Sabitri Dairi lives in a two-room hut in the village of Badreni in southern Nepal. It's close to Chitwan National Park and like many Nepali peasant farmers she relies on firewood for cooking.

"We have to buy some of our firewood," she tells me, while expertly flicking a short sickle to provide straw for her goats. "We also bring firewood from the forest. It takes about four-to-five hours to collect."

Dairi says she knows that cutting down lots of firewood harms the environment – "there could be landslides," she says – but when it comes to the fundamentals of life, like cooking a meal, these considerations come second.

To try and resolve this conflict between humans and nature, the villagers are taking part in an innovative pilot project which aims to solve their fuel needs and save the forest at the same time.

Unfortunately, the system's key funding mechanism is being criticized for its own waste of resources.

Cooking with gas

Four years ago the World Wide Fund for Nature (WWF) and the Nepali government funded biogas projects in this village so they wouldn't need to burn firewood or kerosene for their meals.

The idea is simple.

Villagers put animal and human waste into underground tanks, the natural fermentation produces methane, and this is piped to a house for cooking fuel known as biogas.

Sheni Chaudary, another farmer, strikes a match inside her house to show me how it works. The odorless gas provides enough fuel for one burner to cook rice or other small amounts of food.

Not only does it save people from raiding the forest for firewood, it also reduces the amount of harmful smoke normally generated by open fires indoors.

For local villagers such as Chaudary, the biogas apparatus is very helpful – but not cheap. It costs about 400 euros, a lot for a family that only earns 1000 Euros per year.

Chaudary explains that the Nepali government subsidized a quarter of the cost, but her family paid the rest. "I had to take a loan in order to buy the biogas," she says.

To make biogas more accessible in future, the WWF hopes to raise 700,000 euros for the system through Europe's voluntary carbon offset market, an initiative to tackle climate change.

Carbon credits

WWF can generate – and sell – 'carbon credits' for each ton of carbon saved from burning biogas instead of firewood.

It sells these credits to a service like MyClimate, a Zurich-based NGO.

MyClimate acts as a middleman between people looking to offset their carbon footprint, and schemes that aim to promote clean development, but lack the money.

With a simple online tool, MyClimate calculates the cost in tons of carbon of anything from a flight to Greece to the yearly energy consumption of your car.

It spits out a figure based on the price of carbon and gives users the opportunity to make a donation, which goes towards schemes like the one in Nepal.

WWF senior program officer Ugan Manandhar says that since the system is voluntary, Europeans are essentially making a donation to a worthy cause.

"If someone wants to support our biogas program, he or she can just donate some funds. Since funds raised aren't enough to finance all the biogas plants, carbon financing was the medium that we chose."

But how do you know the cause is worthy? To avoid bogus claims about the true amount of carbon being saved, the system needs auditors.

"You need this process of documentation, validation and verification," Manandhar says.

Yet this doesn't come cheap.

Taking stock

Verification and validation is a complicated and expensive process.

A European company must fly evaluators to Nepal to determine exactly how much carbon is reduced by using biogas. Manandhar says each visit and follow up costs 14,000 euros.

In addition, only 33 companies worldwide – mostly based in Europe – qualify to evaluate carbon offset projects.

Samir Thapa, an official with the Nepali government's Alternative Energy Promotion Center, said the demand for evaluation far exceeds the supply of companies that can do the work.

"Sometimes you may have to wait to validate your project for maybe six months or maybe one year," Thapa said.

"It increases the cost and reduces the efficiency. Economically, that's not very viable for the project, especially in terms of smaller projects like ours."

Thapa thinks the problem could be resolved by creating more regional verification companies. A company based in India, for example, would be far more efficient for Nepali projects.

"They would be more knowledgeable about the projects, more knowledgeable about the technologies, more knowledgeable about social, economic and government bureaucracy."

"That might reduce the costs as well as expedite the registration of these projects."

Do not pass go

Yet some critics say the whole offset system – in which polluting European companies and consumers buy 'get out of jail free cards' from less-polluting developing countries – may be flawed.

Shaunna Barnhart, an American PhD candidate studying biogas in Nepal, said developing countries like Nepal are actually penalized because they don't produce much green house gas.

She noted that Nepal has long relied on hydroelectric power, a renewable and non-polluting source of energy.

"But (Nepal) can't trade carbon credits for that because they weren't polluting first," Barnhart said, "So it's actually rewarding bad behavior."

Back in Badreni village, the number of farmers who enjoy the benefits of the pilot biogas project is still relatively limited.

WWF says it hopes to receive funding soon to build thousands more. The group says the carbon offset system works for these villagers, but it hopes future reforms will lower costs.

Author: Reese Erlich
Editor: Nathan Witkop