Ethanol could be a game-changer in East Africa’s clean cooking transition—offering a sustainable, scalable alternative to traditional fuels like charcoal and firewood. As the region navigates the challenges of deforestation, household air pollution, and rising energy demand, ethanol stands out as a clean, locally viable solution. It also supports agricultural livelihoods through ethanol feedstock production, creates manufacturing jobs through bio-ethanol refining, and can help companies and countries tap into growing carbon finance markets. At a recent convening on bio-ethanol for clean cooking in East Africa hosted by the US Grains Council and Dalberg in Nairobi, policymakers, ethanol producers, clean cooking enterprises, and development partners came together to chart a path forward.  The discussions highlighted the sector’s growing momentum and key opportunities for advancement—enhancing regional policy alignment, strengthening supply chains, harmonizing standards, expanding innovative financing solutions, and improving consumer access.

Drawing on Dalberg’s experience in the clean energy and climate sectors, the convening laid out what it will take to accelerate ethanol adoption—through bold policy harmonization, targeted investments, and public-private collaboration that puts consumers at the center.

“Ethanol presents a clean, safe, and convenient option for households transitioning away from traditional cooking fuels. Its adoption should be actively promoted as part of national clean cooking strategies. Given the nascency of the ethanol-for-cooking market, robust government support is essential. This includes implementing supportive policies and fiscal incentives, raising public awareness about the benefits of ethanol for cooking, and investing in the long-term development of local ethanol production. These measures will help create a viable and scalable clean cooking ecosystem centered on ethanol.”

 

Grace Njunge

Associate Partner, Dalberg Advisors

Why Now: A Critical Window for Action

Momentum is building across East Africa to make ethanol a viable option for households for the  clean cooking transition. A late 2024 announcement by the Kenyan president recognizing ethanol’s role in the energy mix signals a potential shift in national policy. At the same time, countries like Uganda and Tanzania are advancing with concrete measures—subsidies, tax exemptions, and results-based incentives—that demonstrate what is possible when policy aligns with market opportunity. Globally, the urgency of the energy transition is growing, and carbon markets are evolving rapidly, creating new revenue streams for clean cooking solutions. With rising investor interest and regional success stories taking shape, this is a significant moment to scale ethanol adoption—before fragmented policies and missed investment opportunities stall progress.

Policy Harmonization and Market Development

A key theme that emerged at the convening was the need for regional policy harmonization. Kenya currently has import restrictions on bioethanol to protect local production, creating a supply gap and delaying the rollout of the E10 ethanol fuel blend. E10—a blend of 10% ethanol and 90% gasoline—is used to reduce carbon emissions and enhance energy security by decreasing reliance on fossil fuels. A delay in its adoption means continued dependence on traditional fuels, higher emissions, and missed economic opportunities for both producers and consumers. Meanwhile, variations in ethanol purity standards, import taxes, and regulatory inconsistencies across East Africa continue to limit trade and investment. With standards varying across the region, the market lacks predictability and trust and these inconsistencies hinder cross-border trade and stall investment. Stakeholders emphasized the importance of coordinated efforts to establish clear guidelines and align regulations across the region.

Beyond regulation, creating a sustainable ethanol market requires investment in local production and distribution networks. Lessons from Uganda and Tanzania highlighted the value of strategic incentives. Uganda has introduced results-based subsidies, aiming to distribute 500,000 cookstoves by 2030. Carbon financing also plays a significant role in helping subsidize the upfront cost of the cookstoves for households, while tax exemptions and targeted financial support further encourage market growth. Similarly, Tanzania is laying the groundwork through standard setting for stoves and fuel quality to scale its clean cooking initiatives.

 Aligning the Value Proposition, Business Economics, and Local Market Expectations

For real progress to occur, the value proposition must meet consumer needs, which requires a robust, efficient supply chain. Most bioethanol companies find that the majority of their potential customers care primarily about cooking costs and convenience – with health and environmental benefits a far lower priority. Affordability challenges thus remain a key barrier, and one that the industry still struggles to solve. Cleancook has shown that that shifting to local stove manufacturing can reduce stove costs as compared to imports, which face tariffs and logistics costs, yet the high upfront price of a stove deters many potential customers. Companies thus subsidize the initial purchase of the stove, as Consumer’s Choice Limited does by partnering with UNIDO in Tanzania. Bukona pointed out that bioethanol remains underutilized due to high fuel production costs; in some markets, this translates into high recurring costs for would-be customers comparing it to wood, charcoal, or even LPG. Companies like this are working to lower feedstock costs and improve farmer incomes.

Financing the Transition

Carbon markets are no longer a fringe opportunity for the sector —they are becoming core to ethanol’s viability as a clean cooking fuel. With players like BIX Capital and KOKO exploring technology-enabled verification and new credit models, carbon revenue is emerging as a foundational pillar for ethanol producers. Compliance markets, such as ICAO’s emissions offset requirements, are expected to drive further demand. But credibility, transparency, and industry standards remain critical challenges that must be addressed. Stakeholders also stressed the importance of fostering partnerships across the value chain. The current model – where ethanol cookstove companies in Africa operate as vertically integrated entities – limits scale and innovation but is seen as a necessity at this nascent stage of the market to guarantee quality and reliability for consumers. Building a more collaborative system between feedstock growers, manufacturers, distributors, carbon credit certifiers, and retailers could improve margins, efficiency, and market reach. Financing models—like pay-as-you-go or government-backed vouchers—will be critical to accelerate adoption. At the same time, ensuring that carbon revenues and other subsidies benefit both stove producers and end-users would further drive affordability and accessibility.

What’s Needed Now: A Roadmap for Action

The US Grains Council convening underscored ethanol’s potential to drive East Africa’s clean cooking transition. However, unlocking this opportunity requires urgent action in key areas:

1. Advocate for Policy Harmonization and Infrastructure Investment

• Standardize ethanol regulations regionally to enable trade and market efficiency.
• Address regulatory barriers like Kenya’s import restrictions to stabilize supply.
• Implement tax incentives and blending mandates to support market growth.

2. Leverage Carbon Financing and Innovative Funding

• Ensure the quality and integrity of carbon credits generated from the clean cooking sector to enhance buyer confidence and stimulate market growth.
• Leverage revenues from carbon credits to subsidize the upfront cost of clean cookstoves and ensure sustained access to fuel.
• Expand result-based financing (RBF) to improve the unit economics of reaching underserved customers, particularly those in peri-urban and rural areas

3. Strengthen Supply Chain Partnerships

• Foster public-private collaboration on standards setting, policy and fiscal incentives and customer awareness building
• Promote local large scale feedstock production and bio-ethanol refinery.

4. Drive Consumer Awareness and Adoption

• Focus messaging on cost savings and convenience.
• Introduce incentives for consistent ethanol stove use e.g., by subsidizing the cost of fuel using carbon revenues
• Level the playing field to make the cost of cooking with ethanol cheaper or at par with other fuels
• Integrate clean cooking education into school curricula.

In collaboration with Dalberg, you can drive meaningful impact through strategic partnerships, policy advocacy, and market transformation. A robust ethanol ecosystem can foster sustainable growth and lasting change for a future of innovation and opportunity.

To know more about Dalberg’s work in developing clean cooking solutions, contact: