LPG SAFETY, INNOVATION, AND MARKET GROWTH ACKNOWLEDGEMENTS
The Clean Cooking Alliance (“Alliance”) works with a Menecon Consulting is an independent, UK-based global network of partners to build an inclusive industry energy-consulting firm offering independent and that makes clean cooking accessible to the three professional advice on public and private sector billion people who live each day without it. Established clients on all aspects of energy policy, strategy, in 2010, the Alliance is driving consumer demand, and economics, including climate change, other mobilizing investment to build a pipeline of scalable environmental challenges, and access to modern businesses, and fostering an enabling environment energy services. that allows the sector to thrive. Clean cooking transforms lives by improving health, protecting the The Alliance, specifically its Private Sector and climate and environment, empowering women, and Investment team led by Peter George with Seema helping consumers save time and money. Patel, and its Strategy and Development team, led by Samiksha Nair with Sheridan Hyland, commissioned ENEA Consulting (“ENEA”) is an independent strategy this report. The Alliance and ENEA would like to thank consultancy specialized in the energy transition and all the partners who contributed their content, time, sustainability, with offices in Paris, Melbourne, and resources, and expert insights. Hong Kong. ENEA Consulting works with a wide range of actors in the energy value chain, from global energy The Alliance is grateful to Chevron Corporation, whose majors to major investors, from entrepreneurs to support made this report possible. international institutions. In the energy access space, the firm has provided consultancy services to more
Photo by Gaelle Marcel on Unsplash than 60 companies, social enterprises, NGOs, and public institutions to help them increase access to Cover photo: World LPG Association energy in developing countries.
1 | CLEAN COOKING ALLIANCE ACKNOWLEDGEMENTS | 2 Specifically, there are safety considerations at each Developing these frameworks and improving enforce- EXECUTIVE SUMMARY stage of the journey along which an LPG cylinder ment can often be a long and complicated process, travels: from the cylinder factory, to the refilling plant, to requiring buy-in from stakeholders along the LPG value the final household end user. Safety is also important chain, as well as effective and rigorous enforcement Issues related to LPG safety, both real and perceived, inhibit the uptake of LPG in the supply of the fuel itself from the import terminal, of established regulations. The effectiveness of these refinery or gas-processing plant to the refilling plant. regulations becomes particularly challenging once by consumers, slowing potential market growth, and contributing to lack of At each stage, there are safety risks–notably in refilling illegal practices become pervasive, as is the case in confidence in return on investment for both investors and companies. Innovative cylinders, transporting them to local distributors and certain key markets including, but not limited to Kenya, technologies and other potential solutions are emerging that both purposefully then customers, and using them in the kitchen. South Africa, and India. and indirectly alleviate safety concerns. It is vital that all stakeholders involved in Technical innovations to overcome safety issues the distribution, regulation, and consumption of can be an effective complementary approach to LPG have a clear view of the various safety regulation and education and training by enhancing When paired with robust policies and strong regulatory though several studies have demonstrated that LPG challenges and potential mitigation measures to safety along the LPG value chain and addressing enforcement, complemented with consumer edu- is safer in practice than most other cooking solutions, encourage increased fuel use and investment in barriers to market penetration, expansion, and cation and awareness raising, the effectiveness particularly kerosene. Aside from the human suffering supply networks. commercialization. Several innovative technologies and market penetration of these technologies is and financial cost involved, LPG-related accidents and business models are already emerging which amplified. In other words, prioritizing interventions to undermine consumer confidence in the fuel. The » A strong regulatory framework is crucial to hold the promise of reducing operating costs and address safety issues can serve as an accelerant for dramatic nature of some LPG accidents has led to ensuring public safety by imposing and enforcing increasing the attractiveness for investors, in addition investment and market growth. sensationalist reporting, which has stoked public strict rules on the handling of LPG along the to enhancing safety along the various stages of the fears about LPG. cylinder supply chain. In particular, policies and LPG cylinder and fuel supply chain. In most cases, Switching to LPG for household cooking could regulations that impose the branded cylinder these solutions are being pursued by private sector bring environmental, economic and health benefits Unsafe practices around LPG can impede investment recirculation model,1 whereby distributors and companies, in some cases with the explicit support of to billions of people. Over a third of the global flows, business growth, commercialization and marketers are responsible for cylinder safety— government authorities. Based on an in-depth industry population continues to rely primarily on non- market entry. For LPG businesses and large including inspection, maintenance, and replace- survey, eight categories of innovations have been sustainable traditional biomass and other polluting multinationals in particular, the risks and costs ment—throughout their lifetimes, are vital to identified and differentiated into two groups, each with fuels such as kerosene and coal for cooking, causing associated with LPG safety has reduced appetite providing incentives for re-fillers to inspect and different time-to-market horizons: low tech solutions indoor air pollution that causes an estimated 3.8 for the sector, thereby reducing the uptake of LPG, repair cylinders properly. that can be implemented at relatively low cost, and million premature deaths each year. By contrast, particularly in sub-Saharan Africa. In order to build a more complex and “game-changing” technologies LPG burns very cleanly and does not contribute to dynamic and financially sustainable clean cooking » Awareness raising and education can bring that hold promise in the longer term. indoor air pollution. It is also convenient and efficient. industry, for both LPG and other clean cooking fuels, down accident rates substantially and eradicate Although LPG is derived from fossil fuels, switching ensuring effective safety best practices is critical. New misunderstandings and misconceptions about Low-tech solutions from traditional fuels can reduce net carbon dioxide innovations that can make LPG more affordable while safety. (CO2) when biomass is not replaced once it has been addressing safety concerns have the potential to spur Four lower-tech solutions represent opportunities harvested. However, reaping the benefits of LPG private sector investment. » Together, these approaches can reassure for more immediate results to increase safety and requires building profitable businesses that can scale consumers that cooking with LPG is safe and give promote the uptake of LPG, at a relatively affordable and instill long-term confidence in both investors and Addressing issues related to safety can be both private sector investors–from local distributors cost for companies and consumers: consumers. an asset and liability to the growth of LPG as a to large energy majors–confidence that the widespread and viable clean cooking fuel. LPG LPG market will be healthy enough to generate » Home delivery of cylinders, which, in addition to For all the benefits that LPG can bring, many businesses, concerned about safety, may choose adequate returns on investment. offering convenience to the customer, permits households are reluctant to make the switch not to invest in LPG given the cost of managing because of concerns about the safety of handling safety challenges and reputational risks. Strategies 1In the branded cylinder recirculation model (BCRM), government-licensed LPG marketers invest in and own the cylinders. They are and using the fuel. Like all other forms of energy, LPG that prioritize safety considerations are complex. To responsible for cylinder safety—including inspection, maintenance, and replacement—and refilling throughout its lifetime. In the customer- is potentially hazardous if mishandled or misused. be effective, safety standards and precautions must controlled cylinder model (CCCM), end users own the cylinders and bring them to filling stations to be refilled as needed. With CCCM, cylinders in circulation tend to become unsafe due to a lack of incentives for the re-filler to inspect and repair the cylinders, as well as a Accidents associated with LPG can and do occur, be adopted by actors throughout the value chain. lack of clear rules and incentives for customers to have cylinders properly inspected and repaired.
3 | CLEAN COOKING ALLIANCE EXECUTIVE SUMMARY | 4 professional delivery personnel to correctly » Home delivery increases consumer satisfac- Advanced technologies install LPG cylinders, teach customers how tion and customer loyalty, as well as safety. to cook safely with LPG, and reassure them Four emerging, innovative technology-enabled sol- about safety. Home delivery is increasingly » Cylinder tracking improves supply-chain utions also have the potential in the longer term to commonplace in developing countries, already management and reduces operational costs, make a significant contribution to increasing safety, reaching 55% of Kenyan LPG customers, and as well as ensures supply chain safety. as well as offering other benefits to distributors and/ 95% of those in Brazil. or consumers: » Digital media not only can be used to » Cylinder tracking, such as through QR codes transmit safety messages, but also cooking » Composite cylinders, which are lighter, explosion- and radio-frequency identification (RFID), which tips, special promotions, and other methods proof, corrosion-free, provide higher mechanical improves the traceability of cylinders along their to increase customer loyalty. resistance, and are sometimes translucent lifecycle and enhances safety during the transport (making the gas level visible), can enhance and refilling of cylinders, while improving oper- » Advanced cooking equipment can not only safety, as well as make cooking with LPG more ational management for companies. These codes give customers more reassurance on safety, convenient and easier for households. They are are becoming mandatory in many countries. but also create an additional revenue stream increasingly being adopted in some advanced for distributors. economies and are starting to be rolled out in » Innovative digital media, such as social networks key emerging markets. They undoubtedly rep- and content sharing platforms, which allows » Investors should study businesses that resent the future of LPG cylinders, but their businesses and authorities to transmit safety are developing technologies in these areas. relatively high cost is likely to be a barrier to their and other marketing messages to customers via Increased investment is needed to support their adoption in lower-income developing countries in the Internet and mobile phones, even in remote uptake across the developing world, particularly the near term. areas, to educate them and raise their awareness in lower-income countries. In addition, these about LPG safety. technologies all have the chance to be deployed » Smart metering systems / pay-as-you-cook at scale to the hundreds of millions of households business models, which use smart valves that » Advanced cooking equipment, such as ad- already using LPG, representing a unique allow end customers to keep track of their exact vanced hoses and improved valves, which can investment opportunity. gas consumption and pay with mobile money for significantly reduce the incidence of gas leak- small volumes of LPG according to their needs ages and accident rates in homes, often at very » Governments and development partners should (hence the “pay-as-you-cook” expression). In low cost. These technologies are becoming com- support innovation in these areas through project addition to improving affordability by reducing monplace in larger emerging markets such as funding and strategic partnerships. In the case the upfront cost of LPG, these systems also India but are not yet widely used lower-income of digital awareness campaigns, public funding increase safety by allowing firms to better track countries. can be used. Development partner finance can cylinder location and customer usage, as well as also be used to fund pilots of these technologies integrating home delivery. The business model With respect to these lower-tech solutions, the in existing distributors, to encourage them to is being tested, costs are coming down, and following actions are recommended: improve safety practices, and ensure increased regulations and standards are being defined. customer engagement. » LPG distributors should explore opportunities to » Smart gas sensors, which permit monitoring of roll out these low-cost technologies and business » Regulators should consider promoting these the volume of gas in the cylinder, automatically practices. Most of these technologies have “dual- solutions by introducing and enforcing at least triggering doorstep deliveries and alerting the wins” for distributors. basic standards, such as making cylinder user and distributor in the event of a gas leak. tracking and certain hose and valve technologies mandatory. » Advanced leak detection systems installed at distribution facilities and in homes, which are stand-alone devices that detect leaks and LPG stove installed in a school in Haiti (Rachel Mahmud/World Central Kitchen)
5 | CLEAN COOKING ALLIANCE EXECUTIVE SUMMARY | 6 through “IoT”2 platforms and potentially trigger Among the various sessions that took place, “Safety emergency procedures. First: Best Practices in LPG” gathered interested TABLE OF industry specialists and other professionals. The More R&D and scaling up of these advanced overview and key takeaways of the discussion are CONTENTS innovations will be needed to make them more available in the Appendix 1 of this report. In the affordable on a larger scale. Pilot projects will be months that followed, the Alliance, assisted by ENEA an important element in the process of bringing and Menecon, engaged with numerous and diverse Acknowledgement...... 2 some of these technological solutions to market. stakeholders to capture their insights on challenges Partnerships between local players and industry and opportunities accompanying the emergence of Executive Summary...... 3 majors can also accelerate their roll-out, as well as technological solutions tackling LPG affordability, identify sustainable business plans. These solutions accessibility and safety. This report is the result of are most likely to thrive in urban and peri-urban areas that extensive research. 1. Context...... 9 first before becoming more affordable and better adapted to rural areas at a later stage. 2. Safety issues along the journey of an
More detail on each of the eight proposed LPG cylinder...... 13 solutions and where in the LPG supply chain their implementation could be most beneficial is provided 3. Improving LPG safety...... 21 in later chapters of this report. The remainder of this report is structured to first provide a brief context 4. Assessment of technology solutions....27 of the role of LPG and outstanding barriers to its market penetration. It then broadly introduces the 5. Conclusions and recommendations...... 55 topic of LPG safety in the cooking fuel sector. This leads into a detailed discussion in the following Appendix 1 – Safety First...... 59 section regarding the safety considerations at each step of an LPG cylinder’s lifecycle, setting the stage for identifying existing and emerging technological References...... 61 innovations that could be utilized as market levers by the private sector, policy-makers through regulatory interventions, and in partnership with consumers through education and training. The subsequent chapters present the findings of in-depth surveys of the advantages and disadvantages of each of the eight solutions described above, together with an assessment of their potential to enhance safety and for market roll-out. The report concludes with actionable recommendations for the different stakeholders in the LPG sector.
The Clean Cooking Alliance launched the inception of this report in the context of its Clean Cooking Forum 2019, held in Nairobi on November 5-7, 2019.
2Internet of Things - A network of Internet-connected objects able to collect and exchange data. Photo: Proto Energy
7 | CLEAN COOKING ALLIANCE TABLE OF CONTENTS | 8 Per capita consumption of LPG for cooking is extremely to ensure public safety and private sector 1. CONTEXT low in most sub-Saharan African countries, averaging confidence to invest. less than 5 kg in most countries, compared with a world average of 17 kg and over 65 kg in Morocco. 2. Finance along the value chain: Lack of access Liquefied petroleum gas (LPG) as a cooking solution is relatively mature LPG is used by just 17% of households in urban areas to financing and concessional funding for LPG of Tanzania and 26% in Ghana (Table 1), with the businesses can inhibit market expansion. compared to other options in terms of market maturity, yet a few critical hurdles penetration in rural areas remaining even lower. remain that hinder market growth in many countries. 3. Affordability: The upfront cost of purchasing In countries where residential use of LPG remains an LPG “starter pack,” including the burner, limited and LPG business growth slowed, the cause cylinder, and first refill of gas, as well as the stems from issues broadly related to supply, demand, recurring costs of cylinder refills, continues to be Clean cooking challenges and the A high rate of switching to LPG has already occurred and the policy and regulatory environment. a barrier to consumer adoption. role of LPG in several countries, resulting in major environmental and health improvements. A government-led program A recent report by the Clean Cooking Alliance outlined 4. Safety: Perception of safety risks and poor LPG is particularly well suited to domestic cooking to push households to adopt LPG in Indonesia drove the main barriers to the development of LPG markets safety practices in the value chain can discourage and heating because of its clean-burning attributes down fuelwood consumption for cooking from 50% to in developing countries [13], chief among which are: consumer willingness to switch to LPG and and practical advantages over both solid fuels 24% and kerosene from 37% to 4% between 2007 and hinder market growth. This topic in particular has and kerosene. LPG burns very cleanly, thereby not 2015 [1]. The net social benefits from avoided carbon 1. Regulation and market structure: Clear reg- implications for the previous three barriers and is causing indoor air pollution experienced by the 40% emissions and reduced forest loss that resulted from ulations and enforcement on the handling, dis- discussed in more detail in the rest of the report. of the population (about three billion people) who rely this program are estimated at US$4.9 per household- tribution, and dissemination of LPG are needed on open fires or inefficient stoves to cook their food month, compared with US$1.6 for improved charcoal [1]. Burning unsustainable biomass also contributes stoves [6]. The economic benefits could be seven to global warming by releasing large amounts of times the cost of implementing the program [7]. Figure 1 - Per capita consumption of LPG in the household sector in selected developing carbon dioxide (CO2) and black carbon into the countries in Asia and Africa, 2017 [12] atmosphere [2]. Although LPG is derived from fossil Over 2.5 billion people in resource-poor settings fuels, switching from traditional fuels to LPG can worldwide use LPG for some cooking tasks, including Morrocco Egypt reduce net CO2 when considering biomass that has millions more in developed countries [8]. Rates are Indonesia not been sustainably harvested. As an example, Kenya generally highest in developing Asia and lowest in World loses 10.3 million m3 of wood from its forests every sub-Saharan Africa [9]. In India, around 75% of the India Angola year from firewood and charcoal consumption, a major population are now using LPG [10] and per capita Viet Nam contributor to the country’s 0.3% annual deforestation consumption has risen to around 16 kg per person Philippines rate. Wood and charcoal fuel use, including black per year, thanks in part to recent large subsidized enegal carbon emissions, contribute 25 million tons of CO2 programs. In some developing countries with higher C te d’Ivoire outh Africa eq. each year, approximately 40% of Kenya’s total GHG average household incomes, such as Brazil and Cambodia emissions [3]. It is estimated that LPG stoves emit Morocco, LPG penetration is close to 100%. Botswana 50% less carbon dioxide equivalent than conventional Tanzania biomass stoves [4] [5]. imbabwe Kenya Togo Mozambique Table 1 - Percentage of population relying on LPG cooking [11] Niger Nigeria ambia Nigeria Kenya Ghana Senegal Ethiopia Bangladesh Ethiopia Urban 16% 24% 36% 55% 2% 0 10 20 30 40 50 60 70 Rural 0% 8% 9% 5% 0%
9 | CLEAN COOKING ALLIANCE 1. CONTEXT | 10 LPG safety – The role of perception Safety concerns also can discourage investment Figure 2 - Main reasons for not using LPG and reality in the sector, particularly by large multinationals. by households in Indonesia [14] Box 1 - Examples of surveys on LPG Ensuring zero accidents is a priority for multinationals, When discussing LPG safety, the topic should be safety perception in emerging markets and LPG has risks which are described in detail below. 4 8 viewed from multiple angles, starting from the A lack of investment in safety measures around LPG, sourcing of the LPG all the way to the usage of the In Indonesia, safety has been identified particularly in a context of weak regulation and poor cylinder in the household. as the most important reason for enforcement therefore poses both a reputational risk to businesses, as well as increasing operational costs. people not adopting LPG [14]. Although LPG is a relatively safe cooking fuel, As one actor working for a major LPG player stated in perceptions that it is more dangerous than other an interview for this study: “LPG safety is the key issue A survey conducted in Lagos, Nigeria 4 6 cooking solutions have proven to be a barrier to for us in Africa and stops us investing in the sector at with a sample size of 519 households switching and hence, market development. The scale. We have even stepped back from certain countries dramatic and devastating nature of some LPG has indicated that 90% of non-LPG due to safety concerns.” accidents has led to sensationalist reporting and users were willing to switch to LPG public fears about LPG. A few examples of LPG safety but cited safety issues and high cost In Nigeria, public authorities are calling upon the perception surveys in emerging markets are compiled as potential barriers to switching [15]. establishment of public-private partnerships (such as in Box 1 to the right. the upcoming one between the Ministry of Energy and 4 4 In Peru, 87% of the participants Mineral Resources and Ibile Oil and Gas Corporation) Serious accidents involving LPG are relatively of a survey reported their general to deepen LPG adoption by making sure that the infrequent in most countries. The most common perception that it is dangerous to product is available at an affordable rate. Lagos State’s types of accidents involve non-fatal burns caused cook with LPG due to the risk of risks Head of Service recently cited the fire incidents in the directly by the flame from the burner or fire caused of fires and explosion [16]. In another region as one of the reasons for increasing awareness by the flame setting light to objects in proximity, survey conducted in Puno, Peru, many on the proper use of the commodity as well as the 4 2 need to raise standards of LPG activities in the State. comparable to other cookstoves. More serious participants perceived LPG stoves The Ministry of Energy and Mineral Resources is accidents can occur as a result of a leakage of gas as dangerous and risky, and there from the pipe or burner and the subsequent ignition of trying to change the narrative about LPG use in order were fears about the “possibility” of the released gas. The most serious, yet extremely rare, to increase penetration from the present 15% to 80% an explosion, even though none of type of accident, involves the gas inside the cylinder or in the next five years. It is estimated that at least them had ever experienced any LPG $2 billion worth of investment is still needed in the storage tank exploding–an incident known as Boiling 4 0 Liquid Expanding Vapor Explosions (BLEVE). This type incident [17]. sector in Nigeria to reach this target [20]. of accident can only occur if the safety valve on the cylinder fails to release the gas inside in the event of In a market survey of 400 house- Ensuring that LPG is handled safely along the the cylinder heating up (for example, if a fire breaks out holds in Pemba, Mozambique, 79% supply chain, from importer to the final consumer, in the building where the cylinder is stored), increasing believed LPG to be toxic, explosive or is of paramount importance to both customer the pressure. dangerous [18]. acceptability and investment appetite. 3 8
In general, LPG-related accidents occur more frequently in the least developed countries, where E pensive safety standards are less respected and ill-enforced. people that live in households and use LPG for cooking tasty Less In Indonesia, where a strong regulatory environment [1]. By contrast, in Cameroon, 20,955 households
was adopted to frame the Zero-Kero program aiming experienced LPG-related accidents accounting for e plosion of Afraid
at boosting LPG adoption, 582 LPG-related accidents 279 deaths and 4,270 injuries in 2004 alone [19]. big too canister of ize were reported over the period 2007 to 2012, resulting in 16 deaths–just three per year out of the 220 million watched be to needs Cooking
11 | CLEAN COOKING ALLIANCE 1. CONTEXT | 12 2. SAFETY ISSUES ALONG THE JOURNEY OF AN LPG CYLINDER
Example of LPG two-burner modern equipment There are a set of safety considerations at each will go through many customers’ hands, travel via stage of the journey along which an LPG cylinder various modes of transportation, and undergo filling Equipment manufacturing accidents. A study analyzing burn admissions at a travels, from the refilling plant to the final household and requalification (repair) at different facilities. This clinic in India has shown that most of those involving end user. Safety is also important in the supply of the section examines, in detail, the different safety risks Ensuring the quality of the equipment used for LPG cylinders were caused by leaks from the hardware, fuel itself from the import terminal, refinery or gas- at each stage. cooking with LPG at the manufacturing stage is usually either due to cracks on the connecting hoses processing plant to the refilling plant. A typical cylinder the first step towards the safe use of LPG. The or defect valves and regulators [24]. Figure 3 - Break down of the LPG cylinder lifecycle most common manufacturing defects include poor cylinder welding (noted in interviews as the key stage Leakages of gas can also occur with the cooking where manufacturing faults can happen), faulty valve equipment. In addition to the LPG cylinder, cooking A uipment manufacturin outlets and pressure gauges, and defective cook- with LPG also requires a cookstove or a “burner”. LPG stoves (the figure below depicts the configuration can also be used in ovens. In both cases, faulty knobs LPG u k transportation of an LPG cylinder and associated fittings). If manu- on the burner or oven can lead to gas escaping even B LPG sourcin and u k stora e facturing defaults go unnoticed, leaks can occur when turned off, leading to a risk of fire. Cy inder refi in leading to the accumulation of gas in enclosed area and the risk of fire. New innovative cookstove equipment is emerging C Cy inder distri ution which deals with several of these risks and is discussed Cy inder mana ement y retai ers Studies of LPG-related incidents demonstrate that in more detail in the technology section. poor manufacturing can be a leading cause of Gas production refinin e. . in ey sta es Saudi Ara ia and u k transportation T roug out t e li espace D Last mi e de ivery o a cylinder, ranging Figure 4 - LPG cylinder and associated fittings [21] [22] [23] ro 20-40 years, it ill nd customer usa e repeatedly go t roug stages C D to be re illed nu erous ti es Insta ed typically once e ery 2- ont s Used for cookin Bu k stora e of Li uid Petro eum Stored en not in use Gas LPG
Refi ed rep aced en empty