Securing Energy Access for the Poor: Is it feasible and attainable

1
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
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Securing Energy Access for the Poor
Outline of the presentation

• Challenges and key issues to address
• Elements of viable strategy and strategic
  response
• A proposal for action

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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.

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More energy poor forecasted for the future
Electricity Deprivation Africa 526m
584m (2030)
Lacking access to clean cooking fuels Global
2.5bn 2.7bn (2030)
People Relying on Traditional Biomass (million)
Source IEA WEO (2006)
Source IEA WEO (2004)
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The poor are disadvantaged both in terms of the
quantity and quality of energy services
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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.
Source WHO (2006), and World Energy Outlook 2006
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Global CO2 emission trends
projected path
Billion of Tons of Carbon Emitted per Year
14
14 GtC/y
Basic Human Needs for cooking and electricity
Seven wedges
O
Historical emissions
7 GtC/y
7
Flat path
1.9 ?
0
2105
2055
2005
1955
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)
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MDGs and Energy Link Why it matters?
Access to modern fuels and electricity increases
household incomes by improving productivity in
terms of saving time, increasing output and
value-addition
MDG1 Eradicate extreme poverty and hunger
Energy for irrigation increases food production
and access to nutrition
Access to electricity empowers women to become
educated on health and productive activities and
brings major benefits to them
MDG2 Achieve universal primary education and
promote gender equality
Access to modern fuels and electricity frees up
time for education, facilitating teaching and
learning
Health clinics with modern fuels and electricity
can refrigerate vaccines, sterilize equipment,
and provide lighting
MDG 4, 5 6 Reduce child and maternal mortality
and disease
Modern fuels and electricity help improve health
through access to clean water, cleaner cooking
fuels and heat for boiling water
Clean fuels, renewable energy technologies, and
energy efficiency can help mitigate environmental
impacts at the local, regional and global levels
MDG7 Ensure Environmental sustainability
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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
Rural
Grid, utility reforms, oil/gas, renewables,
efficiency
Grid-extension, renewables
Informal
Formal
Rural - Formal
Rural - Informal
Urban
Formal
Grid-extension, more efficient technologies
Off-grid electricity, renewables, Improved
cookstoves, mechanical power
Informal
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Historically resources are not directed to the
rural energy poor
Poverty Access
Growth Sustainability
Environmentally
Industrialisation
Cross-border
Rural
Sustainable Energy
Urban
Growth Needs
Connection
Technology
Poorer
Richer
Government
Government

Government
(Subsidies)
(Subsidies)
International Finance Institutions (IFIs)
ODA targeted grants (such as EUEI, Netherlands)

(WB's Clean Energy Inv Framework/Energy Access)
GEF/SGP
Global Environmental Facility

Carbon Financing

Private Capital
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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.
Note Large countries include Brazil, China,
India and Indonesia
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Expanding and up-scaling energy access for the
poor Key issues to address

• Strategies do not always recognize energy access
  for the poor as a priority. (The majority of
  existing PRSPs do not set national targets on
  energy access)
• Still a focus on increasing energy supply and
  infrastructure rather than energy services

Energy not reflected in national strategies,
policies budgets

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

Investments not always aligned with national
priorities
Issues relevant in developing countries

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

Institutional capacity is limited
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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)

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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.
2. Nepal Improved Cookstove Program
1. Mali Multi Functional Platform
Cost per Platform
48 units
453 units
21,000 units
106,000 units
ID
ID
Hard Technology cost ID - Institutional
Development cost Soft - Training costs
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Strategic responses to expand and upscale modern
energy service delivery for the poor and
unserved to attain MDGs
Mainstreaming energy access considerations into
MDG-based NDS/PRS
Facilitating investment financing mobilisation
Developing local institutional capacity to
deliver energy services for the poor

• Integrate energy access into the process of
  formulation implementation of MDG-based
  national development strategies/PRS
• Organize multi-sectoral dialogues to establish
  national energy visions, priorities and national
  targets on energy access within MDG-based PRS
• Align budgetary allocation with national
  priorities through MTEF/public budget-making
  discussions

• Ensure country-level coordination through
  discussions among development partners to help
  harmonize bring alignment of their development
  assistance to national energy access priorities
  as articulated in NDS/ PRS
• Ensure coordination of country-level
  sector-wide cooperation working with IFIs,
  bilateral donors, and other partners.

• Strengthen capacity of local authorities to
  undertake participatory planning budgeting,
  energy assessment and manage delivery of energy
  services
• Develop capacity of local actors such as
  communities, NGOs, small-sized enterprises, and
  financial institutions to enable them to respond
  to the energy needs of poor with energy services
• Enhance technical capacity of entrepreneurs
  incl. business management marketing to run
  energy systems for productive use

Measurable Development Impacts
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Political commitment at the highest level and
directing public resources are key to
scaling-upand 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 through
• 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)

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Cost estimates for energy service needs in Kenya
show that they are not huge.
GDP per capita 411
3 of GDP
0.3 of GDP
Source UN Millennium Project et al (2005)
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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
US100 million grant investment in hard-ware,
institutional capacity development strategy
for scaling
4000 units (10 kW) installed to provide
mechanical power for agro-processing and lighting
US 263 million Womens time-saving (2-3 hrs)
Improved girls schooling
Access to mechanical power and lighting for 4
million people
3 yrs
Leverage US 10-15 million of social capital
Scale Up
5 yrs
Potential to leverage US800 million of public
resources (Govt., ODA, etc.)
32,000 (10 kW) units to provide
mechanical power for agro-processing and lighting
Access to mechanical power and lighting for 32
million people
US 2.1 billion Womens time-saving (2-3 hrs)
Improved girls schooling
B/C Ratio 2.6
Leverage US 100 million of social capital
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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. Footnote This is less than one-third of
annual disbursement through Global Environmental
Fund
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• Thank you