Project: Emerging Clean Cooking
State of development: Current
Stage of development: Late stage
Stage notes: Late stage design 
Type of instrument — Impact Bond: Yes; Outcomes Fund: No; Social Impact Incentives (SIINC): No; Social Impact Guarantee: No; Payment-by-results (no pre-financing): No; Technical Assistance and Market-building program: No; Other: 
Rationale for using outcome-based finance: Our innovation is the use of Digital MRV with Causal AI and Verifiable Claims to create digital units of outcomes. This will transform OBF by making outcome verification fast, cheap, and scalable. The ixo technology solution is designed for easy replication, applicable to various OBF use-cases, and is open-source without IP constraints. This flexibility, coupled with the tokenization of outcomes using digital impact certificates, paves the way for new market mechanisms and participants, scaling both private and public capital flows into SDG and Climate financing. The project's demonstration effect is likely to signal to an emerging competitive marketplace for technology solutions, trading venues, and services related to outcomes-based digital finance and tokenized outcomes. This innovative approach allows projects to be initiated more quickly and funded continuously, reflecting a game-changing model with significant potential for scalability, cost-effectiveness, and broader market adoption.
Key challenges to launch: We have has identified as key challenges the need to meet government procurement requirements, which demands further refinement of legal structures and administrative processes. The nascent stage of digital technologies requires demonstration to government stakeholders to gain support for these transformational tools. Additionally, the novel solution of using the ITMOs mechanism to finance privately delivered climate projects by non-state providers needs validation. Accelerator support can be instrumental in overcoming these pain points by providing expertise in legal and administrative design, facilitating demonstrations to build confidence in digital technologies, and assisting in piloting the innovative ITMOs mechanism. This targeted assistance can catalyze the project's progress, breaking through critical barriers and fostering innovative climate solutions.
Social/developmental challenge: The development challenge centers on the lack of efficient and transparent mechanisms to finance and implement climate impact mitigation interventions in developing regions. Market failures contributing to this challenge include the absence of reliable data for measuring and verifying emission reductions, limited access to capital for innovative climate projects, and a lack of incentives for private investment in sustainable development. Traditional financing models often fall short in addressing the unique needs of climate projects, leading to underinvestment and slow progress. The program aims to overcome these barriers by leveraging the ITMOS mechanism under Article 6.2 of the Paris Agreement, utilizing digital measurement, reporting, and verification (dMRV), and outcome-based financing (OBF). Using already available technology, the program seeks to mobilize private capital, ensure high-integrity data, and create a scalable model for climate action.
Expected intervention model: Innovations in the digitization of carbon markets could transform how green technology infrastructure, such as modern energy cookstoves, gets financed and scaled up in Africa. These mechanisms leverage Climate Finance to promote financial inclusion and stimulate sustainable local socio-economic development, by distributing incentives and providing direct digital cash transfers to local implementing agents and beneficiaries using the green technologies. Digital transformation also creates opportunities to mobilize and equip digitally-native youth with skills, tools and incentives, which could provide the workforce and promote entrepreneurship for the green economic transition in Africa. The UNICEF-led Youth Opportunities Marketplace (Yoma) is gearing up to provide the digital coordination and financing platform aiming to create new income opportunities for youth in the transition to a green economy. Internationally Transferred Mitigation Outcomes (ITMOs) are a key driver of this financing innovation. National governments in Africa have begun to introduce regulations that allow mitigation activities to be funded through ITMOs under Article 6.2 of the Paris Agreement. As an example, the government of Zambia has authorized the design of a national modern energy cooking mitigation activity that implements digital Measurement, Reporting and Verification (dMRV) to certify Mitigation Outcomes and Carbon Credits. Government-sanctioned Mitigation Outcome Purchase Agreements (MOPAs) between the Mitigation Activity (MA) implementers and counterparty government Acquiring Parties are expected to raise the bar for the quality, price, and predictability of the supply for Mitigation Outcomes – including for carbon credits in the Voluntary Carbon Markets. This should significantly reduce financing risks for private capital to invest in green energy infrastructure projects. Digital MRV provides real-time visibility of MA project performance, which could reduce project execution risks. Generating digitally certified outcomes could increase capital velocity and liquidity in carbon credit markets. Project finance may now be structured using innovative financing instruments that are linked to the proceeds of MOPAs and to forward contracts for digitally certified ITMOs and Carbon Credits in the private sector. This model of Outcome-based Financing presents a promising approach that could be extended to other areas of sustainable development, such as healthcare and education, potentially transforming funding mechanisms in these sectors and providing opportunities for youth.
Policy sectors — Employment and private sector development: No; Education: No; Social protection: No; Criminal justice: No; Health: No; Agriculture: No; Environment and climate change: Yes; Water, Sanitation and Hygiene: No; Energy: Yes; Humanitarian: No; Early Childhood Education: No; Other: 
Primary SDG goal: 5,7,13
Country income classification of beneficiaries — Low-income: No; Lower-middle-income: Yes; Upper-middle-income: No; High-income: No
Notes: Data for this pipeline project was last updated in May 2024.
Delivery location: Zambia