After working closely with stakeholders including the Alliance, the Clean Cookstove Association of Kenya, and the Petroleum Institute of East Africa, the Kenyan government has taken concrete steps toward increasing adoption of cleaner, more efficient cookstoves and fuels.
Tax on LPG removed
With the release of the annual budget this month, Treasury Secretary Henry Rotich announced the removal of the 16% value added tax (VAT) on liquefied petroleum gas (LPG). Originally introduced in 2013, the VAT increased the cost of LPG, hindering the uptake of a clean-burning cooking fuel while forcing people to revert to more heavily-polluting fuels such as kerosene, charcoal, and firewood. The recent announcement is expected to spur broader use of cleaner fuels and stoves and help achieve progress on the country's goals to improve health, livelihoods, the environment, and the country’s overall development.
In coordination with the removal of the VAT on LPG, the government also announced that it will simultaneously increase the cost of kerosene by Kshs 7.20 ($.07 US). The price increase is expected to disincentivize the use of kerosene while increasing adoption of cleaner cooking fuels. A host of factors led to the government's actions: evidence of the toxic effects of kerosene on human health, sustained advocacy from groups pushing for use of cleaner fuels and stoves, a desire to promote cleaner cooking fuel at the household level, and petroleum adulteration (mixing kerosene with diesel or kerosene with super petrol to take advantage of the lower taxes on kerosene).
This is another example of how monetary policies can help enable more healthy, sustainable energy usage at the household level, which in turn supports the growth of the clean cooking market.
Import duties on cookstoves and fuels
The government also reduced the import duty on energy efficient cookstoves from 25% to 10%, thus aligning them with similar cookstoves and cookers that use gas, electricity, and other fuels that currently attract a 10% import duty. The benefit of this reduced cost is expected to be passed on to consumers, encouraging the purchase of more efficient stoves and enabling the further growth of the companies that design, produce, and distribute these household products that have a myriad of positive impacts for consumers and the environment.
During the last financial year, the government also removed the excise duty on denatured alcohol (ethanol) for cooking and heating. The distribution infrastructure for ethanol remains under-developed, but this policy change is expected to spur investment in more mature delivery systems that can reach interested consumers with affordable, high quality products.
All these efforts are positive indicators that the government is listening to the many voices calling for an improved policy environment for the clean cooking sector to develop and grow. These encouraging policy changes will be important for the growth of the national market, but will also be examples for other countries to learn from. These recent actions are foundational to the universal access to energy for cooking by 2030 as stipulated in the Sustainable Energy for All Action agenda, as well as achieving the Sustainable Development Goals and implementing Kenya’s Nationally Determined Contribution to addressing climate change.