Unlocking the Potential of Carbon Finance for Clean Cooking in Displacement Settings

Lack of access to clean cooking remains a major issue in displacement settings, where households often rely on biomass fuels like firewood and charcoal, leading to environmental degradation, and negative health and economic impacts. This dependency contributes to deforestation and increased carbon emissions, and places a disproportionate burden on women and children, who are often responsible for fuel collection and preparation, facing safety risks and loss of educational or productive opportunities. With many refugee camps and settlements located in areas with minimal infrastructure, delivering clean energy solutions continues to pose a significant challenge.

Carbon finance, a results-based climate finance (RBCF) mechanism that rewards emissions reductions through the generation and sale of carbon credits, presents a promising opportunity to scale clean cooking initiatives in displacement settings. However, despite the potential benefits, implementing carbon-financed clean cooking projects requires overcoming a unique set of barriers.

At COP29 currently taking place in Baku, Azerbaijan, international leaders have urged that access to clean cooking be prioritised as a key component of climate resilience strategies in urban, rural and humanitarian and displacement contexts.

GPA panel session: De-risking Mechanisms for Energy Investment in Displacement Settings at COP29. © Paola Acevedo UNITAR/GPA

Under Article 6 of the Paris Agreement, governments have agreed on strong standards for a centralised carbon market, allowing for the international transfer of carbon credits. This has the potential of bridging the climate financing deficit estimated in the trillions of dollars impacting the energy transitions of emerging and developing countries which host most of the displaced populations globally. The standards call for robust and transparent monitoring to ensure carbon credits genuinely reflect environmental gains – this is of high relevance in refugee settlements, where verification and accountability are paramount.

In protracted crises, populations may remain displaced for decades. This extended timeframe offers a unique opportunity to implement long-term clean energy solutions that improve health outcomes, protect the environment, and reduce carbon emissions. Metered methodologies and advanced monitoring technologies, such as digital monitoring, reporting and verification (dMRV) solutions, can quantify the carbon savings achieved when transitioning from traditional firewood stoves to cleaner alternatives, such as pellets, biogas, LPG or electricity (incl. solar-powered electric cooking solutions). By generating carbon credits, these projects can access additional funding, crucial given the limited budgets available for humanitarian responses.

However, implementing carbon finance clean cooking projects in displacement settings is challenging. Political and economic instability, security concerns, and frequent population movements can hinder consistent implementation and monitoring. High transaction costs for certification and MRV (including digital MRV) systems often make projects financially unfeasible without significant initial investment.

Data reliability is another issue, as these settings often lack the infrastructure for accurate emissions and reductions tracking. Limited internet access and transient populations complicate monitoring, while over crediting—overstating carbon savings—has fuelled scepticism. Robust verification mechanisms that include health, safety, and socio-economic impacts are needed to demonstrate project credibility. Engaging communities in project design can enhance cultural relevance and sustainability.

Proving additionality—ensuring carbon savings wouldn’t occur without the project—is also complex. With multiple aid organizations active, it’s hard to attribute reductions to specific initiatives. Policymakers must design interventions distinct from broader humanitarian efforts, leveraging strategic partnerships to create high-integrity projects that meet carbon finance criteria.

Overcoming these challenges requires innovative policy and financial strategies. Development funds from governments and philanthropic sources should mobilise private capital for carbon finance by leveraging tools like pooled funds, guarantees, grants, and loans to improve risk-return profiles. Tailored insurance solutions can further reduce financial risks, while technical assistance facilities enhance implementation capacity.

Governments must align regulations to enable carbon finance and ensure displaced populations are included in Article 6 discussions under the Paris Agreement, addressing the unique challenges of displacement settings.

Collaboration among humanitarian and development organizations, private sector actors, and governments will be instrumental. By uniting humanitarian and development organisations, the private sector, and governments, we can create scalable, impactful solutions. Transparent monitoring, strong community engagement, and financial innovation can scale clean cooking initiatives, contributing to climate mitigation while improving the lives of millions living in protracted crises.

The blog was written by Iwona Bisaga, Global Clean Cooking Lead for GPA Coordination Unit and NORCAP.