Millions of people around the world have no choice but to cook with charcoal. This leads to indoor air pollution, which is a major cause of premature death in developing countries. Unsustainable charcoal production can cause environmental degradation and burning charcoal releases black carbon, a potent agent of climate change.
Providing cleaner, more sustainable fuel alternatives to informally produced charcoal, and positioning them in a way that makes people buy and use them, is a difficult process. A key factor when choosing a cooking fuel is its price. Charcoal is largely an informal commodity, so local charcoal prices are not transparent to those outside the immediate value chain. This lack of price information can lead to market inefficiencies and the exploitation of local people and resources.
One tool that is missing from the current toolbox is transparent charcoal prices. A charcoal price index could provide this transparency. Accenture’s hypothesis is that better visibility of accurate, localized charcoal prices will enable stakeholders outside of the charcoal value chain to offer clean fuel alternatives at a price that competes with local charcoal.
Technology can help to provide greater price transparency in charcoal markets, and the ever-increasing penetration of mobile phones makes this possible. There could be many beneficiaries of this tool:
- Customers will be able to choose charcoal from their cheapest local charcoal vendor, or preferably, to switch to other fuels that will be at an equal price with local charcoal prices.
- Clean fuel companies and charcoal producers will be able to use the data to inform local price competitiveness and assess new market entry.
- Researchers will have more useful data for studies and policy decisions.
- Investors will have better data to assess opportunities for investing in clean fuel companies that are planning to scale or enter new markets.
- Policy makers will have better insights that will help to inform regional, national and international fuel policies over time, such as subsidy schemes.