The Role of Energy in Fostering Human Development · PDF fileThe Role of Energy in Fostering...
Transcript of The Role of Energy in Fostering Human Development · PDF fileThe Role of Energy in Fostering...
The Role of Energy in Fostering
Human Development
Jamal SaghirDirector
Energy, Transport, and Water The World Bank
12th International Energy ForumCancun, Mexico
30-31 March 2010
The World Bank Group
Overview
Energy and human development
Key challenges
Main barriers to be tackled
Lessons from past experiences
Opportunities for the future
2
Energy and Human Development
Energy inequalities contribute to regional inequalities
CHALLENGESEnergy and Human Development
3
276.2
160.8146.2
127.2
72.453.3
42.8
15.9
North America
Eurasia Europe Middle East WORLD Central and South
America
Asia and Oceania
Africa
Per Capita Primary Energy Consumption (mBTU)
Source: Energy Information Administration 2006
Consumption in Africa is 4.5 times lower than world average and 18 times lower than that of North America
The world still has 1.5 billion people without access to modern energy services and electricity. Nearly 2.5 billion people use solid fuels for
cooking and heating. Recent high oil prices have forced some
poor households to revert to traditional biomass. Inadequate power supply is a significant
drag on competitiveness and productivity of firms. Serious fuel shortages have also occurred,
often linked to price subsidies.
Continuing energy poverty is a major challenge for the world
Challenges
4
0
2
4
6
8
10
12
14
16
18
Billi
on to
nnes
of o
il eq
uiva
lent
World primary energy demand in 2030
Other renewables
Biomass and wastes
Hydropower
Nuclear
Natural gas
Oil
Coal
IEA World Energy Outlook 2009
99.8% of people without access to electricity live in developing countries
5
North Africa 2m, 98.9%
Sub-Saharan Africa 587m, 28.5%
China and East Asia195m, 90.2%South Asia
614m, 62%
Latin America 34m, 92.7%
Middle East 21m, 89.1%
WORLD WIDE 1456m, 78.2%DEVELOPING WORLD 1453m, 72%
Challenges
Source: www.worldenergyoutlook.org
REGIONS (people without access, rate of electricity)
Africa has exceptionally low electricity access…
Only 24% of Sub-Saharan Africa’s population has access to electricity• Numbers of those without access projected
to rise from 590m in 2008 to 700m in 2030
Installed generation capacity is extremely low • At 39 MW per million population, about 1/10
the level in other low-income regions
• Not including South Africa, the installed capacity in SSA is 30 GW (same as Argentina)
More than 30 countries face regular outages and load shedding• Cost of power outages is equivalent to 2.1% of
regional GDP
• Shocks, such as volatile oil prices and/or conflict, worsen the power crisis
Causes of Africa’s Power Supply Crisis
Main Cause or TriggerNatural Causes (Droughts)Oil Price ShockSystem Disrupted by ConflictHigh Growth, Low
Investment/Structural Issues
Energy and Human DevelopmentChallenges
6
This is a result of inadequate investment…
More than US$165 billion investment needed per year for the electricity sector in the developing world, about one-third for achieving universal access by 2030.
US$42 billion investment required in Africa alone.
The sector faces large financing gaps
7
0
5
10
15
20
25
30
35
40
45
Investment Requirement Current Investments
Annual Financing Gap of $30.9 billion
Africa Power Infrastructure Financing Gap
Challenges
Energy for cooking and heating
Challenges
8
Cheap or free alternatives to clean, modern sources of energy exist in abundance in many areas.
For rural inhabitants, the opportunity cost of time spent collecting biomass is often very small. As a result, some people will not stop using free biomass.
A surprisingly high proportion of middle- and upper-income groups continue to use traditional biomass as their main cooking fuel, even in urban areas in some countries, possibly because of costs of switching (e.g., LPG cylinder and stove)
cultural preference for traditional cooking
biomass being a demerit good (people do not fully recognize the adverse health effects)
Energy generation, processing, and use contribute over 60% of the world’s greenhouse gas emissions
In a ‘business-as-usual’ scenario, energy -related carbon dioxide emissions will nearly double by 2050
Developing countries, and especially poor people, are disproportionately affected by the impact of climate change
Climate change: a critical dimension of energy
Challenges
9
Access to energy and per capita emissions are inversely correlated
Challenges
10
0
20
40
60
80
100
0 10,000 20,000 30,000 40,000 50,000
% o
f hou
seho
lds
with
ele
ctric
ity
GDP per capita in 2005 US$ at PPP
Source: World Bank data
Low income and poor countries are likely to suffer the first, and the most, from climate change.
Challenges
11Source: World Bank
Drought Flood Storm Coastal 1m Coastal 5m Agriculture
Malawi Bangladesh Philippines All low-lying Island States
All low-lying Island States Sudan
Ethiopia China Bangladesh Vietnam Netherlands Senegal
Zimbabwe India Madagascar Egypt Japan Zimbabwe
India Cambodia Vietnam Tunisia Bangladesh Mali
Mozambique Mozambique Moldova Indonesia Philippines Zambia
Niger Laos Mongolia Mauritania Egypt Morocco
Mauritania Pakistan Haiti China Brazil Niger
Eritrea Sri Lanka Samoa Mexico Venezuela India
Sudan Thailand Tonga Myanmar Senegal Malawi
Chad Vietnam China Bangladesh Fiji Algeria
Kenya Benin Honduras Senegal Vietnam Ethiopia
Iran Rwanda Fiji Libya Denmark Pakistan
Low Income Middle Income
&
Improve operational and financial performance
Strengthen governance
Improve access and reliability of energy supply
Facilitate shift to more environmentally sustainable energy sector development
The challenge is to balance the twin objectives of greater access and sustainability.
Principal Challenge
Multiple barriers must be overcome to tackle the twin challenges of energy access and sustainability
High financing and investment needs
Weak institutional capacity at national and local levels
Low access to, and high cost of, technologies
Lack of enabling policies and regulations
Low affordability and willingness to pay for energy services
13
Main Barriers
World Bank supported Vietnam’s extraordinary success in expanding energy access
Rural Electrification Program• In 1993, more than 70m people
and 85% rural households lacked access
• Since then, 5% of GDP has been invested in energy infrastructure
• World Bank assistance accounted for 70% of the program cost of $1 billion
• By 2008, an additional 40m people had gained access, with the proportion of rural households with access rising to 94.5%
Reasons for Success• Effective leadership of a strong
utility• Partnership between state and
local utilities• Active participation of local
governments and communes• Clear demarcation of
responsibilities• Enforcement of strict technical
standards• Open and effective
consultation process among stakeholders
14
Example of Best Practice Past Experience
No universal institutional model to tackle the electricity access gap - need customized solutions: Centralized and decentralized Public or private Public-private partnerships
Explore all options: off-grid, cooperatives, pro-poor financing methods, affordable lifeline rates, sharply targeted subsidies
Lessons from past experience offer valuable guidance
Tackling the Challenge
15
Sound operational and financial performance should be ensured through improved capacity and governance
For the very poor, promoting productive applications for energy interventions is most important to improve access and affordability
Power Sector Past Experience
Energy for the Poor Initiative
Tackling the Challenge
16
Energy Scaling Up Access
In June 2008, at Energy Summit in Jeddah, King Abdullah of Saudi Arabia launched the Energy for the Poor Initiative. Cooperation interest has been fostered for co-financing and
parallel financing with World Bank by Arab Fund for Economic Development, the Islamic Development Bank, Kuwait Funds, OFID and Saudi Funds for energy access projects in Africa In addition, cooperation with OFID has been deepened since
2009 projects: Mozambique Energy Development and Access program (project cost - US$
230m)
Rwanda Electricity Access Scale up project (project cost - US$ 310m)
Expand energy supply base in a sustainable way
Promote energy trade and regional integration Invest in energy efficient technologies and processes Phase out distorting subsidies Diversify energy mix Accelerate technology innovation and transfer to ensure access to
developing countries Develop technologies that can reduce the adverse impacts of fossil fuels
(e.g. CCS)Expand energy supply base in a sustainable way Create enabling environment to attract private sector investment Put in place policies, regulations, and institutions that facilitate promotion
of technologies Build a new financial architecture by leveraging new financing sources (e.g.
climate funds, green funds, pension funds, carbon finance) Adopt innovative finance mechanisms that improve affordability for the
poor (e.g. micro credit) Foster institutional models to ensure participation of local communities and
gender integration
17
Options and Opportunities
Ensure adequate resources to achieve energy goals
18
investing in R&D
Technology Hardware & equipment
Pharmaceuticals & biotechnology
Automobiles & parts
Electronic & electrical equipt
Software & computer services
Chemicals
Leisure goods
Aerospace & Defense
General Industry
Industrial Engr
Health Care
Fixed line telecommunications
Oil & Gas Prod
House-hold goods
Food prod Industrial metals
Electricity
Personal goods
Media ConstructionBanks
Tobacco
Oil equipMobile Tel
g
Pharmaceuticals & biotechnology
Oil & gas producers
Technology Hardware & equipment
Software & computer services
Automobiles & parts
Electronic & electrical equipment
General industrials
Chemicals Fixed Line Telecoms
Banks
Food Prod
Aero-space
IndustrialEngr
Health Care Household goods
Tobacco
Industrial metals
Electricity
Leisure goods
Mobile Tel
Oil equip
Personal goods
Media
Cons-truc-tion
Mining
Research & Development SpendingMarket Capitalization
Oil & GasOil &Gas
IncreasingDecreasing
Source PFC Energy
Conclusion: Chartering a Way ForwardThe world needs a bold approach and collective will to tackle the challenges of access , sustainability and climate change Develop time-bound action plans
Match the intent with concrete commitment of financial resources
Work through partnerships
Make the cost of service fit into poor’s budget: need for some initial capital subsidies for access, electricity and natural gas lifeline rates Ensure sharp targeting identify the truly needy
Explore options other than subsidized energy prices
Help the poor increase consumption efficiency, possibly providing subsidies in the interim
Supply-side and demand-side efficiency improvement and energy conservation are good for the economy and environment For conventional energy, expose all customers other than the poor targeted for
assistance to unsubsidized prices
Diversify energy sources19
http://www.worldbank.org/energy
Thank You