Wednesday, 24 September 2014

Green Microfinance - supporting renewable energy in Vietnam

Biogas facility in Vietnam © MACDI 2014
In recent years a growing number of ‘green microfinance’ initiatives have encouraged eco-friendly microenterprises and supported the use of renewable energy. One such programme is implemented by Lendwithcare’s partner in Vietnam, the Microfinance and Community Development Institute (MACDI). MACDI provides loans to rural households so they can install household plants that use animal waste to generate biogas, a clean fuel that can be used for cooking, lighting and heating.
According to Minh Thai Dinh Thi, Director of MACDI, the motivation for providing biogas loans has as much do with the economic as the environmental benefits. She explains that “since households do not need to spend money on buying firewood, and for the poorer families the time spent by women and girls gathering firewood, biogas plants simultaneously save money, time and also reduce deforestation”. 

Biogas offers other compelling advantages. It promotes better health through eliminating smoke from cooking with firewood. It also reduces harmful pathogens from animal waste that might lead to illnesses (the Asian Development Bank estimates more than 70 million tonnes of animal waste is improperly disposed of each year in Vietnam, contaminating the environment and often finding its way into streams and rivers). Importantly it also converts animal manure into an improved fertiliser, saving farmers money on expensive chemical fertilisers. Many families who have installed biogas plants have also commented that their general environment looks cleaner with less foul odours and flies. While the biogas technology can work in most climatic conditions it seems particularly suitable to countries such as Vietnam with generally warm temperatures and sufficient rainfall. 

Biogas being used for cooking in Vietnam © MACDI 2014
However, despite the potential benefits, the adoption of biogas technology has been slow. This is mainly because of the relatively high cost of biogas plants for people living in rural areas with limited financial resources. To overcome this obstacle, starting in 2011, MACDI has been providing households with loans for between US$500-700 with a long repayment period of between 24-36 months to install the biogas plants. On average, households with at least two cattle or six pigs can generate sufficient biogas to meet their daily basic cooking and lighting needs and the investment pays for itself after about three years. To date, almost 400 families have benefited from the loans. MACDI negotiated with a specialist company to build, service and maintain the biogas plants to ensure they are correctly and safely installed so that they have a long life span. MACDI also provides borrowers with training on management and upkeep of the biogas plants to ensure that they receive the best returns from their investment.

Most of MACDI’s borrowers are small-scale farmers who grow rice and maize and typically raise livestock and poultry. Whilst previously the pig, cattle and buffalo manure and crop residue was left to rot or burned (wasting valuable plant nutrients), households now feed the manure mixed with water, but also some crop residue and other organic matter, into the biogas plant where it decomposes. Under anaerobic (without air) conditions the rotting matter produces biogas which is pumped into the home, usually the kitchen, and used for cooking, lighting and in the winter months heating as well. The slurry which has a high nutrient content is used as a fertiliser and crop yields of vegetable crops such as potatoes and onions, fruit, sugar cane and rice have reacted particularly favourably. The biogas generally comprises  just under 60% methane, almost 40% carbon dioxide and a small fraction of other gases such as hydrogen, nitrogen  and hydrogen sulphide. Although methane is a damaging greenhouse gas, since it is burnt the process is essentially ‘carbon negative’.

The potential for biogas in Vietnam is huge, with more than two-thirds of the population earning a living from agriculture, animal husbandry and fishing and most have traditionally relied on wood, agricultural residue and animal dung for their energy needs. Lendwithcare is supporting MACDI to increase the scale and outreach of its green microfinance programme to ensure more rural households in Vietnam are able to install household biogas plants and have access to clean, sustainable and affordable energy.

You can invest in a green loan today by simply visiting the Lendwithcare website

By Dr Ajaz Ahmed Khan, Lendwithcare Microfinance Advisor

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