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A recurring theme in romantic novels and movies is that you travel all over the world to finally find what you were searching for, right where you began. Could it be that the answer to malnutrition and self sustaining communities be a plant which has been growing in their back yard for all this time? This might be the case with Moringa Oleifera, often dubbed as the Miracle Tree, often discussed as being a savior of vulnerable communities especially in Africa and South Asia.

The plant, which grows in dry soils in tropical lands, is known primarily for the exceptional nutritional value of its leaves. Lowell Fuglie who has been researching abut the uses of Moringa for over a decade (and used to work for the Church World Service) says "Gram for gram, Moringa leaves contain three times the iron of spinach, four times the vitamin A of carrots, seven times the Vitamin C of oranges, three times the potassium of bananas, and four times the calcium and twice the protein of milk" (a much larger list can be obtained here). "Nutritionally, you can't beat it." he adds.

But it doesn't end here; Moringa Oleifera is known to be a really good water purifier, plant growth enhancer, biofuel (abstract only), and has plenty of medicinal uses.  These address some of the most pressing issues faced at the BoP today: Enegry, water scarcity & agricultural yield and most importantly malnutrition. All this being said, one would expect entrepreneurs to jump at this opportunity and capitalize upon it. A Moringa-based idea submitted to the Ashoka's Nutrition Competition was even adjudged as an early winner. However, we don't see any major players trying to create an industry based on this wonder plant. Why so?

The opportunities and challenges in the commercialization of Moringa have been summed up well by in a paper written by J P Sutherland, who was involved with a biotech startup called Optima Environment SA based in Switzerland. He cites lack of extensive research, skepticism from the scientific community, barriers to entry in the form of government regulations as well as poor marketing as some of the factors which constraint the commercialization of Moringa products such as oil, water coagulants and packaged food. He emphasizes that if entrepreneurs can find a way to improve the extraction process, moringa oil has a potential to become a useful source of fuel (both industrial as well as domestic) in the years to come. However, it's also up to the venture capitalists in the agro-health sector to realize it's importance as a life saving plant and encourage investments in this domain. 

What's really fascinating about this plant is that it is locally available in areas that need it most. The tropical nations provide the temperature and soil requirements that is suitable for its growth.  Every part of the plant, be it the stems, the leaves, the pods are useful in one way or the other. Even if it takes time to commercialize it on a large scale, I can see this as a useful community run venture to meet the nutrient needs of villages that are struggling to meet their requirements.

 The main problem with climate change, as David Keith highlighted in his brilliant TED talk, is that in the immediate short run, it creates winners and losers. And the major portion of this loss will be borne by developing nations almost all of whom are in the global south. The food productivity of a lot of areas will suffer. They will be plagued by more diseases. Water scarcity due to the melting of glaciers and evapotranspiration will limit the already acute fresh water supply. The list is endless.

Also, it is pretty much agreed that for the world to meet its climate change mitigation goals, business cannot continue as usual. Though businesses realize that adapting to the changing scenario is inevitable, they don't want to be at the receiving end of a raw deal in order to remain competitive.

I came across an interesting paper (via AccountAbility) titled The Business of Adaptation that strikes at the core of this issue. It's a call to action for the governments and UN from the businesses side. The paper admits that the private sector has been slow to adapt to climate change challenges faced by nations, however, it's also quick to point out that with adequate support in the form of appropriate financial mechanism and suitable international policies the private sector can act be a huge helping hand to the public sector to meet their targets.

Take the case of Microfinance institutions, for example. Given their existing rural market penetration they can always expand the range of services they offer as is the case with Grameen Shakti. It capitalized on the Grameen Bank's business linkages and evolved its financial package to become one of the largest renewable energy companies in Bangladesh. In the future, such a transformation could be performed as a public private partnership too, making the program more efficient.

 But one of the advantages of market based approaches is that they act as primary breeding ground for technological innovations. Some striking examples are Global Easy Water Products which provides affordable drip irrigation solutions to many small scale farmers in India, or Electricité de France, which, through partnerships with NGOs and the government, provided over 6,000 Mali homes with affordable electricity using solar source and low cost village grids.

Efficient business adaptation is hindered by various factors, however. These include lack of soft venture capital, absence of business linkages with the government, lack of awareness pertaining to climate change, and in some cases lack of adequate environments to do business. The report highlights some points and concrete recommendations, including the role of business and its mention in the UNFCC text, the role of national poilicies in enabling private sector participation, and the availability of suitable financing mechanisms that facilitate the participation of enterprise in addressint the effects of climate change. 

In the end, it comes down to a simple inevitable truth which is beautifully summed up by Jared Diamond in his best-selling book Collapse:

"Because we are rapidly advancing along this non sustainable course, the world's environmental problems will get resolved, in one way or the other....the only question is whether they will become resolved in pleasant ways of our own choice, or in unpleasant ways not of our choice, such as warfare, genocide, starvation...and collapse of societies.

If you're at all interested in the way climate change, business and the base of the pyramid meet each other, I suggest you give this report a read.

Editor's Note: This post first appeared on the Plug-In Blog hosted by E+Co.

MIT Press publishes innovations each quarter. Its fall 2009 issue, “Energy for Change” is well worth reading. It is a study in well established and newer thinking regarding energy issues.  Some of it is old news not listened to enough (“The California Effect” by Art Rosenfeld), and some of it is newer and better and gets more attention (Matthew Bunn et al in “A Future for Nuclear Power”). But for me the most important and telling article is Vinod Khosla’s “Whose Rules?” article.

This article is extraordinarily well grounded, especially as regards to establishing the carbon intensity of an economy as a measure of progress,  the four macro-criteria for negotiations success* and its powerful statement regarding the need for reducing the cost of capital to differentiate low from high carbon development.

My colleagues and I have spent the last two decades investing in more than two hundred developing country clean energy enterprises and are constantly aware of the disadvantage clean energy faces vis-à-vis the cost of capital.  It is significant that these two hundred enterprises – representing a quarter billion dollars of mobilized capital — produce as a portfolio (after losses and after all costs) the very 3% IRR the author cites as the lower boundary that funds such as World Bank IDA should underwrite.

This return is feasible, predictable and practical via investments in local clean energy enterprises. What this means is this: if the world’s public and private sector leaders were willing to underwrite such investments at 3% we believe an enterprise-centered approach to clean energy development would erase energy poverty for the 1.5 to 2.5 billion people who suffer from it.

This is an outcome desired by many.  For these last few decades hundreds of entrepreneurs have imagined and then created a world where clean energy for the poor can be delivered at an all-in return of positive 3%.  But they have struggled against the voices who proclaim “that’s not commercial”.

What a pleasure to hear voices as influential as Mr. Khosla and innovations zero in on the cost of capital as the critical lever.  I particularly love this quote from Khosla:

I believe that access to cheap capital (and thus lower financing costs) is vital; in fact the cost of capital may be the most critical tool in developing a lower carbon GDP economy.

*NOTE on 4 criteria: International agreements must

1. meet CO2 targets in ways acceptable to different participants;
2. be morally acceptable rather than forced and accepted under duress;
3. be politically acceptable inside participating countries; and
4. adjust to changing circumstances.

I envision these criteria as a triangle composed of the first three criteria, on which is balanced a board named “international CO2 agreement” along which a weight of change moves.  If any side of the triangle – the balance of power among the participants, the underlying societal values or domestic politics – is too short then reaching agreement is unlikely. And the weight that slides along this board – changing reality as CO2 is understood and its consequences realized – must be accommodated.

My second event at the 2009 Net Impact Conference was a very well orchestrated case study analysis of a critical emerging market and base of the pyramid (BoP) issue - off grid solutions and energy consumption. Off grid solutions have been a point of exploration in recent years with initiatives such as the Solar Foundation work in Ethiopia and the reading lamp project in Africa and India.

Our presenter, Wolfgang Gregory, Chief Sustainability Officer for OSRAM Sylvania, a subsidiary of Siemens, painted a very lively picture of the origins of a project that has the potential to dramatically change the off grid  sector. He set the context narrating a meeting in Germany where members from his team pondered on a potential opportunity.

OSRAM Sylvania is a leading provider of lighting solutions and through its Global Care program is committed to investing in sustainable programs in emerging markets.  About 77 billion liters of kerosene is being used for lighting every year in different parts of the world accounting for a market of $55 billion USD with nearly 1.6 billion people having no access to electricity. This equated to an enormous market opportunity for OSRAM and also a potential to innovate within this sector.

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 "Clean coal" is a term that will probably ring a bell for those that were in the US around this time last year. Clean energy and the reduction of greenhouse gas emissions were both key issues discussed during the presidential campaign and clean coal was advocated as a solution by both Barack Obama and John McCain.

"Coal cannot be clean. Getting it off the ground is a dirty process already", explained Jason Aramburu during our conversation last Wednesday night in Camden. "However, the principles of the clean coal process can be applied to biomass. When I discovered that I decided to found re:char. We can produce energy through a process that is not only carbon neutral but carbon negative, and also produce char that sequesters carbon, enriches degraded soils and improves agricultural yields for farmers around the world."

The core of re:char's technology, Jason explained, is a process called pyrolisis, which takes place by heating to biomass like wood or agricultural waste in the absence of oxygen. Pyrolisis separates biomass and turns it into two main bi-products: a liquid fuel called bio-oil and bio char. Bio-oil is the used to run an energy generator and the remaining biochar can be applied back to the ground, enriching the soils and accelerating the process of carbon capture. Other models involving biomass do one of the two, Jason told me, either turning biomass into charcoal which can then be used, to operate cooking stoves or into energy through gasification processes. Jason's model is different in that energy needs for lighting and cooking can be met through bio-oil, leaving char available to be put back into the ground, producing both environmental benefits (making the process carbon negative) and social benefits in the form of increased agricultural yields.  

Jason presentred at Pop!Tech yesterday evening, as part of this year's class of Social innovation Fellows. He argued that his technology can be used to both bring energy to the almost 2 billion people currently off the grid and also make a huge dent in the reduction of greenhouse gas emissions. "With enough energy produced through our technology, we have the potential of going back to 1992 carbon concentration levels in ten years. Our process reduces GHG emissions and also captures existing carbon from the atmosphere."

Re:char is already operating pilots in the US and in Cameroon, and has plans to roll out its technology both in the developing world and industrialized economies. When I asked him what had been most valuable from his experience at Pop!Tech, Jason said he'd been reminded of the importance to "look back at the base of our own pyramid; there's enormous opportunity for technologies like re:char's here in the States".  

I was struck by Jason's presentation, his keen knowledge of energy issues and his understanding of the inextricable links between poverty and the challenges poised by climate change. I suspect we'll be hearing much more about him in the coming months and look forward to reporting on his process.

On Tuesday, D.Light Design released its newest product, the Kiran.  Dubbed by its staff the "$10 Kerosene Killer" the Kiran is the world's most affordable quality solar lamp.  According to the company's web site, "It is a safer and brighter alternative to the kerosene lantern, and is designed to provide 360-degree lighting for the home or workplace."

Quite frankly, this little lamp is a big deal.  There are more than 1 million deaths every year attributed to kerosene lamps; 62% of the people who die are under the age of fourteen, according to the World Health Organization.  If that weren't enough, kerosene lamps are responsible for at least 100 million tons of carbon dioxide emissions annually.  Every D.Light sold - every non-kerosene lamp sold, for that matter - eliminates one or more kerosene lamp, fighting the scourge of kerosene.

The Kiran is not just a kerosene killer; it is also a livelihood-enhancer.  According to the UNDP, the ability to engage in nighttime activities increases the average poor family's income by up to 30 percent.

Of course, solar-powered LED lamps have not been the most affordable products in the past.  D.Light's other products sell for between $15 and $30 dollars, depending on features (a little more or a little less, depending on exchange rates).  Cosmos Ignite's MightyLight costs around $20; ToughStuff costs around $15.

A cost reduction to $10 is a big deal.  Lower-income customers can buy the light, with financing (and more often, without). 

The Kiran is not just lower-cost - it is designed to be extremely user-friendly and flexible. It has no detachable parts, including an integrated solar panel that makes recharging simple and easy. The product shape, portability, and handle with 9 different settings give the customer many options for use. The Kiran can be carried, hung from the wall or ceiling, or placed on any surface to effectively illuminate the surrounding area.

The health, environmental and economic impacts of improved lighting are known.  With that in mind, D.Light has just raised the game again.  They have put the kerosene lamp on notice - sometime soon, these solar power LEDs, along with grid extensions, micro grids and other electrification schemes - are going to put dirty, inefficient kerosene out of business.  Watch out, kerosene - a killer's on the loose.

(Apologies for the silence, which some may prefer anyway: I have been in a medical fog these past weeks.  I owe another installment on Francisco's and Manuel's entries on platforms -- one on micro-finance -- and some comments and questions from previous posts.  Fortunately, NextBillion has been really rich as I slept, so I also need to catch up on fifty or so entries).

In a prior post I commented on the potential of traditional utilities to serve as a platform for expansion into a non-traditional area: decentralized energy. It was suggested (by Paul Rigterink) that it would be helpful to provide more cost information and he kindly suggested some resources. While such resources may be helpful for "back-of-envelope" calculations, it is more relevant and frankly more important that you reverse-engineer the product search a bit by looking at what is currently available within a region you may wish to serve or study. 

Product Pricing presumes Product Access, which is not always the case. It makes little sense to determine that a particular solar lantern might be available for $25 in market X if your interest is in market Y half a continent away. If there is a logical way to move the product between points (Uganda to Tanzania for example), then costs in one market may serve as a useful placeholder for another until you get a firm price quote.  Such regional prices will result in better business planning than catalog estimates.  There is a second caveat: most imported goods (solar panels, for example) are very volume sensitive, so general or catalog unit prices may only serve as the roughest of approximations.

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Today is Blog Action Day, an annual event that unites the world's bloggers in posting about the same issue on the same day with the aim of sparking discussion around an issue of global importance. This year's issue is climate change. This post first appeared on Acumen Fund's blog.

Climate change - important topic. Glad to see that we are now all looking ahead and considering how our actions will permanently impact climate, how we will impact the lives of our children and grandchildren. And if we act now and cut back it is not too late to make a difference for them.

But what about the poor? The developing countries? Sure, they benefit if we save the planet, but is it fair that we are asking them to also cut back with us to help solve the climate problem? After all they don't have a teenager with a Camaro to give up, or a roadtrip in a Winnebago to trade in. And they are now paying $4/gallon for gasoline because the rich countries used most if it up when nobody was looking!

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The video that Harald Schützeichel likes to share about his Solar Energy Foundation shows how dark it gets in rural Ethiopia when the sun goes down. For those who haven't lived in the darkness that 1.6 billion people without electricity face at night, it is perhaps surprising that energy be ranked among other pressing concerns such as health, or education, or housing.  For the poorest 4 billion people of the world, the Base of the Pyramid (BOP), access to clean and safe energy is an entry into a new life.

Right now, energy means batteries, kerosene or paraffin lamps, or cooking with firewood or waste. Urban households perhaps have an unreliable and dangerous informal hookup to a grid. Women and girls in particular spend hours in collecting firewood or inhaling smoke over a dirty stove. A staggering 1.6 million people die every year due to the toxic effects of indoor air pollution from cooking fires. Despite being poorly served or even endangered, the poor are paying for energy. The BOP spends $500 billion (PPP) on energy each year - often paying more per unit than rich consumers.

Fortunately, the combination of pressing social need and stalled traditional approaches is prime territory for social entrepreneurs. The report just released by Ashoka and Hystra highlights four very promising business models for grid connections, devices, solar home systems, and rural cooperatives. I've talked about grid connections already, as well as financing mechanisms that show the maturation of the access to energy market.

When you put it all together, it's fascinating to see how people in different roles can transform access to energy.

Aid agencies can play an important role extending energy solutions lower in the BOP.  For example, solar home systems currently reach the BOP2000 at best.  By supporting microfinance, aid agencies can reduce the upfront price burden and allow them to pay back over time.  Aid agencies can also invest in bottlenecks such as the lack of skilled technicians, or support favourable regulations such as buy-back rates to utility grids.  Social entrepreneurs could not overemphasize what aid agencies should not do: promise free help such as solar home systems or grid hookups.  More often than not, the uncertainty about when or if this aid will arrive makes it difficult for households and entrepreneurs to plan, resulting in endless waiting and a prolongation of the dangerous and expensive status quo.

Governments can play much the same role as aid agencies, with a few unique contributions.  These include designing tax incentives and duty rules to support energy enterprises. For example, Ethiopia charges 50% duties on solar home system parts.  Governments can also clarify buy-back rates for energy fed into the grid by energy enterprises.  This helps entrepreneurs plan their business and households make decisions. Finally, standards ratings can help high quality enterprises distinguish themselves and protect consumers.

Strategic Social Investors and Foundations are very important to access to energy enterprises.  Nearly all the cases highlighted here employed grants or low-cost financing, at least at the start.  These players can offer a creative range of financial instruments, examine their portfolio and reduce market distortions, take on orphan strategies and prod other natural owners, and actively build the pipeline of energy enterprises.

Citizen Sector Organizations (CSOs) are involved at some stage of a hybrid value chain in most case studies.  For example, when CSOs distribute solar devices, they expand their social impact and earn unrestricted revenue.  CSOs can also organize local communities for grid connections, provide microcredit, and train micro entrepreneurs.  Finally, CSOs are instrumental in social marketing and awareness building especially around health and safety. CSOs have helped slum communities understand how moving to legal grid connections will enable street lighting and improve neighbourhood safety.

Energy social entrepreneurs are moving rapidly into new roles.  They are expanding their range of products, promoting distinctive intellectual property, and focusing on the part of the value chain they are best suited for while letting others take on the rest.

Multinational companies play a number of roles, including working with individual social entrepreneurs, building a portfolio of social entrepreneurs, launching a project around a key installation, and building a business in a key segment. MNC resources like bulk purchasing make a big difference for energy entrepreneurs.  New roles are emerging out of traditional CSR.  IBEKA in Indonesia convinced a donor that $500,000 given to a rural school would run out eventually, but $500,000 invested in a hydro plant attached to the school would provide revenue in perpetuity.

We brought Harald to discuss his solar lanterns with energy business leaders in Paris.  After some initial skepticism, the conversation took on a life of its own.  Where can we get cheaper batteries?  Is it really waterproof?  What's the next target country?

There is a palpable sense of excitement when you speak with energy entrepreneurs, people like Joseph Adelegan and his plans for turning slaughterhouse waste into affordable cooking gas.    This report highlights just a slice of the many examples of business and social entrepreneurs getting together to bring clean, safe energy to the Base of the Pyramid.

You can find the complete report here, and an introductory video here. 

Climate and carbon are hot topics these days, as what may be the most important climate conference ever approaches.   Whatever its outcome, the December 2009 Copenhagen climate negotiations represent the first time since the election of Barack Obama that all countries will come together to discuss climate change under the rubric of the now universally accepted human-induced global warming. 

The United Nations Climate Change Conference, or COP 15 as it is casually known, seeks to establish a successor to the Kyoto Protocol, which expires in 2012.  Most countries are feeling the pressure to cut carbon emissions, but for rapidly developing countries, such as India and China,  the call for emissions stands in oppositon to their own industrialization.  Indeed, many would argue that the wealth enjoyed in Europe and the U.S. is a result of burning fossil fuels for the past one hundred years.  For COP 15 to result in an aggressive agreement to reduce global carbon emissions, a fair strategy that addresses the needs of developing countries will be required.

E+Co, a mission-driven clean energy investor in developing countries, is working to implement strategies that enable Wall Street investors to put capital to work in developing countries through the carbon markets.  Unlike more traditional carbon finance developers, however, E+Co strives to ensure that dollars flowing from carbon credits make it to the bottom of the pyramid.  To that end, the organization recently announced that it has successfully registered two energy efficient cookstove projects with the Gold Standard, a Swiss-based non-profit that serves as a governing body for Verified Emissions Reductions (VERs).  These are among the first such projects ever registered with the Gold Standard.

Energy efficient cookstoves are important for a number of reasons.  First, they are 40% more efficient than traditional stoves, thus significantly reducing the amount of charcoal that is used for cooking.  The stoves also reduce indoor air pollution, which is one of the leading causes of death in developing countries: according to the World Health Organization, one person dies of indoor air pollution every 20 seconds, and more people in the developing world die from indoor air pollution than from malaria.

Because of the triple bottom line benefits associated with energy efficient cookstoves, E+Co has long invested in companies that manufacture and sell the products, particularly in West Africa.  Now, two of its investee-enterprises, Katene in Mali and Toyola in Ghana, have successfully completed the validation process, the carbon credits are registered and awaiting sale.

"More than any carbon project, cookstoves address most directly health and poverty at the bottom of the pyramid," says E+Co Carbon Finance Manager, Erik Wurster.  "What we want to do is get more money flowing down to the local cookstove manufacturers, enabling them to drop the price of stoves and make more stoves accessible to more people.  This, in turn, greatly reduces the amount of soot and other particulates that are released into the air.  When burned in poorly ventilated conditions in primitive stoves, solid fuels such as wood and charcoal have a tremendously harmful public health impact and are a leading cause of respiratory illness in developing countries," Wurster notes.

It took E+Co over two years to complete the application and registration process.  The benefit of the arduous process, though, is that it offers needed transparency and confidence to a new and abstract commodities market, which is critical for this market to thrive.  Wurster acknowledges, "E+Co learned valuable lessons from this experience and is leading the way in terms of developing carbon credits from cookstoves.  We are among a short list of organizations who know how to develop these types of projects.  And, we know how to do it well."

E+Co anticipates that these two stove projects will generate an enormous amount of carbon dioxide emissions reductions over the next several years.  These reductions will be sold on the market as carbon credits.  Entrepreneurs will see a significant slice of the carbon revenues in the form of cash, which is then used to grow their business.  E+Co will continue to work with other companies in its portfolio to develop carbon credits.

As for COP 15, it is this type of cash-in-hand transfer to developing countries that will bring them to the table to discuss emissions reductions. Wurster notes, "E+Co does not really engage in crafting policy, we're not a think tank or a lobbying group.  We are doers.  We develop and implement sound business strategies for the bottom of the pyramid. Yet, we are optimistic that demonstrating the benefit of these projects can improve the upcoming climate talks.  Perhaps in a small way, this achievement shows how capital can be used to curb greenhouse gas emissions, improve public health, and perhaps most importantly, offer ingredients for an equitable climate change treaty post-2012 in which all countries benefit."