for Economics and Market Development (USAID/DDI)

FAO Food and Agriculture Organization of the United Nations g Grams

GDP Gross domestic product

GHG Greenhouse gas

GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit ha Hectare(s)

IEA International Energy Agency

IFDC International Fertilizer Development Center (formerly, now a non-acronym name)

IPCC Intergovernmental Panel on Climate Change

KCJ Kenya ceramic-lined jiko kg Kilogram(s) kWh Kilowatt-hour(s) m Meter(s) m3 Cubic meter(s)

MJ Megajoule(s)

LPG Liquefied petroleum gas

MSI Management Systems International

NCS Natural Climate Solutions Division (USAID/ EEI)

PM2.5 Fine particulate matter with a diameter of 2.5 micrometers (microns) or less

SNEL Société Nationale d’Électricité

T Metric tons tCO2e Metric tons of carbon dioxide equivalent

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo vi

TERA Technologies, Renewable Energy, Academy Project (UNDP and UNCDF)

UNCDF United Nations Capital Development Fund

UNDP United Nations Development Program

UNFCCC United Nations Framework Convention on Climate Change

USAID United States Agency for International Development

VAT Value-added tax

VSL Value of a statistical life

WHO World Health Organization

WWF World Wide Fund for Nature

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo vii

ACKNOWLEDGMENTS

Management Systems International (MSI) prepared this study under the USAID-funded E3 Analytics and Evaluation Project. It was funded by the Natural Climate Solutions Division (NCS) in the USAID Center for the Environment, Energy, and Infrastructure (EEI) in the Development, Democracy, and Innovation (DDI) Bureau. MSI would like to thank Bethany White and Bhavani Pathak (Contracting Officer’s Representatives in DDI) and Dr. Eric Hyman (Activity Manager in DDI’s Center for Economics and Market Development [EMD]). The authors would like to thank the following USAID staff: Christian Kalinde (Activity Manager for the USAID/Democratic Republic of the Congo); Melody McNeil, Nathan Hulley, and Nicodeme Tchamou (USAID/DRC); Noel Gurwick (EEI/NCS); and Lucy Gibbon (Africa Bureau).

MSI is grateful to the local researchers who conducted the primary data collection in the DRC -- Pascal Murhula, Junior Evariste, Benjamin Munyamali, Rosette Amani, and Michel Ndengoli. The authors also thank the following people who contributed important information -- Elisha Moore-Delate (United Nations Capital Development Fund), Emilien Dubiez (Centre de Coopération Internationale en Recherche Agronomique pour le Développement), Jolien Schure, (Center for International Forestry Research), and Thierry Lusenge (World Wide Fund for Nature). Helpful comments were provided by Christian Kalinde.

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo viii

EXECUTIVE SUMMARY

USAID commissioned Management Systems International (MSI) to conduct financial and economic analyses of household cooking fuel supply and demand alternatives in the Democratic Republic of the Congo (DRC). This study focused on four cities – Bukavu (South Kivu Province), Goma (North Kivu Province), Kinshasa (the capital and largest city), and Kisangani (Tshopo Province). It compared the present value of the financial and economic costs of producing charcoal in five types of kilns and cooking with eight combinations of household stoves and fuels. The charcoal production methods included a traditional earth mound kiln (the most common method), IFDC improved earth mound kiln, Casamance improved earth mound kiln, portable metal drum kiln, and brick kiln. The cooking alternatives included wood in a three-stone stove (open fire); charcoal in traditional metal stoves, charcoal in low- and medium- efficiency artisan-produced stoves (adaptations of the Kenya ceramic-lined jiko); charcoal in two high-efficiency, imported, mass manufactured stoves (Jikokoa Xtra and EcoZoom Jet); a liquefied petroleum gas (LPG) stove; and a single-burner coil electric hotplate. All monetary values are in 2020 U.S. dollars.

The financial analyses assessed the costs to households and charcoal producers and used a 10-year time horizon. The economic analyses adjusted the financial costs for market distortions (taxes, tariffs, and subsidies) and included, the global social costs of greenhouse gas (GHG) emissions, the lost value of forest environmental goods from unsustainable woodfuel harvesting, and local premature mortality risks from fine particulate exposures (PM2.5):

• The social cost of greenhouse gas emissions. Carbon dioxide, methane, and nitrous oxide emissions were costed at the U.S. Government’s 2021 preliminary global social cost estimate of $51 per metric ton of carbon dioxide equivalent (tCO2e) in 2020 and the U.S. EPA’s 2022 draft revised estimate of $190/tCO2e.

• The lost value of forest environmental goods per hectare (ha) of unsustainable woodfuel harvesting at a conservative, domestic value of $224 and a higher global median of $486.

• The costs of premature mortality risks from exposure to fine particulates (PM2.5) from cooking with woodfuels indoors and outdoors. PM2.5 risks are higher where woodfuels are typically used in cooking indoors (Goma and Bukavu) and lower where this is usually done outdoors (Kinshasa and Kisangani). Two country-specific values of a statistical life (VSL) were used -- $18,601 in the base case and $40,716 in the sensitivity analysis.

The economic analyses used a 50-year time horizon to capture the long-term social costs of GHG emissions, lost value of forest environmental services, and premature mortality risks from fine particulate exposures. The financial and economic analyses were based on a 12 percent real discount rate, with sensitivity tests at 3 percent and 7 percent real discount rates.

Both the financial and economic analyses included sensitivity testing of a 50 percent increase in average annual consumption of all fuels and a concurrent 25 percent increase in wood and charcoal prices and a 50 percent increase in the LPG price. The base case economic analysis used the lower estimates of the social cost of GHGs, values for lost forest environmental services, and VSL. Sensitivity testing examined the effects of using the higher values of the social cost of GHGs, lost forest environmental services, and

VSL.

Table S-1 presents the discounted financial costs of the five kilns per ton of charcoal produced in the four locations. It was based on a 12 percent real discount rate and the assumption that each kiln would be operated at an 80 percent capacity use rate. Except for the metal drum kiln, the cost-effectiveness

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo ix rankings of the kilns corresponded to their relative carbonization efficiencies. Even though the more efficient kilns had higher capital costs, their greater efficiencies more than offset their higher capital costs. The large brick beehive kiln (also called a half-orange kiln) was the least-cost alternative. The metal drum kiln was the highest-cost alternative because of its low production capacity and relatively high labor costs. The cost-effectiveness rankings of the kilns were the same at the two lower discount rates.

TABLE S-1: Present Value of the Financial Costs of Charcoal Production by Kiln Type at a 12 Percent Discount Rate (U.S. Dollars Per Ton of Charcoal)

Kilns Bukavu Goma Kinshasa Kisangani

Brick beehive $7.92 $9.14 $6.22 $2.66 Casamance earth mound $9.19 $10.56 $7.08 $3.35 Improved earth mound $11.43 $13.16 $7.85 $3.74 Traditional earth mound $12.91 $15.45 $10.07 $4.30 Portable steel drum $13.80 $15.79 $25.65 $10.80

Table S-2 summarizes the discounted economic costs of the kilns in the four locations at the 12 percent discount rate. The social costs of GHGs accounted for an average of 68 percent of the total discounted economic costs in the base case scenario. In Bukavu and Goma, the kilns with the lowest GHG emissions per ton of charcoal had the lowest economic costs. This was also the case in Kinshasa and Kisangani, except for the metal drum kiln. The higher labor costs in Kinshasa and Kisangani made the economic costs of the labor-intensive metal drum kiln higher than the traditional earth mound kiln. The two lower discount rates did not change the economic cost rankings of the kilns.

TABLE S-2: Present Value of the Economic Costs of Charcoal Production by Kiln Type at a 12 Percent Discount Rate (U.S. Dollars Per Ton of Charcoal)

Kilns Bukavu Goma Kinshasa Kisangani Casamance earth mound $25.71 $27.10 $24.50 $19.97 Brick beehive $28.70 $29.95 $27.81 $23.54 Improved earth mound $38.11 $39.86 $35.61 $30.54 Portable steel drum $43.14 $45.15 $55.87 $40.24 Traditional earth mound $45.91 $48.48 $44.36 $37.45

The analysis of fuels and stoves covered low and high unit prices for charcoal. Low-income households often buy small amounts of charcoal for daily use at a higher unit price than households who buy larger amounts at a time. Table S-3 presents the present value of financial costs for a household using one stove and fuel for all cooking over 10 years.

At the low unit price of charcoal purchased in bulk, the electric hotplate had the lowest financial costs in Bukavu, Goma, and Kinshasha. In Kisangani, the price of electricity was much higher, making the electric hotplate the second most expensive alternative for households. LPG had the highest financial costs in all four cities. The three-stone woodstove had higher financial costs than any of the charcoal stoves in Bukavu, Goma, and Kinshasa, but was the fourth least costly alternative in Kisangani, where fuelwood prices were lower. In Kisangani, the three-stone woodstove had higher financial costs than the high- or

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo x medium-efficiency charcoal stoves, but was less costly than the low-efficiency charcoal stoves.

Differences in charcoal prices across the four cities affected some of the financial cost rankings. The traditional charcoal stove had higher financial costs than the low-efficiency improved charcoal stove in Goma, Kinshasa, and Kisangani. In Bukavu, the traditional and improved low-efficiency charcoal stoves had similar costs because the price of charcoal was lower.

At the high unit price of charcoal purchased in small, daily use volumes, the annual costs of charcoal increased and the fuel cost increase was larger with the less fuel-efficient charcoal stoves. The costs of cooking with electricity, LPG, or wood did not change with the charcoal price assumption, but that only changed some of the rankings of the stove and fuel combinations. The electric hotplate remained the lowest financial cost alternative in Bukavu, Goma, and Kinshasa, followed by the high- and medium-efficiency charcoal stoves. However, the high unit charcoal price made the low-efficiency charcoal stoves less financially cost-effective than the three-stone woodstove in Bukavu and Goma. In Kisangani, the three-stone woodstove had the lowest financial -cost alternative because of the high prices of electricity and charcoal relative to wood. The other stove and fuel combinations had the same rankings in the financial analysis at both unit prices of charcoal.

Table S-4 contains the discounted economic costs of the fuel and stove combinations. The economic costs were substantially higher than the financial costs, mainly due to the social cost of GHG emissions and the value of statistical lives lost from PM2.5 exposure. The differences between the financial and economic costs were highest for the three-stone woodstove and the charcoal stoves, especially the less efficient charcoal stoves. However, the GHG emissions from LPG were underestimated due to lack of data on the emissions in petroleum extraction, processing, and transport. The premature mortality costs of cooking with LPG were also undercounted because of insufficient information on the health risks of nitrous oxide and methane exposure.

At the low unit price of charcoal purchased in bulk, the electric hotplate was by far the least-cost alternative in the economic analyses for Bukavu, Goma, and Kinshasha. However, in Kisangani, the electric hotplate had the third highest economic costs because of higher electricity prices. In Bukavu, the EcoZoom Jet charcoal stove had the second lowest economic costs, followed closely by the LPG stove, and the Jikokoa Xtra charcoal stove, but all had about the same discounted economic costs. The medium-efficiency charcoal stove had substantially higher economic costs than the high-efficiency charcoal stoves and LPG and the economic costs were even higher for the low-efficiency charcoal stoves. In Goma and Kinshasha, the LPG stove had lower economic costs than the high-efficiency charcoal stoves, but the medium- and low-efficiency charcoal stoves had higher economic costs than these stoves. In Kisangani, the two high-efficiency charcoal stoves had much lower economic costs than the LPG stove with the EcoZoom Jet offering a small cost advantage over the Jikokoa Xtra. The discounted economic costs of the EcoZoom Jet were less than half those of the LPG stove in Kisangani.

The three-stone woodstove had the highest economic costs in Bukavu, Goma, and Kinshasha.

However, the three-stone woodstove had lower economic costs than the LPG stove in Kisangani, where fuelwood prices were lower and LPG prices higher.

At the high unit price of charcoal purchased in small volumes, only some of the economic cost rankings changed. The electric hotplate remained the lowest economic cost alternative in Bukavu, Goma, and Kinshasha and the third lowest in Kisangani. In Kisangani, the LPG stove was still the highest economic cost alternative and the EcoZoom Jet charcoal stove remained the second lowest-cost alternative, followed by the Jikokoa Xtra charcoal stove. In Bukavu, Goma, and Kinshasha, the three-stone woodstove continued to be the most expensive alternative, but the LPG stove became less costly than the high-efficiency charcoal stoves. The medium- and low-efficiency charcoal stoves were more affected by the higher unit price of charcoal than the high-efficiency charcoal stoves.

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo xi

TABLE S-3: Present Value of the Financial Costs of Stoves and Fuels by Charcoal Price at a 12 Percent Discount Rate (U.S.

Dollars Per Household)

Stoves

Bukavu Goma Kinshasa Kisangani Low

Charcoal Price

High Charcoal

Price

Low Charcoal

Price

High Charcoal

Price

Low Charcoal

Price

High Charcoal

Price

Low Charcoal

Price

High Charcoal

Price

Single-burner, coil electric hotplate $492 $492 $484 $484 $512 $512 $2,068 $2,068

High-efficiency, EcoZoom Jet charcoal stove $986 $1,080 $1,277 $1,643 $1,217 $1,990 $632 $1,007

High-efficiency, Jikokoa Xtra charcoal stove $1,010 $1,106 $1,306 $1,680 $1,245 $2,032 $655 $1,041

Medium-efficiency, improved charcoal stove $1,167 $1,285 $1,490 $1,931 $1,495 $2,463 $735 $1,204

Low-efficiency, traditional charcoal stove $1,557 $1,712 $2,042 $2,645 $1,939 $3,209 $971 $1,589

Low-efficiency, improved charcoal stove $1,561 $1,718 $1,741 $2,258 $1,681 $2,774 $829 $1,359

Three-stone woodstove $1,637 $1,637 $2,156 $2,156 $3,132 $3,132 $786 $786 LPG stove $3,379 $3,379 $3,370 $3,370 $3,255 $3,255 $6,417 $6,417

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo xii

TABLE S-4: Present Value of the Economic Costs of Stoves and Fuels by Charcoal Price at a 12 Percent Discount Rate (U.S.

Dollars per Household)

Stoves

Bukavu Goma Kinshasa Kisangani Low

Charcoal Price

High Charcoal

Price

Low Charcoal

Price

High Charcoal

Price

Low Charcoal

Price

High Charcoal

Price

Low Charcoal

Price

High Charcoal

Price

Single-burner, coil electric hotplate $1,352 $1,352 $1,343 $1,343 $1,408 $1,408 $5,986 $5,986

High-efficiency EcoZoom Jet charcoal stove $4,604 $4,743 $5,410 $5,948 $5,191 $6,328 $4,173 $4,724

High-efficiency Jikokoa Xtra charcoal stove $4,661 $4,802 $5,479 $6,028 $5,258 $6,416 $4,248 $4,815

Medium-efficiency, improved charcoal stove

$5,232 $5,404 $6,092 $6,742 $6,055 $7,478 $4,751 $5,442

Low-efficiency, traditional charcoal stove $5,601 $5,830 $6,846 $7,732 $6,618 $8,485 $4,968 $5,876

Low-efficiency, improved charcoal stove $6,169 $6,400 $6,640 $7,400 $6,460 $8,066 $5,005 $5,785

Three-stone woodstove $7,776 $7,776 $9,289 $9,289 $10,650 $10,650 $6,944 $6,944

LPG stove $4,647 $4,647 $4,631 $4,631 $4,488 $4,488 $8,315 $8,315

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo xiii

Over the long term, the DRC Government and development assistance organizations can increase public and private investment in renewable electric power generation and grid and minigrid infrastructure. The electric hotplate was the least-cost alternative in the financial and economic analyses, except in Kisangani, where electricity was more expensive. Households often prefer to cook some foods with wood or charcoal and are unlikely to stop cooking with woodfuels even if they also use other fuels. Kinshasa had a relatively high grid access rate, yet many households regularly cooked with both electricity and charcoal.

The DRC has enormous untapped hydroelectric potential, but transmission and distribution costs for expanding access to the grid are high. Increasing access to grid electricity will require substantial investment and time, but would reduce the costs of cooking in three of the study areas and the environmental and health impacts of cooking in all four locations. The potential for building more local minigrids should also be considered.

In the near-term and medium-term, the DRC Government and development assistance organizations can increase the availability of high-quality, efficient, and cleaner charcoal stoves by facilitating imports of mass-manufactured stoves. Informal sector artisans produce nearly all of the traditional and improved household charcoal stoves in small batches and do not market them outside their local areas. These stoves have low fuel efficiency and durability due to poor raw materials, limited understanding of stove design principles, inconsistent production practices and weak quality control.

The Worldwide Fund for Nature (WWF) and other development assistance organizations have trained some informal sector artisans to make improved charcoal stoves, especially in Goma and Bukavu.

However, the approach of training informal sector producers has been slow and has not increased stove quality enough. Widespread adoption of efficient improved stoves cannot be achieved by continuing the local artisan approach, especially without financing, better raw materials, and mechanized production.

A better solution would be to replace informal sector production of improved charcoal stoves with mass manufacturing. More efficient and durable charcoal stoves have been mass produced in several African countries and China. Mass manufacturing opens up the potential for economies of scale in production, product standardization, and better stove quality and durability.

In the near term, development assistance agencies or the Government could facilitate imports of mass manufactured, charcoal stoves. A first step would be to assess the experience of the existing mass manufacturers and efforts to sell these stoves in other countries. Households will also need reliable information to inform their purchase decisions. Marketing campaigns to build demand will need to be combined with efforts to ensure sufficient availability of the imported stoves. The affordability of imported, charcoal stoves could be improved by eliminating the value-added tax on imported charcoal stoves and electric hotplates and providing financing for sellers.

The DRC has a large potential market for imported household charcoal stoves. After a sufficient market has been demonstrated, development assistance organizations or the Government could consider facilitating domestic mass manufacturing of high-quality household charcoal stoves by the private sector.

Development assistance organizations can promote more efficient charcoal kilns and production practices to reduce wood consumption. A brick kiln can reduce unsustainable wood harvesting for charcoal. There can also be large differences in the carbonization efficiency of traditional kilns due to differences in the density and moisture content of the wood, weather during carbonization, kiln sizes, and worker practices in building and operating the kilns.

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo xiv

Traditional earth mound charcoal kilns are built by producers near the source of the wood for each production cycle. Traditional kilns are typically larger where wood is abundant and smaller where wood is scarce. Many charcoal producers, especially in Goma and Bukavu, use relatively small earth mound kilns. Some charcoal producers in North and South Kivu Provinces operate inside national parks.

Farmers may produce charcoal for a short period after clearing trees for agriculture.

Informal sector charcoal producers cannot afford higher capital costs and rely on own unpaid labor that receives a share of the revenues. More efficient kilns that require purchased bricks or metal parts that have to be transported to production locations may not be practical since informal sector producers cannot afford the capital costs and lack access to financing.

The carbonization efficiency of a traditional kiln can be improved with some relatively low-cost materials and worker training. One example is the Casamance earth mound kiln with a chimney and flue vents for better air circulation. It can yield more charcoal per unit of wood and the charcoal may be better quality. However, the capital costs of the Casamance kiln are higher than the traditional kiln and some other improved earth mound kilns, and it is only likely to be adopted with support from development assistance organizations or the Government. The WWF’s Ecomakala Project promoted the Casamance kiln in the DRC, but relatively few charcoal producers in the country have used it.

The higher capital costs of the Casamance kiln can be offset by the increase in charcoal production and the potential for higher quality charcoal that might be sold at a premium price. The purchased components for the Casamance kiln can be reused in subsequent production cycles. The production cycles are also faster. Per ton of charcoal produced, the financial costs of using the Casamance kiln are lower than the traditional kiln, but higher than the large brick kiln.

When the GHG emission reductions are taken into account, the present value of the economic costs per ton of charcoal were lower for the Casamance kiln than the other alternatives in all four study locations. Since the Casamance kiln is similar to the traditional kiln, it should be easier to get informal sector charcoal producers to adopt it instead of the much more expensive alternatives. Nevertheless, it will be challenging to scale up use of the Casamance kiln due to the large number of small-scale charcoal producers in the DRC.

The Casamance kiln can be promoted in tandem with the establishment of plantations for sustainable production of wood for charcoal making. The WWF’s Ecomakala Project in North Kivu Province demonstrated the potential of a private plantation-based model for growing woodfuels sustainably. This and similar projects have enabled North and South Kivu Provinces to obtain 41 percent of their woodfuels from plantations. The Ecomakala Project also promoted low-cost, but more efficient, charcoal production methods such as the Casamance kiln. The lessons learned from these experiences could help development assistance organizations scale up this work and replicate it in other provinces, particularly around Kinshasa where wood was relatively scarce and charcoal in high demand.

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo 1

1 BACKGROUND AND CONTEXT

USAID commissioned the E3 Analytics and Evaluation Project, implemented by Management Systems International (MSI), a Tetra Tech company, to conduct financial and economic cost-effectiveness analyses of supply- and demand-side alternatives for household cooking in four urban areas of the Democratic Republic of the Congo (DRC) -– Bukavu (South Kivu Province), Goma (North Kivu Province), Kinshasa (the capital and largest city), and Kisangani (Tshopo Province). This study built on similar analyses for Lilongwe, Malawi and Lusaka, Zambia (Matek et al. 2021a, 2021b).

This study compared the present value of the costs of producing charcoal in five types of kilns and cooking with eight combinations of household stoves and fuels. The charcoal production methods included a traditional earth mound kiln (the most common method), improved earth mound kiln, Casamance improved earth mound kiln, portable metal drum kiln, and brick kiln. The cooking alternatives included wood in a three-stone stove (open fire); charcoal in traditional metal stoves;

charcoal in low- and medium-efficiency, low-quality, locally produced modifications of the Kenya ceramic-lined jiko (Hyman 1986 and 1987); charcoal in two high-efficiency, imported, mass manufactured stoves (EcoZoom Jet and Jikokoa Xtra); a liquefied petroleum gas (LPG) stove; and an imported, single-burner, coil electric hotplate. Annex A is the scope of work and Annex B contains the data collection instruments.

The Congo Basin contains the second largest expanse of tropical forest in the world, after the Amazon Basin. The DRC had about 60 percent of the 217 million hectares (ha) of forest in the Congo Basin (FAO 2020). These forests sequestered approximately 23.3 billion tons of carbon, 5.2 percent of the global carbon stored in vegetation (Saatchi et al. 2017 and Erb et al. 2017).

Deforestation refers to the permanent conversion of forests to other land uses. It is distinguished from forest degradation, a reduction of the tree cover on land that has not been converted to nonforest land uses. The World Resources Institute estimated that the DRC lost about 500,000 hectares (ha) of primary forest through deforestation in 2021, the second largest amount in the world. This loss was approximately 0.5 percent of the country’s primary forests.

Use of woodfuels (firewood or charcoal) in household cooking is a major cause of deforestation and forest degradation in the country. Over 95 percent of DRC households relied on woodfuels for cooking and the demand was increasing. Population growth and economic development are increasing pressures on converting forests to agriculture and other land uses (IEA 2019). Deforestation and forest degradation from woodfuel use in the rapidly growing city of Goma poses a risk to Virunga National Park in eastern DRC. Virunga is a UNESCO World Heritage Site and important habitat for endangered mountain gorillas (Ndebo 2020; Marien 2009).

Griscom et al. (2009) estimated that unsustainable wood harvesting for firewood and charcoal accounted for 57 percent of forest greenhouse gas (GHG) emissions in Sub-Saharan Africa. The Food and Agriculture Organization of the United Nations (FAO) estimated that global production and use of woodfuels contributed 1.0-2.4 billion metric tons of carbon dioxide equivalent (tCO2e) each year, 2-7 percent of anthropogenic greenhouse gas (GHG) emissions. Wood sourcing was responsible for 29-61 percent of the global carbon dioxide (CO2) emissions from charcoal production while carbonization (the process of making charcoal) generated 28-61 percent of the total and charcoal combustion (burning) produced 9-18 percent. Charcoal transportation and distribution only contributed a small share of the total CO2 emissions from charcoal (FAO 2017a).

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo 2

Combustion of woodfuels releases CO2, methane (CH4), and nitrous oxide (N2O). Methane and nitrous oxide have stronger effects on atmospheric temperatures than CO2 per ton (higher radiative forcing) but remain in the atmosphere for shorter time periods (lower persistence). Global Warming Potential (GWP) accounts for both of these factors and varies with the time period analyzed. This report uses 100-year GWP values. By definition, CO2 has a global warming potential of 1.0. This analysis used 100-year GWP estimates from the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) -- 32.0 for CH4 and 282.0 for N2O.1

Fine particles 2.5 microns in diameter or smaller (PM2.5) are particularly harmful to human health because they penetrate deep into the lungs and enter the bloodstream. Exposure to PM2.5 emissions from cooking with woodfuels can increase respiratory and other illnesses and premature mortality rates for the cooks and other household members, particularly children (WHO 2018). However, PM2.5 exposures are substantially lower when cooking is done outdoors instead of indoors. Most cooking with woodfuels was done indoors in Bukavu and Goma and outdoors in Kinshasa and Kisangani (Gazull et al. 2020a, 2020b, 2020c; Imani and Moore-Delate 2021).

The environmental and health impacts of woodfuels use can be reduced by increasing the efficiency of charcoal kilns and cookstoves and shifting to cleaner cooking technologies. Electricity is a clean cooking fuel at the end-user level. However, only 19 percent of all households in the DRC had access to grid (mains) electricity in 2018. Grid access is mainly limited to urban areas. About 41 percent of urban households and only 1 percent of rural households in the DRC had access to the electric grid in 2021.2 Population growth has increased the number of people in the country without access to grid electricity.

The International Energy Agency (IEA) projected that this trend will accelerate worldwide and DRC will be one of the countries with the largest increase in the population without power grid access.3

Comprehensive data on grid access in the four cities were not available. However, survey data indicated that electricity was regularly used for cooking by 15.0 percent of the households in Bukavu, 13.2 percent in Goma, 66.4 percent in Kinshasa, and 0.5 percent in Kisangani (Gazull et al. 2020a, 2020b 2020c; Imani and Moore-Delate 2021).

The most common electric stoves in the DRC were single-burner, coil hotplates imported from Asia.

These are the lowest-cost electric stoves and the alternative most comparable to a single-burner charcoal stove. Two- and four-burner coil hotplates are also available in the DRC, but are more expensive and not directly comparable to a charcoal stove. Electric coil hotplates are portable and allow users to control the cooking temperature. Induction hotplates cook much faster and more efficiently than coil units and their surfaces do not get hot. However, they are much more expensive and require more costly magnetic cooking pots (cast iron or stainless steel).

The DRC has considerable hydropower capacity and enormous additional potential.4 There was 2,792 megawatts (MW) of installed hydropower capacity, 98 percent of the total power generation capacity.

There was 2.2 MW of power generation capacity from natural gas and only 1 MW from solar power.5 Two dams in Kongo Central province, Inga I and II, have an installed capacity of 1,775 MW (63.5 percent of national hydropower capacity). The Inga facilities have been undergoing maintenance to bring their

1 The Sixth Assessment Report (IPCC 2021) updated GWP estimates to 27.2 for methane from agricultural sources, 29.8 for methane from fossil fuels, and 273 for nitrous oxide.

2 https://www.trade.gov/country-commercial-guides/democratic-republic-congo-energy#:~:text=Despite%20millions%20of%20dollars%20of,one%20percent%20in%20rural%20areas.

3 https://www.iea.org/commentaries/for-the-first-time-in-decades-the-number-of-people-without-access-to-electricity-is-set-to-increase-in-2022?utm_source=SendGrid&utm_medium=Email&utm_campaign=IEA+newsletters 4 See https://trackingsdg7.esmap.org/country/democratic-republic-congo.

5 https://www.usaid.gov/powerafrica/democratic-republic-congo https://www.trade.gov/country-commercial-guides/democratic-republic-congo-energy#:%7E:text=Despite%20millions%20of%20dollars%20of,one%20percent%20in%20rural%20areas https://www.trade.gov/country-commercial-guides/democratic-republic-congo-energy#:%7E:text=Despite%20millions%20of%20dollars%20of,one%20percent%20in%20rural%20areas https://trackingsdg7.esmap.org/country/democratic-republic-congo https://www.usaid.gov/powerafrica/democratic-republic-congo

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo 3 operations back to full capacity. Nevertheless, the country generated 97 percent of its electricity from hydropower in 2019 (IHA 2020). In 2021 the DRC generated over nine terawatt-hours of hydroelectricity (IHA 2022). The DRC has the largest undeveloped hydropower capacity in Africa and among the largest in the world – an additional100,000 MW is technically feasible (Tricard 2017). Only about 2.8 percent of the technically feasible capacity has been developed.6

Generation capacity is not the only constraint on access to electricity. The capital costs of expanding the electric transmission and distribution grid are high. Even in urban areas where grid expansion is more feasible, expansion will take a considerable time. The DRC is likely to remain dependent on woodfuels for household cooking in the short- to medium-term, especially in rural areas (World Bank 2020). As a result, the country will need to adopt less costly and environmentally damaging ways to produce and use woodfuels.

Liquefied petroleum gas (LPG) is an expensive fuel for low-income households due to the upfront costs of purchasing the imported cylinder, regulator, line, and cooking ring and the continuing costs of buying this imported fossil fuel. Some development assistance organizations and developing country governments have subsidized LPG fuel or stoves to reduce deforestation and forest degradation and PM2.5 emissions. However, LPG subsidies are fiscally unsustainable and typically benefit higher income households more than lower income households.

LPG also generates indoor air pollution from methane and nitrogen dioxide (NO2) that may persist at levels that pose a risk to health (Kephart et al. 2021). The extraction, processing, and transportation of LPG generates substantial GHG emissions. In 2021, a new policy required U.S. Government agencies to approve and report exemptions for funding carbon-intensive projects. LPG for household cooking exceeds the GHG emission threshold subject to this requirement.7

The Worldwide Fund for Nature (WWF) and other development assistance organizations have trained some informal sector artisans to make improved charcoal stoves, especially in Goma and Bukavu. Over 80 percent of households in Bukavu and Goma owned an improved charcoal stove (Gazull et al. 2020a, 2020b). However, many of these stoves are poorly designed and made and not as efficient and durable as the improved stoves mass manufactured in Kenya.

Relatively few households in Kinshasa and Kisangani owned improved charcoal stoves (Gazull et al.

2020c and Imani and Moore-Delate 2021). High-quality improved charcoal stoves are available in Kinshasha, but are not widely available in Kisangani. There were only four producers of improved charcoal stoves in Kisangani, with a total monthly production of 450 stoves. Most of these stoves were not very fuel efficient and some users reported problems such as fragility, heaviness, small size, and difficult handling (Moore-Delate 2021).

The United Nations Development Program (UNDP) and the United Nations Capital Development Fund (UNCDF) Technologies, Renewable Energy, Academy (TERA) Project in Kisangani trains informal sector

6 https://www.trade.gov/country-commercial-guides/democratic-republic-congo-energy#:~:text=Hydroelectric%20power%20accounts%20for%2096,located%20in%20Kongo%20Central%20province.

7 On January 27, 2021, U.S. Executive Order 14008 required all Federal agencies to eliminate fossil fuel subsidies and establish a process to review exemptions from a prohibition on funding carbon-intensive projects. This executive order defined carbon-intensive projects as having lifetime emissions of over 250 gCO2e per kWh of electricity or energy equivalent for other fuels. It exempted technical assistance and transmission and distribution investments for electric power. USG agencies can approve exemptions on national security and development grounds in International Development Association (IDA) and IDA-blend recipient countries, small island developing states, and conflict-affected countries. Agencies have to issue a public report on their approved exemptions annually.

Financial and Economic Analysis of Charcoal and Wood Use for Cooking and Demand- and Supply-Side Alternatives for Forest Conservation in Four Urban Areas of The Democratic Republic of The Congo 4 artisans on improved charcoal stove designs and quality control. It aims to increase the fuel efficiency, durability, safety, and ease of use of improved charcoal stoves. 8

Recent surveys in Bukavu, Goma, and Kinshasa (Gazull et al. 2020a, 2020b, 2020c) and Kisangani (Imani and Moore-Delate 2021) documented household cooking practices. Table 1 shows the cookstoves and fuels used by the respondents. Most households owned multiple types of stoves, but only used some infrequently. Between 90 and 96 percent of respondents in Bukavu and Goma and 69 to 73 percent in Kisangani and Kinshasha used charcoal to cook all meals every day. Approximately 11 percent of households in Bukavu and 27 percent in Kisangani cooked all meals with fuelwood.

Only 3-4 percent of the respondents in Bukavu and Goma and 0 percent in Kisangani regularly used electricity for cooking. Some of these households lacked access to the electric grid. Over 60 percent of the respondents in Kinshasha used electricity in cooking at least part of all daily meals and many also used charcoal to cook certain foods during the same meals.

Most respondents in Bukavu and Goma used low-efficiency improved charcoal stoves, but most in Kinshasa and Kisangani used low-efficiency traditional charcoal stoves. Approximately 74 percent of households in Bukavu and 87 percent in Goma mainly cooked indoors. Only 32 percent of households in Kinshasa and 25 percent in Kisangani cooked most meals indoors.

The three-stone woodstove is an open fire under a cooking pot balanced on three rocks. A three-stone stove has no capital or replacement cost. It has an average fuel efficiency of about 14 percent.9

Informal sector artisans throughout the country produce traditional and improved charcoal stoves. The designs and quality vary by location and producer. Traditional charcoal stoves are all-metal with perforated grills that support a cooking pot on or above the charcoal and no means to control the airflow or heat delivered to the pot. Informal sector artisans make the traditional charcoal stoves from scrap metal. The most common designs of traditional charcoal stoves varied considerably across the four study areas. Improved charcoal stoves have a higher fuel efficiency, longer effective life, and/or lower PM2.5 exposures than traditional stoves.

Most of the improved charcoal stoves in the DRC are low-quality versions of the Kenya ceramic-lined jiko (KCJ). The KCJ was developed in Kenya in the early 1980s and subsequently promoted in many East, West, and Southern African countries.