Energizing the Millennium Development Goals by liaoqinmei


									Securing Energy Access for the Poor:
    Is it feasible and attainable?
             Kamal Rijal, Policy Advisor
          Sustainable Energy Programme
        Environment and Energy Group/BDP
                 UNDP New York
                  20 August 2007
Securing Energy Access for the Poor

 Outline of the presentation

   • Challenges and key issues to address

   • Elements of viable strategy and strategic

   • A proposal for action
Main challenges

• Increasing access to modern energy services, especially for the
  poor, is essential to the achievement of the MDGs. Expanding
  access to modern energy services for the poor and unserved
  remains the major development and environmental challenge for
  developing countries.

• Ensuring sustainability, particularly environmental sustainability,
  including the climate. Current patterns of energy production and
  consumption are not sustainable.

• Increasing security of energy supply. Countries are increasingly
  getting energy interdependent, and strengthened international
  cooperation is required to enhance market stability and energy
  security of both consumers and producers.
    More energy poor forecasted for the

  Electricity Deprivation:        Lacking access to clean cooking fuels:
  Africa: 526m      584m (2030)   Global: 2.5bn     2.7bn (2030)

                                    People Relying on Traditional Biomass (million)

                                  Source: IEA WEO (2006)
Source: IEA WEO (2004)
The poor are disadvantaged both in terms of
the quantity and quality of energy services
Annual deaths from indoor air pollution

The number of people using dirty traditional biomass for
cooking and heating will grow from 2.5 billion now to 2.7 billion
in 2030 in the absence of new strategic interventions.
            3                                                    2.8


                  1.2              1.3


                Malaria        Smoke from       Tuberculosis   HIV/AIDS
        Source : WHO (2006), and World Energy Outlook 2006
   Global CO2 emission trends

  14      Billion of Tons of
                                                             14 GtC/y
          Carbon Emitted per
              Basic Human Needs for
              cooking and electricity                        Seven “wedges”

                                        Flat path
                                                       O     7 GtC/y

1.9 
       1955                    2005                   2055                            2105
   If every households using traditional biomass for cooking switched to LPG,
   impact on world oil demand and carbon emission would be negligible
   (WEO, 2006).
                                                                        Source : R. Socolow (2006)
MDGs and Energy Link: Why it matters?
                        Access to modern fuels and electricity
                        increases household incomes by
                        improving productivity in terms of
      MDG1:             saving time, increasing output and
    Eradicate           value-addition
 extreme poverty
   and hunger                                                         Energy for irrigation
                                                                      increases food
                                                                      production and
                        Access to electricity empowers women
                                                                      access to nutrition
      MDG2:             to become educated on health and
                        productive activities and brings major
 Achieve universal      benefits to them
 primary education
and promote gender
      equality                                                     Access to modern fuels
                                                                   and electricity frees up
                                                                   time for education,
                       Health clinics with modern fuels and
                                                                   facilitating teaching and
                       electricity can refrigerate vaccines,
  MDG 4, 5 & 6:                                                    learning
                       sterilize equipment, and provide
 Reduce child and      lighting
 maternal mortality
   and disease
                                                                 Modern fuels and electricity
                                                                 help improve health through
                                                                 access to clean water, cleaner
       MDG7:           Clean fuels, renewable energy
                                                                 cooking fuels and heat for
                       technologies, and energy efficiency
Ensure Environmental                                             boiling water
                       can help mitigate environmental
   sustainability      impacts at the local, regional and
                       global levels
The poor have always remained outside of the
radar screen of development strategies/
energy interventions
                  Where are the most energy poor?

                                   Urban - Formal      Urban - Informal
                                   Grid, utility       Grid-extension,
                                   reforms, oil/gas,   renewables
                  Informal         renewables,
Formal                             efficiency

             Urban                Rural - Formal       Rural - Informal
                                   Grid-extension,     Off-grid electricity,
                                   more efficient      renewables,
                  Informal         technologies        Improved
                                                       mechanical power
Historically resources are not directed
to the rural energy poor…

                  Poverty & Access                                       Growth & Sustainability
                                                                             Industrialisation     Cross-border
                  Rural                    Urban     Sustainable Energy
                                                                               Growth Needs         Connection
        Poorer                  Richer

                  (Subsidies) Government                                                   Government
ODA targeted grants                            International Finance Institutions (IFIs)
  (such as EUEI,
   Netherlands’)        (WB's Clean Energy Inv Framework/Energy Access)

                      GEF/SGP            Global Environmental Facility

                                                          Carbon Financing

                                                                                      Private Capital
Is it too expensive to finance the energy needs
of the poor?
Estimates show that less than 1% of global electricity investment required
by 2030 will be needed to provide modern energy services for the poor
people who are not currently served.

                                                                                                                          $6,446                 $11,276
Investment Requirements ($ billions)





                                                           $28                     $43
                                                  Universal Access to LPG   Universal Access to   Electricity Sector   Electricity Sector   Global Electricity Sector
                                                    by 2030 to LPG by Mechanical Pow er IEA, Investment
                                       Universal Access(Source: IEA, 2030 (Source:and 2006) by 2030 in Investment by 2030 in all                Investment by 2030
                                       Universal Access to Mechanical Power and Lighting by 2030 (Source: UNDP, 2007)
                                                           2006)     Lighting by 2030 (Source:  Developing Countries    Developing Countries    (Source: IEA, 2006)
                                       Electricity Sector Investment by 2030       2007)          (except for large      (Source: IEA, countries) (Source: IEA, 2006)
                                                                            UNDP,in Developing Countries (except for large 2006)
                                                                                               countries) (Source: IEA,
                                       Electricity Sector Investment by 2030 in all Developing Countries (Source: IEA, 2006)
                                       Global Electricity Sector Investment by 2030 (Source: IEA, 2006)
                 Note: Large countries include Brazil, China, India and Indonesia
Expanding and up-scaling energy access for the
poor: Key issues to address ……
                                                                 • Strategies do not always recognize energy
                                              Energy not           access for the poor as a priority. (The
                                              reflected in         majority of existing PRSPs do not set
Issues relevant in developing countries

                                          national strategies,     national targets on energy access)
                                          policies & budgets
                                                                 • Still a focus on increasing energy supply
                                                                   and infrastructure rather than energy

                                           Investments not       • Financing (including official development assistance)
                                            always aligned         not always aligned with the countries’ priorities
                                             with national       • New financing opportunities such as CDM are by-
                                               priorities          passing LDCs.

                                                                 • Limited capacity to translate political and funding
                                             Institutional         commitments into policies and programmes
                                              capacity is        • Lack of capacity for planning, coordination, funding
                                                limited            mobilisation, management and monitoring of the
                                                                   delivery of modern energy services for the poor
                                                                 • Weak business skills to support income-generation
                                                                   with energy access
Elements of scaling-up energy services
delivery for the poor and unserved

   • Reduce costs of energy services delivery

   • Reduce risks for investors

   • Increase payment capacity/productive use of
     energy services

   • Mobilize the untapped resources (social capital)

   • Capture long-term benefits (externalities)
Significant cost reduction is possible by up-scaling
and expanding program intervention …
The Malian (Africa) and Nepalese (Asia) cases illustrate that the highest costs
are associated with institutional capacity development, and that is where
economies of scale can best be achieved. Institutional capacity has a decisive
implication for how fast energy access can be expanded in rural areas.

 1. Mali: Multi Functional Platform               2. Nepal: Improved Cookstove Program

                   Cost per Platform
$50,000                                                                  Cost per ICS / HH
           48 units                453 units
$45,000                                                      21,000                          106,000
$40,000                                           $12.00      units                           units
              ID                                   $8.00                                                 Soft
                                                                ID                                       ID
$15,000                                            $4.00                                                 Hard
$10,000                                            $2.00
                                                             1999-2001                       2002-2004
            1996-98                    1999-04

Hard – Technology cost           ID - Institutional Development cost           Soft - Training costs
Strategic responses to expand and upscale modern energy
service delivery for the poor and unserved to attain MDGs
   Mainstreaming                  Facilitating                    Developing local
   energy access                  investment                    institutional capacity
 considerations into               financing                      to deliver energy
    MDG-based                     mobilisation                  services for the poor
• Integrate energy           • Ensure country-level         •  Strengthen capacity of
access into the process of   coordination through
formulation &                discussions among
                                                            local authorities to
implementation of MDG-       development partners to        undertake participatory
based national               help harmonize & bring         planning & budgeting,
development                  alignment of their             energy assessment and
strategies/PRS               development assistance         manage delivery of energy
                             to national energy access      services                     Measurable
• Organize multi-sectoral
dialogues to establish
                             priorities as articulated in
                                                            • Develop capacity of
                             NDS/ PRS
national energy visions,                                    local actors such as           Impacts
priorities and national      • Ensure coordination          communities, NGOs, small-
targets on energy access     of country-level sector-       sized enterprises, and
within MDG-based PRS         wide cooperation               financial institutions to
                             working with IFIs, bilateral
• Align budgetary                                           enable them to respond to
                             donors, and other
allocation with national                                    the energy needs of poor
priorities through                                          with energy services
MTEF/public budget-
making discussions                                          • Enhance technical
                                                            capacity of entrepreneurs
                                                            incl. business management
                                                            & marketing to run energy
                                                            systems for productive use
 Political commitment at the highest level and
 directing public resources are key to scaling-up
 and expanding energy services for the poor …..
 Examples from Mali and Burkina Faso
• Political context
   – Highest political commitment (i.e. President of Mali) to advancing rural energy
     services for the poor
   – Existing political awareness of the impacts of energy services on the poor, as
     raised by Multifunctional Platforms (MFPs) - mechanized tools for agricultural
     processes, pumping, etc)
• Process
   – Linking micro-level evidence to national-level policy formulation processes
       • Providing an analysis of the impacts of MFPs on a variety of development
         issues (income generation, education, health, gender, etc)
       • Advocacy & lobbying using to draw greater attention to rural energy services
       • Re-packaging of MFP initiative to fit into HIPC funding criteria
• Results
   – Strengthened discussion of rural energy services in PRPSs
   – Allocation of HIPC funding to national MFP (US$ 5 million to Burkino Faso, US$ 4
     million to Mali)
   – National rural energy access scale up programme under discussion for AfDB
     funding (US$ 42 million)
Cost estimates for energy service needs in Kenya
show that they are not huge….

                                                                                     GDP per capita = $411
                                          Electricity to Community Centres
                                          Mechanical Power
                                          Improved Cooking Fuels
    US$ per capita per year

                                          Meeting Energy Targets
                                          GDP per capita

                                                                             ~ 3% of GDP


                                             ~ 0.3% of GDP
                                    Source: UN Millennium Project et al (2005)
 A proposal to expand and up-scale modern energy
 services delivery: It is feasible, fully attainable and
 within our reach ……
  US$ 100 million grant will leverage approx. US$ 900 million
  investment for expanding access to lighting and mechanical
  power for 36 million poor contributing towards achieving MDGs.
       Cost Items                                          Expected Benefits
      US$100 million grant   4000 units (10 kW)            US$ 263 million    Access to
3 yrs investment in hard-    installed to provide          + Women’s time-    mechanical power
      ware, institutional    mechanical power              saving (2-3 hrs)   and lighting for
      capacity               for agro-processing           + Improved girls   4 million people
      development &          and lighting                  schooling
      strategy for scaling
                             Leverage US$ 10-15 million of social capital
Scale Up
5 yrs Potential to           32,000 (10 kW)               US$ 2.1 billion     Access to
      leverage US$800        units to provide             + Women’s time-     mechanical
      million of public      mechanical                   saving (2-3 hrs)    power and
      resources (Govt.,      power for agro-              + Improved girls    lighting for 32
      ODA, etc.)             processing and               schooling           million people
                             Leverage US$ 100 million of social capital       B/C Ratio: 2.6
Call for Political Action …..
Need for ‘Global Instrument’ to Secure Energy
Access for the Poor and Unserved

What it means?
Global Energy-Poverty Fund to disburse 250 – 500
million per annum to leverage 3-5 billion/annum till
2030 to provide universal access to modern energy
services for all.

This is less than one-third of annual disbursement
through Global Environmental Fund
Thank you

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