An annual investment of around $6 billion is needed in sub-Saharan Africa to combat the challenges posed by polluting stoves, a new report has said.

The newly released 2023 Clean Cooking Industry Snapshot, a report by the Clean Cooking Alliance (CCA), says total funding raised globally by clean cooking enterprises is still well below the $8 billion required every year across the globe, to achieve universal access by 2030, according to International Energy Agency (IEA) estimates.

According to IEA half of the $8 billion would need to be concessional finance, and around three-quarters of it would have to be directed towards Sub-Saharan Africa.

Of this amount, 21 percent is needed for infrastructure and 79 percent for end-use equipment.

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Despite the global investment slowdown in 2022, clean cooking enterprises witnessed a remarkable surge in investment, reaching a record-breaking $215 million in 2022 — 80 percent higher than in 2021 and over 250 percent higher than in 2020. Carbon finance played a pivotal role in this growth.

Investments tracked by CCA covering equity, debt, and grants, experienced an 80 percent increase compared to 2021 levels, with return-seeking capital dominating at 97 percent of the total investments recorded in 2022.

According to the analysis, the Africa Carbon Markets Initiative aims to increase Africa’s carbon credit production by 19-fold by 2030, an initiative aimed at supporting entrepreneurs and businesses in transforming the continent’s economy, including clean cooking projects.

The large increase in funding in 2021 and 2022 was largely driven by debt; in 2022, debt capital raised by clean cooking enterprises increased dramatically to $169 million — over 10 times 2020’s figure of almost $16 million.

Equity investment grew to $39 million in 2022, an increase of 4 percent over 2021. According to CCA, this increase is particularly encouraging given that it is counter to negative global equity investment trends.

Global venture capital funding fell by 30 percent in 2022 due to macroeconomic pressures. Grant funding fell to one of its lowest points in 2021 ($3 million) but bounced back in 2022 with just over $7 million, close to the average seen between 2016 and 2020.

But this sum continues to be concentrated in a small number of enterprises.

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According to the report, in 2022, the seven largest players by capital raised, accounted for 90 percent of the total investment in the industry. This is the same number as in 2020. Liquefied petroleum gas (LPG) enterprises have dominated funding over the past two years; 59 percent of the total funding tracked in 2021 and 2022 went to enterprises offering only LPG.

Debt has replaced equity as the largest source of funding for the clean cooking industry. Debt capital was the largest source of capital sourced by clean cooking enterprises for the second year running and accounted for 79 percent of investment in 2022.

The new influx of debt capital was driven by a combination of large investments in LPG enterprises by the International Finance Corporation and availability of new carbon driven debt facilities.

With nearly one billion people or 83 percent of households in Sub-Sahara Africa relying on polluting fuels and technologies for cooking, and with this figure set to rise to more than one billion people over the next 30 years, replacing traditional biomass-burning cookstoves across the region could save more than 463,000 lives and $66 billion in health costs annually, according to a new analysis of the most socially optimal cooking technologies in Africa.