How can we involve the private sector in a transition to clean cooking in Ethiopia? This was the question a group of Ethiopian IGE Fellows asked. Their answers became significant input into the country’s plans for a clean energy transition and to achieve cleaner cooking practices.
The use of biomass, such as wood and charcoal, for cooking causes severe health problems and premature deaths in the Global South, as well as contributes to climate change and deforestation. To address this issue, the 2023/2024 participants in the Inclusive Green Economy in Practice program, the IGE Fellows from five East African countries, chose to focus on policies to promote cleaner cooking practices.
The team from Ethiopia, five civil servants representing the Ministry of Water and Energy and the Ministry of Finance, chose as their special Transformation Initiative (TI) to investigate the feasibility of improving private sector involvement in this endeavor. They concluded that a sustainable energy transition requires that all stakeholders cooperate: government, academia, the private sector, and civil society. Based on continuous stakeholder dialogue workshops, the low private sector engagement was identified as a major challenge for a sustainable energy transition in Ethiopia.
Tax incentives and financing are needed
“There are tax incentives for the private sector to invest in renewable technologies, such as solar panels. However, those are mostly used for lighting, while biomass is used for cooking,” says Tagay Hamza, Climate Expert at the Ministry of Water and Energy.
It’s not realistic to expect a leap from firewood to electric stoves. Improved cookstoves and other transitional solutions are needed until electricity is widely available and electric appliances are affordable.
However, the customs tariff for improved cookstoves and similar non-electric appliances is 35%. As a result, they are too expensive for most low and middle-income households in the country. The tax policy also discourages the private sector from engaging in the production, import, and distribution of cleaner cooking technologies. To address this, the Fellows propose, among others, a tax exemption to incentivize private sector participation by reducing this tariff to 0%. They also suggest improved access to finance options, both for consumers and producers.
Valuable peer learning on policy experiences
During the IGE program, the IGE Fellows discussed their TI with different groups, businesses, civil society, NGOs, and women’s groups in stakeholder workshops. The program also includes training sessions and peer-learning sessions where the Fellows exchange knowledge and experiences with their colleagues from the other four participating countries.
“The IGE program has been very valuable for us. We have learned a lot that we could apply when we created the roadmap for clean cooking. We learned, for instance, that it takes a combination of several policy instruments to achieve a transition.”
Their TI was very timely. The Ministry of Water and Energy was preparing Ethiopia’s Clean Cooking Roadmap 2025-2035. The recommendations from the TI were used as input into this roadmap.
Ethiopia has also developed a National Sustainable Energy Development Strategy (N-SEDS) using the TI as one key input. For instance, based on the TI assessment, improving private sector engagement was included as a strategic objective.
The TI continues to inform policy discussions. In October 2024, EfD Ethiopia and the Ethiopia Clean Cooking Alliance (ECCA), hosted a round of its Talk Energy Ahead (TEA) series in Addis Ababa. The discussion focused on Financial Access and Tax Incentives for Clean Cooking Transition in Ethiopia based on the TI developed by IGE fellows from 2023/24. The platform helps create awareness among different stakeholders including government, producers, manufacturers, importers, and researchers.
By: Petra Hansson