ADMIRE result: Colombia cuts taxes for green cook stoves

Advocacy by UNEP DTU partner has resulted in a VAT exemption on improved cook stoves, a step towards a market with efficient cooking that helps environment and health.

February 14, 2018

A new tax incentive in Colombia means that more families will get the possibility to use cook stoves that are better for the environment and their health.

Funded by DANIDA, Colombian organisation Fundación Natura has been working with UNEP DTU to promote the use of more efficient cook stoves in Colombia since early 2016.
The effort to make the tax incentive a reality is part of a project to create a market for improved cook stoves that benefits the poor rural population.

The changes in taxes on improved cook stoves comes after the Colombian government has been reviewing categories for VAT exemption. As a partner in the UNEP DTU ADMIRE project Fundación Natura entered in to intense dialogue and advocacy, which led to cook stoves being included on the list and thereby exempted from the 19% VAT.

“We worked to advocate for including improved cook stoves as an energy efficiency measure, and to convince the Ministry of Environment and Sustainable Development about how our projects can help reach the national targets of greenhouse gas emissions reductions,” Javier Dario Aristizabal, head of project in Fundación Natura, explains.

Climate change and health benefits

Many people living in rural Colombia use low efficiency cook stoves or open fires for cooking. This has severe adverse effects not only on the rate of deforestation and emissions of greenhouse gases, but also on the health of especially women and children.

Presenting these facts was an important part in convincing the Colombian government to exempt improves stoves from VAT, Javier Dario Aristizabal says:

“A key matter was to endorse our explanations with figures about fuelwood consumption in rural Colombia and its impacts.”

Using more efficient stoves means less pollution and cutting down fewer trees, thus leaving more trees to absorb CO2, but it also means time and money saved from collecting or buying firewood. And it can save millions of lives.

Burning wood, coal or other sources of heat in primitive cookers emit smoke and particles that can lead to lethal respiratory diseases such as pneumonia and bronchitis. Globally, 3.9 million people die every year of air pollution from home cooking, and the pollution is known as “the killer in the kitchen”.
Since most women and children are responsible for cooking and staying in poorly ventilated kitchens, it is especially those who are affected by the diseases caused by cooking.

Promoting energy efficiency nationwide

Fundación Natura started working with cook stoves in 2008 based on a need for decreasing the consumption of fuel and deforestation in rural Colombia. The organisation was first to address the issue and raise awareness of cook stoves as a measure for halting climate change in Colombia. An awareness that has now led to changes in tax legislation.

Tax laws that benefit environmentally friendly activities have existed in Colombia since 1989, but up until 2001, they were mostly aimed at monitoring activities. In 2001 the Efficient and Rational Use of Energy Programme (PROURE) was initiated, to promote more efficient energy use nationwide. PROURE included both punishments and incentives and focused mostly on electricity measures.

When a new Indicative Action Plan, that defines the targets of PROURE until 2022, was to be approved, the partners in the Colombian ADMIRE project saw chance to get improved cook stoves on the list of tax exempted areas.

The new Indicative Action Plan was approved in late December 2016 and since the ADMIRE partnership between Fundación Natura and UNEP DTU has focused on establishing pilot projects and entering in to concentrated dialogues with stakeholders on both supply and demand side.

A market that benefits all

The ADMIRE programme is funded by DANIDA and aims to involve the private sector in climate mitigation and adaptation by developing business cases in climate friendly investments in countries in the developing world.
The project in Colombia focuses on creating a market for efficient cook stoves that can help limit greenhouse gas emissions and deforestation and help achieve the goals in the Paris Agreement and the Sustainable Development Goals.

It focuses on both improving the supply and the demand side of cook stoves. On the supply side, the focus is to study the potential market dynamics to create alliances between actors in the cook stove value chain. On the demand side, the work focuses on creating financial mechanisms which allow the usually poor rural population to buy a cook stove, but pay it over time. Tax incentives such as VAT exemptions is a crucial element in this.

“The support of UNEP DTU means that our chances to succeed in creating a market for improved cook stoves are significantly higher. It has given to us better tools to expand our efforts in reaching new stakeholders whose common vision is developing business models based on climate-friendly actions.” Javier Dario Aristizabal says about the cooperation.

Coordinated by Fundación Natura the project is looking at both supply and demand, making a business case to ensure, that as many people as possible gets the opportunity to get an improved cook stove.

“UDP has played a key role in this process. It has strengthened our capacities for understanding how to build partnerships among private entities and to enhance the collaboration between public – private sectors. The UDP’s support has boosted the involvement of new players who will help the cook stove market comes true.” Javier Dario Aristizabal says.