Energy in Common
Encyclopedia
Energy in Common is a not-for-profit organization, which is the first to enable microloans specifically and only for renewable energy
technologies. EIC was founded by Hugh Whalan and Scott Tudman in 2009 (website launch 2010). It has the very ambitious goal of delivering renewable energy to 15 million people in the next five years, while fighting poverty by empowering developing world entrepreneurs through microloans. EIC represents one of the most promising contenders in the growing green microfinance sector.
EIC operates very similarly to Kiva
. In the case of Kiva, lenders provide funds with zero return expected to developing world entrepreneurs to invest in their businesses (typical loans are for things like seeds for farming). EIC does this as well, but specifically focuses on purchasing renewable energy
systems like solar photovoltaic panels.
What makes EIC particularly unique in the microfinance
non-profit sector is that they have created a model to measure the greenhouse gas emission reductions that are created by their loans. The EIC model helps provide funding to developing world entrepreneurs for energy solutions and also helps to channel additional funding into mitigating climate change.
technologies:
, human waste
and animal waste into nutrient rich liquid fertilizer
and biogas
(thus a renewable fuel made up primarily of methane
). A biodigester is made up of a bag or tank that holds the organic 'wastes' over a period in which bacteria breaks down the organic matter and produces biogas. Biogas is used as a replacement for kerosene
, firewood
, or any other combustible fuel source used in the developing world such as cow dung. Biodegesters thus produce renewable energy, cut down on odors and pathogens in organic materials, reduce surface and groundwater contamination, improve indoor air quality
and provide a source of high quality organic fertilizer
as a byproduct—that has been shown to improve crop yields and decrease fertilizer costs.
, charcoal
, or dung
. This is somewhat controversial as currently this allows for economic savings although clearly there is a potential to have negative effects of becoming dependent on a non-renewable energy source, which in many cases needs to be imported. Less controversial, is a clean burning stove that uses wood, charcoal, or dung, but burns more efficiently. These stoves funded by EIC are designed to increase the airflow to the fuel source, creating a better flame and reducing the amount of fuel required to provide a given amount of heat to the target (e.g. it takes less fuel wood to cook dinner). Both types of clean burning stoves reduce the costs associated with fuel use and improve the indoor air quality
within the homes of the users.
lamps combine a small solar photovoltaic panel with a rechargeable battery
and an array of LED lights into an effective lighting system, which is used to replace dangerous (indoor air quality, GHG emitting, and fire hazard) kerosene
lamps. LED lights are known to be very efficient, which prolongs illumination time on the charging made available by the PV.
and a small battery
. The stored solar electricity can be used both in the day and after dark to power lights and an electrical socket for other electrical equipment (e.g. cell phone charger, OLPC, radio, TV, or computer).
They do this by providing a detailed questionnaires before, during and after the loan, and in-depth field surveys conducted by both by EIC and independent auditing firms in order to sell the carbon offsets. The particularly clever part is that loaners may then buy the carbon credits and get a tax credit from EIC.
) the minimum loan is $25 and the average time until repayment is about 18 months. This can put a lot of well-intentioned people off of the concept. EIC Nanoloans are a limited run of $5 loans, specifically designed to be repaid in just 60 days. The object of offering nanoloans is to introduce new lenders to the entire microlending process fast.
projects while more equitably distributing the return on investment
. These concepts have now been instituted by Energy in Common
and Kiva
in their green fund.
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
technologies. EIC was founded by Hugh Whalan and Scott Tudman in 2009 (website launch 2010). It has the very ambitious goal of delivering renewable energy to 15 million people in the next five years, while fighting poverty by empowering developing world entrepreneurs through microloans. EIC represents one of the most promising contenders in the growing green microfinance sector.
EIC operates very similarly to Kiva
Kiva (organization)
Kiva Microfunds is an organization that allows people to lend money via the Internet to microfinance institutions in developing countries around the world and in the United States, which in turn lend the money to small businesses and students...
. In the case of Kiva, lenders provide funds with zero return expected to developing world entrepreneurs to invest in their businesses (typical loans are for things like seeds for farming). EIC does this as well, but specifically focuses on purchasing renewable energy
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
systems like solar photovoltaic panels.
What makes EIC particularly unique in the microfinance
Microfinance
Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....
non-profit sector is that they have created a model to measure the greenhouse gas emission reductions that are created by their loans. The EIC model helps provide funding to developing world entrepreneurs for energy solutions and also helps to channel additional funding into mitigating climate change.
How Energy in Common Works
- EIC enables individuals to lend money to poor entrepreneurs in the developing world via website using a Kiva-like model that connects individual lenders and borrowers. Upon choosing a borrower the lender can decide how much to lend - either a fraction or the entire loan requested by the borrower. The minimum loan is set at $25 for the standard microloans and $5 for their innovative nanoloans (discussed below). The total of a given range is usually found between $40 and a thousand dollars. When enough individual lenders have provided the fractional loans to a borrower and the total amount required has been reached, the loan is dispersed by the EIC. All of the EIC loans are meant to directly alleviate poverty and mitigate greenhouse gasGreenhouse gasA greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...
(GHG) emissions. - EIC has partnered with several microfinance institutions (MFI)s. The MFIs provide EIC with lists of potential borrowers, which are screened by the EIC before any individual borrower is profiled. MFIs are responsible for disbursing the loan directly to the borrower and all maintenance and support services to the borrower after the energy product is purchased. To cover the expenses related to this responsibility, the MFIs receives all of the interest charged to the customer for the loan. For their part, the EIC helps their MFIs partners with sourcing reliable energy technologies. Currently, EIC works with four MFIs all based in Sub-Saharan Africa, but has plans to expand into other regions.
- When a loan is repaid, funds are deposited back into the lenders account and EIC calculates the individual project's GHG emission reductions. These GHG emission reductions can be used by a lender to offset their carbon emissions through a tax deductible donation to EIC. Presumably the carbon credits may also be sold to third parties. The total carbon emission offsets are determined for a project by subtracting the carbon emissions before and after the energy loan was provided.
Appropriate Technologies Funded by EIC
The following list of primarily renewable energyRenewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
technologies:
Biodigesters
Biodigesters convert organic wastes such as food wasteFood waste
Food waste or food loss is food that is discarded or lost uneaten. As of 2011, 1.3 billion tons of food, about one third of the global food production, are lost or wasted annually. Loss and wastage occurs on all steps in the food supply chain...
, human waste
Human waste
Human waste is a waste type usually used to refer to byproducts of digestion, such as feces and urine. Human waste is most often transported as sewage in waste water through sewerage systems...
and animal waste into nutrient rich liquid fertilizer
Fertilizer
Fertilizer is any organic or inorganic material of natural or synthetic origin that is added to a soil to supply one or more plant nutrients essential to the growth of plants. A recent assessment found that about 40 to 60% of crop yields are attributable to commercial fertilizer use...
and biogas
Biogas
Biogas typically refers to a gas produced by the biological breakdown of organic matter in the absence of oxygen. Organic waste such as dead plant and animal material, animal dung, and kitchen waste can be converted into a gaseous fuel called biogas...
(thus a renewable fuel made up primarily of methane
Methane
Methane is a chemical compound with the chemical formula . It is the simplest alkane, the principal component of natural gas, and probably the most abundant organic compound on earth. The relative abundance of methane makes it an attractive fuel...
). A biodigester is made up of a bag or tank that holds the organic 'wastes' over a period in which bacteria breaks down the organic matter and produces biogas. Biogas is used as a replacement for kerosene
Kerosene
Kerosene, sometimes spelled kerosine in scientific and industrial usage, also known as paraffin or paraffin oil in the United Kingdom, Hong Kong, Ireland and South Africa, is a combustible hydrocarbon liquid. The name is derived from Greek keros...
, firewood
Firewood
Firewood is any wood-like material that is gathered and used for fuel. Generally, firewood is not highly processed and is in some sort of recognizable log or branch form....
, or any other combustible fuel source used in the developing world such as cow dung. Biodegesters thus produce renewable energy, cut down on odors and pathogens in organic materials, reduce surface and groundwater contamination, improve indoor air quality
Indoor air quality
Indoor air quality is a term referring to the air quality within and around buildings and structures, especially as it relates to the health and comfort of building occupants....
and provide a source of high quality organic fertilizer
Organic fertilizer
Organic fertilizers are naturally occurring fertilizers .Naturally occurring organic fertilizers include manure, slurry, worm castings, peat, seaweed, humic acid, and guano. Sewage sludge use in organic agricultural operations in the U.S...
as a byproduct—that has been shown to improve crop yields and decrease fertilizer costs.
Clean Burning Stoves
Clean burning stoves improve the fuel utilization over common stoves. There are several types but the ones funded often burn propane instead of less efficient fuels such as woodWood
Wood is a hard, fibrous tissue found in many trees. It has been used for hundreds of thousands of years for both fuel and as a construction material. It is an organic material, a natural composite of cellulose fibers embedded in a matrix of lignin which resists compression...
, charcoal
Charcoal
Charcoal is the dark grey residue consisting of carbon, and any remaining ash, obtained by removing water and other volatile constituents from animal and vegetation substances. Charcoal is usually produced by slow pyrolysis, the heating of wood or other substances in the absence of oxygen...
, or dung
Dung
Dung may refer to:* Dung, animal feces* Dung, Doubs, a commune in the Doubs department in the Franche-Comté region in eastern France* Mundungus Fletcher or "Dung", a character in the Harry Potter novels* Dung beetle...
. This is somewhat controversial as currently this allows for economic savings although clearly there is a potential to have negative effects of becoming dependent on a non-renewable energy source, which in many cases needs to be imported. Less controversial, is a clean burning stove that uses wood, charcoal, or dung, but burns more efficiently. These stoves funded by EIC are designed to increase the airflow to the fuel source, creating a better flame and reducing the amount of fuel required to provide a given amount of heat to the target (e.g. it takes less fuel wood to cook dinner). Both types of clean burning stoves reduce the costs associated with fuel use and improve the indoor air quality
Indoor air quality
Indoor air quality is a term referring to the air quality within and around buildings and structures, especially as it relates to the health and comfort of building occupants....
within the homes of the users.
Solar Powered LED Lighting
The LEDLEd
LEd is a TeX/LaTeX editing software working under Microsoft Windows. It is a freeware product....
lamps combine a small solar photovoltaic panel with a rechargeable battery
Rechargeable battery
A rechargeable battery or storage battery is a group of one or more electrochemical cells. They are known as secondary cells because their electrochemical reactions are electrically reversible. Rechargeable batteries come in many different shapes and sizes, ranging anything from a button cell to...
and an array of LED lights into an effective lighting system, which is used to replace dangerous (indoor air quality, GHG emitting, and fire hazard) kerosene
Kerosene
Kerosene, sometimes spelled kerosine in scientific and industrial usage, also known as paraffin or paraffin oil in the United Kingdom, Hong Kong, Ireland and South Africa, is a combustible hydrocarbon liquid. The name is derived from Greek keros...
lamps. LED lights are known to be very efficient, which prolongs illumination time on the charging made available by the PV.
Solar Photovoltaic Home Systems
A typical solar photovoltaic home system funded by EIC consists of a small solar panel (both pole or roof mounted) connected to a charge controllerCharge controller
A charge controller, charge regulator or battery regulator limits the rate at which electric current is added to or drawn from electric batteries....
and a small battery
Battery (electricity)
An electrical battery is one or more electrochemical cells that convert stored chemical energy into electrical energy. Since the invention of the first battery in 1800 by Alessandro Volta and especially since the technically improved Daniell cell in 1836, batteries have become a common power...
. The stored solar electricity can be used both in the day and after dark to power lights and an electrical socket for other electrical equipment (e.g. cell phone charger, OLPC, radio, TV, or computer).
Carbon Offsets
EIC creates carbon offsets from emission reductions that have occurred over the loan term and only once the loan term has finished. In this way, lenders and those that make donations to retire carbon credits can be sure that all emission reductions have already happened.They do this by providing a detailed questionnaires before, during and after the loan, and in-depth field surveys conducted by both by EIC and independent auditing firms in order to sell the carbon offsets. The particularly clever part is that loaners may then buy the carbon credits and get a tax credit from EIC.
Nanoloans
In order to overcome the initial investment barrier that many people have when considering microfinance EIC developed the "Nanoloan" concept. For most microfinance institutions (e.g. KivaKiva
A kiva is a room used by modern Puebloans for religious rituals, many of them associated with the kachina belief system. Among the modern Hopi and most other Pueblo peoples, kivas are square-walled and underground, and are used for spiritual ceremonies....
) the minimum loan is $25 and the average time until repayment is about 18 months. This can put a lot of well-intentioned people off of the concept. EIC Nanoloans are a limited run of $5 loans, specifically designed to be repaid in just 60 days. The object of offering nanoloans is to introduce new lenders to the entire microlending process fast.
EIC Impact
EIC has been covered extensively in the green alternative press including The Huffington Post, Mother Nature Network, GreenBiz, the Next Billion and the standard press such as CNN.Theoretical Support
P2P banking and financing has been proposed as a method to accelerate the development renewable energyRenewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
projects while more equitably distributing the return on investment
Return on investment
Return on investment is one way of considering profits in relation to capital invested. Return on assets , return on net assets , return on capital and return on invested capital are similar measures with variations on how “investment” is defined.Marketing not only influences net profits but also...
. These concepts have now been instituted by Energy in Common
Energy in Common
Energy in Common is a not-for-profit organization, which is the first to enable microloans specifically and only for renewable energy technologies. EIC was founded by Hugh Whalan and Scott Tudman in 2009...
and Kiva
Kiva
A kiva is a room used by modern Puebloans for religious rituals, many of them associated with the kachina belief system. Among the modern Hopi and most other Pueblo peoples, kivas are square-walled and underground, and are used for spiritual ceremonies....
in their green fund.
See also
- Grameen BankGrameen BankThe Grameen Bank is a microfinance organization and community development bank started in Bangladesh that makes small loans to the impoverished without requiring collateral...
- Kiva (organization)Kiva (organization)Kiva Microfunds is an organization that allows people to lend money via the Internet to microfinance institutions in developing countries around the world and in the United States, which in turn lend the money to small businesses and students...
- MicrofinanceMicrofinanceMicrofinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....
- Socially responsible investingSocially responsible investingSocially responsible investing , also known as sustainable, socially conscious, or ethical investing, describes an investment strategy which seeks to consider both financial return and social good....