Cooking Up Solutions in Africa with EcoSafi
Tom Price is the founder and CEO of EcoSafi, and in today’s episode, we're diving deep into the challenge of access to clean cooking fuels in developing economies.
EcoSafi builds cook stoves and biomass fuel pellets that aim to reduce deforestation, improve in-home air quality and health outcomes, and reduce emissions. They work in Kenya, Zambia, Malawi, and Uganda. The challenge at hand, as Tom discusses at length, is that as of 2020, Project Drawdown estimated that 43% of families in low and middle-income countries worldwide cook food at home using stoves fueled by wood or coal. The gas and induction stove debate is not even relevant. This phenomenon drives all of these earlier outcomes from direct emissions to negative health implications to deforestation.
Before we dive into this topic, we get to know Tom a bit. He's been working on this problem in Africa since 2017, first with a company called Inyenyeri, and now with EcoSafi since 2020. Our MCJ Collective venture funds are proud to be investors in EcoSafi. But, as you'll hear him describe, his path to working on this problem has been full of incredible zigs and zags that have given him a wealth of life experience and the confidence to be able to navigate and build a business with the complexities that EcoSafi demands.
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Episode recorded on Oct 12, 2023 (Published on Nov 16, 2023)
In this episode, we cover:
Access to clean cooking fuels in developing economies
Tom's background in communications and journalism
His experience in disaster relief after Hurricane Katrina and environmental management at Burning Man
Tom's time on the Environmental Advisory Committee for the 2002 Salt Lake City Winter Olympics
His work in clean energy in Africa, starting with solar
Impact of cooking with wood or coal on emissions, health, and deforestation
EcoSafi's cookstoves and biomass fuel pellets
Barriers to clean cooking in Africa
The importance of carbon credits in the clean cooking market
Issues with existing carbon offset methodologies
EcoSafi's focus on verifiability and impact measurement
Vertical integration and technology in EcoSafi's business model
Potential for significant market growth in the clean cooking sector
Impacts of deforestation, drought, and additional topics to continue the conversation
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Cody Simms:
Today, on my Climate Journey Startup series, our guest is Tom Price, founder and CEO at Ecosafi. We're going deep on the challenge of access to clean cooking fuels in developing economies. Ecosafi builds cook stoves and biomass fuel pellets that aim to reduce deforestation, improve in-home air quality and health outcomes, and reduce emissions. They're live in Kenya, Zambia, Malawi, and Uganda today. The challenge at hand, as Tom will talk about with me at length, is that Project Drawdown estimated that as of 2020, 43% of families in low and middle income countries in the world cook food at home with stoves fueled by wood or coal in their homes. The gas and induction stove debate, it's not even relevant. This phenomenon drives all of these earlier outcomes I mentioned from direct emissions to negative health implications to deforestation.
Before we dive into this topic, I thought it was important for us to get to know Tom a bit. He's been working on this problem in Africa since 2017, first with a company called Inyenyeri, and now with Ecosafi since 2020. Our MCJ Collective Venture Funds are proud to be investors in Ecosafi. But, as you'll hear him describe, his path to working on this problem has been full of incredible zigs and zags that have given him a wealth of life experience and the confidence to be able to navigate and build a business with the complexities that Ecosafi demands. But, before we start...
I'm Cody Sims.
Yin Lu:
I'm Yin Lu.
Jason Jacobs:
And, I'm Jason Jacobs. Welcome to My Climate Journey.
Yin Lu:
This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms:
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help. Tom, welcome to the show.
Tom Price:
It's great to be here.
Cody Simms:
Tom, here's the deal. I honestly feel like we could accidentally spend, not only an hour, but multiple hours talking about all of the incredibly interesting crazy stuff on your background and not even get into your current company and Ecosafi or clean cooking or any of that stuff at all. So, I'm going to do my best to steer this conversation and make sure we don't do that. But, we are going to spend some time talking about a little bit in your background. But, before we do that, maybe start with just a teaser on what is Ecosafi so that we make sure we keep people's interest to the topic that will eventually be at hand.
Tom Price:
Ecosafi is a fuel utility company operating in East Africa trying to solve the last big unsolved problem in international development. If you look around the world, extreme poverty is being solved, lack of access to telecommunications, to energy, to light, to medicines. But, the last big unsolved problem is how to make dinner without killing your health and the planet. The number one source of CO2 emissions per household in the developing world is making dinner.
Every day, about 3 billion people basically light a campfire in their house so they can heat up their food. They do that because the top five foods that humans eat anywhere on the planet, wheat, rice, corn, potatoes, beans, none of them are digestible unless you add heat. People chop down trees, they use charcoal, some places they use dung, to light on fire and create this smoky disaster so they can have the energy they need to make the food they have digestible.
We're not just talking about people in mud huts out in the boonies somewhere. We're talking about people living in multi-story apartment buildings in major cities, cooking on charcoal fires two or three times a day. Project Drawdown says that solving clean cooking is the number eight biggest lever on climate change and almost no one's pulling on it. So, our work is to give people something cheaper, cleaner, more sustainable, and better working so they can make dinner for their families.
Cody Simms:
Thank you for that. I'm going to put a pin in that because we are going to come back and spend a lot of time talking about this important problem. But, before we do, I want to give people some context of who you are and how you ultimately came to solve this problem. Normally, I do this by going through people's backgrounds in a little bit of chronological order. But, again, if we did that, we would spend two hours I think traversing your history. I'm going to cherry pick a few things and just have you try to stitch them together in terms of how they led you to solving this current problem that you're working on. I'm going to start with, in the early 2000s, you apparently were an investigative journalist who was banned from Botswana for reporting about the diamond mining industry. Let's start there.
Tom Price:
I used to work on Capitol Hill, and then I went to work in communications for some fantastic conservation organizations. And then, I realized if you want to get communications done, it would be easier to be the person writing the story and writing the story about what I wanted to write about rather than trying to pitch reporters. So, I decided to become a freelance journalist. So, I did that. In the course of that work, I got to go literally all over the world to amazing places. That's actually what got me on my climate path.
I was the first US reporter to report from a place called Tuvalu. It's a small island nation, 400 miles north of Fiji. And, it has distinction of it will be the first country in the world to cease to exist because of climate change. The highest point in the country is only six feet out of the water. There will be a day in living memory when they push in that chair at the United Nations and roll up their flag and take it down because they won't exist anymore. Also, as part of that work, I went to Southern Africa to the Central Kalahari Game Reserve. Fascinating place. Only reserve on the planet that was set up not for animals, but for people, the Bushman tribe who've been living there since forever.
Cody Simms:
Was that your first trip to Africa was to write the story?
Tom Price:
It was my second. I learned about that story when I was there on my first trip and I was there a few months later reporting on it, 2004 or five. The short version of the story is that Botswana, six months after independence, found diamonds. And, they're like, "Wow, we want to do something with this. We don't know what to do with it." So, they made a partnership with the De Beers Mining Company. They formed a company called Debswana, De Beers and Botswana. They split the money 50/50. De Beers digs up the diamond, they cut the government in for half.
The Bushmen have been living in the Central Kalahari Game Reserve forever. It was set up in the late 1960s. And then, the government realized there might be diamonds under there. So, they forcibly relocated these Bushmen from the place they always lived to these resettlement camps. And then, immediately, leased the CKGR for diamond mining. They denied all of this and said, "Oh no, there's no linkage. No, this isn't happening," blah, blah, blah. I went there to see what was going on. I did that by sneaking into the Central Kalahari Game Reserve.
I drove up to a game warden gate and I said, "Yeah, I'm going to go over this way and look at some animals or whatever." He said, "Great." They opened the gate. And then, as soon as I was out of sight, turned and drove the other way and drove 300 miles across untracked sand to where a couple hundred of these Bushmen had walked across the desert for hundreds of miles back to their traditional community, to sit and talk with them there about what their experience was, to investigate it personally, to go see firsthand what was really going on. I eventually got back and got to the capital, and then walked up to the Minister of Minerals and Mines office, walked in and asked for an interview. I was sitting down having tea with him, and they were denying that this had ever taken place, that this forced relocation, all these... They were denying all this stuff. I said, "Well, it's funny you say that because I was there the day before yesterday and here's what I saw." And, let's just say the tea service quality went downhill immediately thereafter.
I did more investigating and reporting. I reported this for Mother Jones and for newspapers in Australia and other places. And then, went to go back. I was actually in the airport in New York on my way to go back and I got a call from the US Ambassador saying, "You and seven other journalists have been declared persona non grata. You're not allowed to go back." So, I decided that I needed to do something else. As it happened, I had left to go to New York, to go to Botswana from Biloxi, Mississippi, where I'd been living for the previous couple of months, running what became a disaster relief NGO to try to help people after Hurricane Katrina. So, I guess it was a good moment for a career transition. But, that's the story of how I came to be banned from Botswana. I still don't know if I can go back actually.
Cody Simms:
The disaster relief organization that you then decided to turn your attention back to, this is where the story continues to... I was going to say get weird, but I guess I'll say evolve, is somehow you ended up becoming the environmental manager at Burning Man.
Tom Price:
Yeah, it's a weird story. I've been attending Burning Man since 1997. I've always been really fascinated by this weird thing that happens in the middle of nowhere. I've always thought there was more to what was going on than just a big party in the desert with music and so forth. But, there's a lot of that. 2005, I was the head of government relations for Burning Man. I was helping take VIPs around and show them what was going on so they could get familiar with what this thing was happening in the desert. It's the largest single use of public land in the United States, kind of a deal. While I was giving a tour to the head of the Bureau of Land Management, at that time there was no telecommunications at Burning Man, so she had just been in the outside world and came back and said, "Yeah, there's this hurricane that just hit New Orleans."
The thing about Burning Man is it's a place where if you have an idea, people don't say, "No, this isn't going to work." They say, "That's a great idea. Let me know. I'll show you how I can help." So, in very short order, in the space of 24 hours, we found out more about what was going on. We raised $42,000 in cash, six tons in food supplies, and organized large numbers of people who wanted to go and volunteer. The town of Biloxi had been put under 30 feet of water and a hundred and something mile an hour winds for many hours. It was just for a quarter mile from the shoreline back in, everything was scraped down to the foundation, like there was nothing but concrete left. The thing about going to Burning Man is it's basically bootcamp for disaster relief. You're going to an incredibly inhospitable place and have to provide all your own food, shelter, et cetera. People coming from Burning Man to the Gulf Coast, there was no difference except instead of being dry, it was wet. And, in short order, although it was just a ragtag bunch of people who didn't really know each other at all, word got around that there was this group of people who kind of had their act together.
Because Burning Man is the largest leave no trace event in the world, people learn how to be very tidy upon leaving. Long story short is we spent nine months there. Hundreds of volunteers. We did something like three and a half million dollars of demolition and debris work for free, all done by volunteers, totally random funding mechanisms. We had people sending us bits of money. We were the largest distributor of food, material and supplies in Biloxi for months afterwards just because it was a group of people who knew how to handle themselves in a tough situation.
Cody Simms:
That's incredible. As I said, we could double click into any one of these stories and do a whole episode on them. I'm going to actually take you further back in time because before you were traveling Botswana and before you were doing hurricane relief, you worked on the Winter Olympics as the chairman of the Environmental Advisory Committee for the 2002 Salt Lake City Winter Olympics. You did that for multiple years. What did that entail?
Tom Price:
A lot of arguing with people who worked for Mitt Romney about whether or not mass transit was a good idea. The Olympics came to Salt Lake City, which is my hometown. And, I got elected to be the chairman of the Environmental Advisory Committee. Our job was to try to make these games sustainable in some way and dealing with all the corporate sponsors and so forth. It was a great learning experience. I learned about how bureaucracies work. I learned about how large corporations operate and what really matters to them.
I learned a very valuable lesson at that time, which is hard things require choices and they require trade-offs. And, anything that's temporary makes good and bad investments depending on really what the long-term value is.
Cody Simms:
Amazing. Well, I think a good story in early attempts to drive awareness in environment and climate when it came to large scale events that in 2002 or whatever people maybe weren't paying as much attention to as they might need to be required to do in 2023. Also, maybe a good show of how much the world frankly has changed in 20 years with respect to attitudes on these things.
Tom Price:
Well, you know that phrase that the arc of history bends towards justice. I think the arc of history also bends towards sustainability. We are collectively, as a planet, on a journey that is getting rocky around understanding what our relationship needs to be with the place. I'm very fortunate that I grew up in the Rocky Mountains in Utah, and the nature and environment was always part of my life. It wasn't actually until I moved to Washington DC to work on the Hill that I realized not everybody cared about the environment the way I did because it was just part of life growing up.
It makes sense. There are a lot of people who live lives very, very disconnected from the natural world and so they don't understand. If their connection with food is some package that they buy at the supermarket, and if their connection with the environment is that space between when they leave their house and when they get on the subway to go to work, it can seem distant and it can seem also inviolate, something that never changes. Of course, the lesson we're all learning the hard way now and the reason you and I are talking today is because we are learning the limit of it's resilience. I lean often on a quote I heard from Bill McKibbon, which is, "I'm not optimistic, but I'm hopeful." The data is not good about climate. I've been working on climate now full-time for more than 20 years. The evidence today is worse than ever. But, conversely, my confidence has never been higher that we may actually pull this off.
Cody Simms:
Well, let's catch ourselves up to your present day. After you did your time with Burning Man, you spent it looks like five or six years in what I would call moving into more traditional clean energy work at an NGO, at a solar development startup, and then eventually found your way into the African biomass, clean energy, clean fuels sort of space. How did that arc find its way there?
Tom Price:
I started in a solar nonprofit that built and gave away more than six megawatts of solar projects. If you see this image, well, you can look over my shoulder, listeners can't. But, those are pictures of some of the arrays that we built. It's called BlackRock Solar. We built 115 arrays for schools, hospitals, charities. The idea was to make solar visible for people that hadn't seen it before so that they could understand that it could be something that could be part of their lives. Back in 2007, that was a very new thing for most people. Then I left and decided to get into building solar. I thought there was a big opportunity.
Cody Simms:
I'm going to come back to that point real quick before you jump into the 2007 piece. The idea of people having their first experience with a clean technology, it's actually a really interesting one. I don't know if the episode will have shipped by the time your episode here ships. But, I just recorded with the head of sustainability at Uber. And, he made the point that a huge number of people have their first experience riding in an EV through an Uber. They believe that that's a big deal. That's a big deal in helping the broader transition start to happen because it makes things feel real and tangible. I just heard you say the same thing, which is-
Tom Price:
No, no, no. It was a very intentional deliberate strategy. Actually, it was even more so. We went and figured out who all the political leaders were in the community, then we figured out what nonprofits they were on the board of. Then we went to those nonprofits so that we could put solar on the roof of the Boys and Girls Club or the animal shelter or the food bank so that we knew they would learn through those channels. Because, what you need to do is influence decision makers because they create the policies to make this stuff possible. I was just in London, all of the cabbies there, almost all of them, have been provided EVs, many of them by Chinese EV makers knowing full well that lots of people will get in cabs. They'll be like, "Oh, this car's nice. It's quiet, it's smooth." So, it's a fantastic strategy for bringing something to people's awareness.
Cody Simms:
I wanted to draw those parallels because I thought it's a useful strategy that hopefully other listeners who work in the space could also think about ways that their product or their solution could follow a similar type of influence-based go to market.
Tom Price:
Oh yeah. Put it in front of people physically. Let them encounter and experience it in the wild. It's so powerful. There is nothing more powerful than a testimonial from someone who has experienced it. Or, even if your friend says, "Hey, I heard this band. I saw this movie. I tried this food." Nothing can replace that.
Cody Simms:
I mean even at MCJ, when we... As many people know, we're raising our next fund right now. And, when we talk to people who start the conversation saying, "I've listened to 10 of your most recent podcast episodes." Wow, that's a helpful initial entry path into having a conversation with people. Yes, the more you can get people to experience some part of what you do is really helpful.
Tom Price:
As an aside, I have to say a shout out to Jason. MCJ came along at a time in my life when I very much needed some inspiration and encouragement on my journey. Watching someone work through their anxiety in real time in public was fantastic therapy and has done such a remarkable job. The MCJ community is fantastic, folks. If you're not part of it, you should definitely be part of it. It is an extraordinary resource in crowd solving. Not crowdsourcing, crowd solving our biggest challenges. It's beautiful thing to see. I am so grateful. Every single person that works there, you, everyone are just fantastic people. It's a wonderful thing to see.
Cody Simms:
Tom, I promise you, we didn't plant that message. But, actually, normally in the pod, we do take a break at some point.
Yin Lu:
Hey, everyone. I'm Yin, a partner at MCJ Collective, here to take a quick minute to tell you about our MCJ membership community, which is born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019 and have grown to thousands of members globally. Each week, we're inspired by people who join with different backgrounds and points of view. What we all share is a deep curiosity to learn and a bias to action around ways to accelerate solutions to climate change.
Some awesome initiatives have come out of the community. A number of founding teams have met, several nonprofits have been established, and a bunch of hiring has been done. Many early stage investments have been made as well as ongoing events and programming like monthly Women in Climate meetups, idea jam sessions for early stage founders, climate book club, art workshops and more. Whether you've been in the climate space for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and click on the members tab at the top. Thanks and enjoy the rest of the show.
Cody Simms:
Tom, let's get to Clean Cook Fuels. After Black Rock, how'd you get to Africa and Clean Cook Fuels?
Tom Price:
I worked for a utility scale solar developer and, as part of that, I ran a process for two years to draft and then build a coalition of 150 state, local, federal environmental justice, environmental advocacy groups, to write and pass a piece of legislation called SB43, which was the Community Renewables Act. It was basically the community solar bill for California. The idea was to give people a pathway to get solar on their bill who couldn't put it on their roof. Most people in California don't own their home, and many people who do own their homes or apartments, live in apartment buildings. They can't put solar on the roof. The idea was to create a pathway to doing that.
We passed the legislation successfully, and then the chief of staff for the member who I worked with for a year there on that bill in Sacramento said, "Hey, I want you to meet my brother." He had this crazy brother who lived in Rwanda. Eric Reynolds is this remarkable individual. At 19 years old, he started the outdoor company, Marmot, which many people are familiar with. And then, did a couple other startups and then went to Rwanda and was there for something else but was in the same place for three weeks and saw himself looking at these women day after day, collecting, buying charcoal, and then lighting these horrible cook fires.
He could see the kids coughing in the kitchen with mom. He's like, "There's got to be a better way." So, he started a business called Indenyeri and the idea was pretty straightforward, which is the problem with clean cooking is the clean stoves people can't afford, and the stoves they can afford aren't clean. Eric's breakthrough insight was, "Well, why don't we give them a really clean stove and then sell them the fuel to use it," the razor blades and handles model. And, built a business.
He recruited me. I went over there. In Rwanda, we worked together for a few years. That business did not end up succeeding. But, it went under for reasons that didn't have anything to do with the value proposition. When it did, I started reaching out to other people in the energy access community trying to give the idea away. I didn't want to start anything. I was like, "I just want to give this idea to somebody. Somebody else needs to do this."
I connected with Xavier Helgesen. Xavier was the founder and CEO of Zola Off-Grid Electric, one of the largest off-grid solar home developers in East Africa. It turns out he had actually crossed paths with Eric years before, and at one point had been on the board of Indenyeri. We both agreed there was a tremendous opportunity here and we just needed to recast it and do it a little of a bit different way. So, we went out looking for people to connect with, and we were very fortunate in that one of the first people we connected with were the folks at Lowercarbon Capital who had just started their fund. So, Lowercarbon led our pre-seed round. They also led our seed round. They've been fantastic partners.
Cody Simms:
We're happy to be participants in your seed round as well through MCJ.
Tom Price:
Yes, delighted about that. They understand what we are trying to do is incredibly ambitious. There are 600 million people in Africa. 85% of the people in Africa cook every day with firewood or charcoal. Like I said, it's the number one source of CO2 emissions per household. It's the number one source of death from household air pollution globally, 4 million people a year. It is the number one source of deforestation. It is leading source of time poverty and of lack of access to resources because families have to spend money on cooking fuel and on dirty cooking fuel that makes them sick. It's this nexus where, if you can give people a cleaner, cheaper, better solution, you get to solve all these other problems at the same time.
This is our solution. We provide people a best in class stove free of charge. It has a battery and a fan in the bottom. If you've ever had a campfire and your campfire was really smoky and it was a real mess, and then you got a piece of cardboard and fanned it, you notice that all of a sudden the smoke goes away. If you adjust it just right, the log just right, suddenly the smoke goes away and it's just beautiful flames. Well, this stove does that automatically. What we put in it are pellets made out of biomass. Sawdust, or in our case, we use sugar cane waste. Densified pellets in a fan gasifying stove are 98% cleaner than cooking with charcoal. If we make it out of sugar cane waste, for example, it uses 100% less trees. Most importantly for consumers, it costs them 40% less than what they're already spending.
So, we take a family that is spending a big chunk of their income on buying a dirty fuel that is causing terrible deforestation and impacts on the environment and local community, and that costs them a lot of money. We replace that with something that is clean, renewable, locally produced, sustainable, and it costs them so much less. And then, they can take that money... I remember one family, they took the money that they saved, they weren't spending on cooking fuel, and they bought the national healthcare program for the family so their kids could get healthcare.
We have an immediate impact. From the very first meal someone cooks, they save money. And, it doesn't cost them anything to become a customer. So, there's no barrier to entry. You don't have to be well off. The ability to make an immediate impact on someone's pocketbook while making an immediate impact on the climate, I mean the numbers here are pretty amazing. We think we can reduce about three and a half, four tons of carbon per household per year. If you multiply that across... I mean we're talking about gigatons of potential.
Cody Simms:
The clean cook fuel numbers in Drawdown that I was able to find said something like, between the years 2020 to 2050, Drawdown estimates that a shift to clean cooking fuels can be 31 to 76 gigatons of CO2 reduced or sequestered in that time. If you do the math, that's like one to two plus gigatons per year, which is significant.
Tom Price:
It's huge. The thing that's important about this, part of the thing that drew me to this, is I live in the Bay Area. I commute to Nairobi. It's a long commute, but that's a different story. So, many of the startups in the Bay Area, so many people working on climate, so many of the climate solutions are focused on, rightly so, on people that live and work here. But, solving climate change is a yes-and solution. It's situation. We have to solve it for everybody. The biggest source of climate emissions per household for the majority of people in the world is making dinner. So, we can't not solve this. There have been many other attempts to solve this problem. Most of them revolve around trying to convince people to use LPG.
Cody Simms:
What is LPG and what's the deal with it?
Tom Price:
Basically, the same stuff that comes out of my kitchen here in California. There's a gas stove. You turn the gas on, you light it, it works. You turn it off. It is clean. It is efficient.
Cody Simms:
The LPG stands for liquid petroleum gas.
Tom Price:
Liquid petroleum gas. Yeah, it's propane, basically. Yeah. The same sort of stuff like you use in a camp stove. Just think about this. Can we afford, on a climate basis, to switch 3 billion people who are not currently using fossil fuels every day to people who are using fossil fuels every day? Well, of course not. We can't. This is where we get into what are the choices people have.
Here's a little context that will blow your mind. 80% of the population growth on this planet in this century will be in Africa, most of it in East Africa. By the end of the century, four of the 10 largest countries on the planet by population will be in East Africa. Tanzania, a country about the size of France, is going to add something like 200 million people. Well, right now, 90% of the population there is using firewood or charcoal as a primary fuel source. The country's rapidly deforesting. What's going to happen? Well, what are they going to switch to because they may run out of trees. At some point, they're going to run out of trees they can chop down and turn into charcoal. What are they going to use? LPG? They're not going to use that because they're not using it now. Why? Because, they can't afford it.
Ethanol has gotten a lot of attention lately. The unsubsidized price of ethanol lands somewhere between charcoal and LPG. Another concern about ethanol is it's not a very hot fuel. The thing you want to do with cooking is heat, and ethanol just has a lower operating temperature than gas or than charcoal. Electric induction also gets a lot of attention. Fantastic solution. It's amazing. Probably not going to work at a very large scale in that environment because you need a very expensive appliance or a couple of them. We have an electric pressure cooker in our house. We have an Instapot. We don't use it for maybe once a month to make some stew. But, we didn't make spaghetti in it last night, which is what we had for dinner.
So, if you're not just going to use a pressure cooker, then you also need an induction hot plate. Now, you're in a couple of hundred dollars. You also need special cookware. And then, of course, you need extremely reliable low cost electricity. Because there's no way to monetize the fuel in that transaction for the provider, you basically have to sell somebody an appliance that's really expensive. Well, if your family's making $300 a month and the appliances are going to cost $200 a month, even if it's going to save you money, you're not going to do it. There's just very clear evidence that people at some point won't spend money that will save them money long-term because they need that money today. So, there's a lot of barriers to electric induction cooking reaching wide-scale adoption. Also, if people can afford electric induction appliances, they can probably already afford gas.
Cody Simms:
It feels like the solution that you also hear or see people talking about are mini solar panels that power some kind of small electric appliance for cooking. But, that sounds like that's not feasible.
Tom Price:
If you've ever used an electric heater in your house, then you get bill at the end of the month, you know just what a disaster it is to use electricity to create heat. You need an enormous amount of electricity to make heat. The amount of money that you would have to spend and the amount of solar that you would have to have to create enough energy to create heat for cooking, the math does not work out. Not even anywhere close.
Solar cookers, like where you have these big radiator panels shining on a crockpot is a solution in search of a problem. Because, people do not want to, in fact, cook in the middle of the day when the sun is shining. They want to cook at night when the sun has gone down down. So, you have this immovable need for a very high dense energy that comes every single day for every single family. Morning and night, they need a lot of energy so they can heat up food so they can turn it from something that is not digestible into something they can consume. LPG, fossil fuel, very expensive. Electric induction has all kinds of dependencies and a lot of barriers to adoption. Ethanol pretty, expensive unless it's subsidized and has some issues with a cooking basis. What else is there?
Cody Simms:
Given that broader context and framework, it sounds like then the challenge is a significant logistics one. How do you deliver these stoves that you're making to a large population and how do you get them access to the pellets that they need on a regular basis? And then, not to mention the cost and financing upfront on your end that you need to do to actually deliver the products before you start receiving the recurring revenue from the pellets.
Tom Price:
Right. Our business is actually really interesting because we have two distinct sources of revenue, which are somewhat independent of each other. We make fuel and sell it to our customers, and we make about 50% gross margin on the fuel, which is a healthy margin.
Cody Simms:
These are the pellets, yes?
Tom Price:
On the pellet fuel. We make pellet fuel out of sugarcane waste in Western Kenya. We make about 50% gross margin on it. We made money on the first kilo of fuel that we sell, then every one cents. And, customers spend 12, 15, $20 a month on fuel every month. That's recurring revenue there. Separately, as we replace the use of charcoal, we're creating carbon credits. We can make, let's say, potentially as much as a hundred dollars a year from that customer that way. The business would work either with the margin from the fuel or with the margin from the carbon credits. But, if you put them together, that's what enables us to... because the stove is not cheap. It costs money. It's a pretty expensive appliance. But, we can pay for it with the carbon offsets because we know what we're doing. This gets us into something that I wanted to talk about, which is the market for carbon credits and how it's changing.
Cody Simms:
If you're dropping pellets off at someone's door or they're coming to pick it up in the town square, assuming you're doing that, they're burning them or they're using them somehow. In order for you to generate carbon credits, you have to have some digital tracking on what was burned, what was used, and what was emitted that you can then be able to claim carbon credit around, I would presume. Yes? Maybe we can go down either of those paths if you want. How are people getting access to the fuel first and foremost?
Tom Price:
Well, the short answer of how they're getting it is we operate in a couple of countries. In Kenya, for example, most of it we deliver on the back of electric motorcycles because we've figured out that it's cheaper to bring it to somebody's front door on an electric motorcycle than it is to put it on the shelf of a store and then have them go pick it up. The reason we do that is because a lot of people in Nairobi, a very significant percentage, use LPG gas at least some of the time, and they're used to having it delivered. So, we're competing with that fuel. We're competing with that experience. In Uganda where we're also operating now, LPG use almost doesn't exist. Everybody, let's call it north of 85%, is used to going somewhere and buying charcoal. So, we use an agent model where people can go and pick up a bag of fuel or pay someone to bring it to their house at a local agent.
We keep track of who buys what. We do that because we want to prove what's happening. This gets us into the can of worms that is carbon offsets from clean cooking projects. The market for carbon offsets from clean cooking projects has exploded in the last couple of years, and it's now more than half of all the credits on the voluntary carbon market for non-nature projects. The problem is it has historically been choose your own adventure approach to which of a wide range of methodologies you used. A methodology is a mechanism by which a standards body, either Vera or Gold Standard, helps understand what was happening before, what was the baseline emissions that were taking place, and then what has happened since. And then, you sort of take the difference, and that's how many carbon credits you've created.
In the past and still today, many project developers use a methodology that allows them to say, we gave or sold away, sold or gave away X number of stoves in this community. The estimate is that they were on average using about this much charcoal beforehand. We think they'll use this much less afterwards. So, we're going to claim that difference as carbon credits. In recent years, there's been a trend towards higher verifiability that was pioneered at my previous company. We were the first company to do something completely different, which was we tracked all the fuel that we sold to every customer. And then, we said, "Well, we knew what they were using beforehand, roughly, and we know what we sold them, and we know how efficient the stove is, so we can tell how many carbon offsets were created." Fast forward to today. There's widespread recognition that a lot of the credits on the voluntary market are junk and don't exist.
Cody Simms:
It sounds familiar across a lot of different spaces in the voluntary carbon credit market.
Tom Price:
Yeah. Don't criticize. Don't criticize this market. Because, this money is super important. But, from my perspective, the money from Toyota, Volkswagen, Gucci, whatever corporate buyer is buying carbon offsets, is vital to go to do important work. They're not buying just the idea of something happening. They're buying actual impact. If that actual impact isn't happening, they want to know it.
Cody Simms:
And, it sounds like it's catalytic to your business model, an important part of the unit economics that make your business model work.
Tom Price:
It's foundational. There's a split taking place right now where higher quality credits are getting paid more. That's why direct air capture projects are getting more. Because, people, they can physically see the carbon. It feels more real to them. And then, projects that are a bit more speculative, especially a bunch of REDD+ projects, forestry projects, the research has gone down. And, the expert, the absolute leading expert in the world for this academically is Dr. Barbara Haya who runs the Berkeley Carbon Trading Project at UC, Berkeley. We teamed up with Berkeley more than two years ago to support research into this topic. I mean, support of the grad student who's doing the research. And, the thing people need to know about supporting academic research, it's very common. Also, you have no control over the outcome. It's a terrible business decision because you're spending money and you have no control over the outcome and no idea what the outcome's going to be.
But, we thought it was important to do this research. So, we did. The research that came back is absolutely shocking. They found that 86% of the offsets from the projects they surveyed, and they were a representative sampling of the industry, probably never took place because people were either using a guess for what the prior emissions were, they weren't validating whether or not the fuel was being used, they were using inflated numbers for whether or not the trees that were being cut down were going to grow back or not. Basically, every single metric, and they compound over each other, got people being overstated. The way the rules were set up was project developers got to choose what methodology they wanted to use. Surprisingly, they all chose one that was advantageous for them.
Cody Simms:
Let me try to understand that. The clean cooking carbon credit methodology may not have been directly related to just a direct swap in emissions of what's being cooked in a pot somewhere in terms of the amount of CO2 it's releasing, but rather might've been backed into, "Oh, let's not worry about that." But, we're going to tie it to some avoidance methodology related to deforestation that would've driven the charcoal in the first place. Am I following the thread?
Tom Price:
Before we get super into the weeds and lose people to sleep, we'll just say that that's true. We chose a different approach. We intentionally chose to make life as hard as possible for ourselves. We chose the toughest methodology. It's brand new. It's called the metered and measured energy for cooking devices. It is based entirely on measuring the amount of fuel sold as a proxy for how much you've reduced emissions. We then went two enormous steps past that. First, we are the only company in the world that has individually surveyed our customers about what their baseline fuel usage was because we want to know exactly what it was so we can give confidence to the buyers of our offsets. What we found has been mindblowing.
In Nairobi, our actual individual customer surveys are showing, in some cases, 80 or 90% less charcoal use than some other companies are claiming in the same market. Why does that matter? Well, their surveys were based on estimates or national averages that include rural families living out in the boonies, whereas ours is only in Nairobi where LPG use, like I mentioned, is quite common and people also use a lot of other different fuels. So we're absolutely confident that our data is rock solid. We're also going to step beyond that doing live real-time monitoring of some of the stoves. Here's what we do. We go to a customer and individually survey them on their baseline use. We then give them a stove and then we track digitally how much fuel that has been sold to them. We follow it up with monitoring of the stove to know when the stove is being used. We have this entire digital chain of custody of the impact that we're having.
It's basically the next best thing to standing there with a clipboard in their kitchen and writing it down. The problem is we have been clumped into the same overall group of offset providers as people who literally give away clay stove somewhere and claim what the baseline usage was and claim how much the person's using it, even though there are stories everywhere about these projects where developers go out and give away a bunch of stoves, you come back in six months and the mother is using it now as a stool and still using the other way she was cooking before.
My point in all this is we have over-rotated significantly on trying to be very provable in what we're doing. The reason that we've chosen to do that is because carbon finance is absolutely vital to bringing clean cooking to the hundreds of millions of families that want and need it. We can make them a better experience that costs them less, and that really has an immediate impact on our environment. We can only do that if we have the carbon finance to back it up and we can only get that carbon finance if we can prove the impact that we're having.
Cody Simms:
What I'm hearing you say is that requires pretty significant level of control on go-to-market of the product.
Tom Price:
But, this is the exciting thing, and this is what I love about this business, and this is what I tell our employees. In every aspect of our business, our interests and our customer interests are aligned. We want to know that they're using the fuel so we track the fuel to them. They don't want to buy a stove. They want to use a stove. We own the stove. If it ever breaks, we repair it and replace it. The customer doesn't have that problem. It's our problem.
We want to ensure that the fuel quality is in good place. If you sell someone a stove, you're probably not going to see that person again for two years. Every time you hear from them, it's probably going to cost you money. We're different in that we want to hear from people. We see our customers all the time. We hear the feedback from them constantly. We're constantly able to align our interests with theirs and their interests are, "I want to spend less money. I want this experience to suck less. And, I would like to help not ruin the environment in the place that I live."
Cody Simms:
I'm hearing that it has to be and is a relatively vertically integrated company. It's a technology company in that vertical integration in that your having visibility into what sales are happening and where, because you're managing that essentially on the pellet side, and technology company in that you own the product and it's either now or in the soon future digitally connected device that can actually deliver data back to you.
Tom Price:
That's right. We have a complete digital chain of custody of the impact that we're having. We'll, hopefully, soon be able to calculate in real-time the emissions reductions taking place and share that data with people that are interested. That matters because, like I said, there's this divergence that we're seeing in the market where some offsets are generating enormous amounts of money because people feel like they can touch and see the impact. And, others, the value is plummeting because there's been appropriate criticism of those offsets. Some crazy percentage of the offsets from California forestry projects are now ash on the bottom of the floor because of the California wildfires.
People want to invest in something that they can have confidence in, and our goal is to deliver that. We have one set of customers, which is people that want to buy carbon offsets and want to make sure they're having an impact. And, a completely different set of customers, which is families that want to have a cheaper, cleaner, more sustainable way to make dinner.
Cody Simms:
One of the big questions I wanted to ask you was why is now the time for this solution? It feels like a relatively low tech solution of food pellets and a stove product. I'm hearing you say, actually, that's not true. There is a decent amount of technology infrastructure that needs to be integrated into this and it's just never been done before in these markets.
Tom Price:
Well, there's three things that haven't existed and haven't come before. The technology exists for how to make pellets. You can buy them at Home Depot. It's pretty basic. The stove didn't exist for a while until very recently. So, that technology didn't exist before. Now, a methodology that would allow us to properly monetize the impact we're creating didn't exist until a little over a year ago. And then, the final piece is low cost digital tools that allow us to serve our customers. We can run our entire company from a phone. We built an app with a no-code solution over the course of a weekend that allows us to organize deliveries and track customers in a way that just physically wasn't possible a few years ago.
The final piece of the puzzle is there is a growing awareness of the importance of climate, growing demand for carbon offsets, growing demand for quality offsets, and growing understanding that the global south has to be part of the solution for climate as well as the global north. All of those have converged. I mean, when we started, I don't think I'm speaking out of school here, we were one of the very first investments that Lowercarbon Capital made. And, they were one of the very first, if not the first, climate focused VC funds. Now, of course, there's so many, including our great friends at MCJ, which all of you should open your checks and become an LP in. We came with the right idea at the right time.
Cody Simms:
How do you see the market evolving? We talked about this huge population wave that's happening in Africa. We talked about the demand for clean cook fuels being driven, whether it's by NGOs or by local population. How do you see the size of this market growing over the next decade plus essentially the lifetime of a venture back startup?
Tom Price:
It's exploding. It's really hard to encapsulate what the demand is. Think about this. Think about a map of Africa, which by the way, if you've looked at that map, you can take the United States, India, Europe, and China, you can sort of stick them all inside. It's an enormous place. But, the Congo Basin is one of the great lungs of our planet, and it's currently being cut down and turned into charcoal. There are hundreds of millions of customers growing more and more every day crowding into cities that need a way to make dinner every day. It is the stickiest market I can imagine.
People can go without new shoes. They can go without a new car. They can't go without a way to make dinner. They'll eat worse food, they'll eat less food, but they can't go without the heat to turn it into something digestible. We have this enormous addressable market that is incredibly sticky. The incumbent solutions are more expensive and less reliable. I've seen research that shows that cooking with pellets in a gasified stove is the best combination of lowest cost and highest performing and cleanest. So, there's this great big market to get to. We just need to keep executing. So far, it's going great. We're growing very, very quickly. You mentioned it is a logistics business. We got to move many, many tons of fuel every day.
I would think it was impossible. But then, I remember that there's hundreds of millions of tons of charcoal being moved in a completely organic, artisanal, chaotic thing. We get to use apps to help us direct where things go from and to. This is not an easy solution. It was described to me by one of our investors last week as scuba diving on the bottom of the ocean without a pressure suit. It is very difficult. But, the benefits to people are immediate, and that's a very visceral thing to experience firsthand. The benefits to the climate are very clear. So, I am very optimistic about our potential. There's so much in front of us to do, so many lives that we can and serve and improve.
Cody Simms:
Optimistic and hopeful.
Tom Price:
Optimistic and... Oh my gosh. Oh my gosh. Look at what you've done to me. Dang it. You've brought me all the way around. We also try to be humble. The overwhelming majority of our staff is Kenyan. The overwhelming majority of our staff are women. Because, those are the people who are our customers. One of the things I work on is making sure that I'm listening more. I see my role as connecting the resources and technology of the place where I spend a lot of my time with places where it can have an impact. Funny thing about Africa, most people don't realize, a lot of places went from having no phones whatsoever to everyone having mobile phones. They went from having no electricity to having renewable energy. They skipped a lot of the problems and decisions that we made in the global north, and there's such an incredible demand for better solutions that improve people's lives. It is an extraordinary opportunity and I feel grateful every day to be standing in front of it.
Cody Simms:
Well, awesome, Tom. You launched in Kenya. You've expanded into Zambia and Malawi. You've recently launched in Uganda. I'm certain you're learning different things in each of these markets in terms of customer behaviors, go-to-market strategies, all of that, which adds complexity to the scuba diving.
Tom Price:
Absolutely. Look, we don't market things the same way in Alabama as we do in California. And, Africa is the same way. It's 54 countries and they're all different. But, there's a lot of similarities between them as well. We can take learnings from one place and put to work somewhere else.
Cody Simms:
Anything we should have talked about that we didn't? We've talked about so much.
Tom Price:
This has been a fantastic conversation. I could talk about it forever. We didn't really talk about the impact of deforestation on the planet and what the impact that it's having elsewhere on climate and how the climate is changing. Kenya is, right now, in the midst of a multi-year drought. Lots and lots of people are suffering from malnutrition because the rains aren't coming the way they used to. There used to be two main rains a year that would come. The Serengeti has this cycle of migration that's being interrupted because the rains are changing.
And, stopping people from cutting the lungs of the planet off is what we do, basically. We stop people from cutting down trees., and the first rule of getting out of a hole is to stop digging. If we're going to get out of this hole, we have to stop cutting down trees, stop cutting down the things that make oxygen on our planet, and then start doing things that can clean up what Justin Gaye calls the superfund site in the sky, and get that carbon out of the sky and back into the ground. You know what the best, most effective tool for harvesting carbon from the atmosphere is? Trees. So, maybe I am optimistic and hopeful now.
Cody Simms:
That's a good note to end on, Tom. Thanks so much for your time today with us.
Tom Price:
Katie... Cody, thank you so much.
Jason Jacobs:
Thanks again for joining us on My Climate Journey podcast.
Cody Simms:
At NCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity.
Jason Jacobs:
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Cody Simms:
Thanks and see you next episode.
