Energy Poverty & Energy Sector Reform KEVIN WARR ENERGY MARKET DEVELOPMENT ADVISOR OFFICE OF INFRASTRUCTURE & ENGINEERING

Transcription

1 Energy Poverty & Energy Sector Reform KEVIN WARR ENERGY MARKET DEVELOPMENT ADVISOR OFFICE OF INFRASTRUCTURE & ENGINEERING September 26, 2006

2 Outline Global Energy Trends Role of Energy in Sustainable Development Energy Sector Reform USAID Energy Programs Making a Difference Angola Electrification Support Program

3 Development requires facilitating investment and growth and empowering poor people to participate in that growth. ~ Ioannis N. Kessides

4 Global Energy Trends I Energy use is expected to increase 50% between 2000 and 2020, with most of that increase coming from increased use of fossil fuels 2000: quads 2020: quads Renewables 8.1% Nuclear Power 6.1% Nuclear Power 3.5% Renewables 8.1% Natural Gas 22.4% Oil 39.2% Natural Gas 29.0% Oil 36.7% Coal 24.3% Source: International Energy Outlook 1999, 142, table A2 Coal 22.6%

5 Global Energy Trends II The bulk of the increase in global energy use will occur in developing countries 2000: quads 2020: quads Eastern Europe and FSU 13% Eastern Europe and FSU 11% Developing Countries 34% Industrialized Countries 53% Developing Countries 46% Industrialized Countries 43% Source: International Energy Outlook 1999, 142, table A2

6 The Role of Energy in Development Development Links Population, Health, and Nutrition Education Humanitarian Assistance ENERGY Environment Agriculture Economic Growth Democracy and Governance In modern times, no country has managed to sustainably reduce poverty without greatly increasing the use of energy.

7 The Role of Energy in Development II Energy has a determinant influence on the Human Development Index.

8 The Role of Energy in Development III The lack of electricity access is strongly correlated to the number of people living on less than $2/day.

9 Role of Energy in Development IV Region (2002) Electricity Coverage (%) Un-served Population (millions) Sub-Saharan Africa Electricity Access North Africa % 90% 80% 94% 88% 92% 89% South Asia East Asia & China Middle East Latin America Percentage 70% 60% 50% 40% 30% 20% 10% 0% % Sub-Saharan Africa North Africa 9 43% 798 South Asia East Asia & China 221 Region Middle East 14 Latin America 46 66% World Wide Number (Millions) Electricity Coverage (%) Un-served Population World Wide

10 Role of Energy in Development V Sustainable Development Requires Sound Energy Sectors Development must be both environmentally and economically sound. Sustainable Development designed to ensure it meets the needs of the present without compromising the ability of future generations to meet their own needs [World Commission on Environment and Development, 1987] Sustainable Energy Sectors promote rational and efficient use of energy

11 Role of Energy in Development VI Implications of Urbanization: 95% of population growth in developing countries will occur in urban areas. This means large-scale, centralized power stations fueled by fossil fuels, nuclear power, or renewables. Affordability remains an issue.

12 Energy Sector Reform I Need for Large Investments: $ billion/year investment needed in emerging market power sectors ( ) Multi-National Development Banks and Export Credit Agencies ($4 billion) Leveraged Private Sector ($30 billion) Additional $50 to $70 billion/year needed Domestic capital critical Self-Financing ($60-80 billion) Source: IEA 2003

13 Energy Sector Reform II Countries need to attract private sector resources. Market mechanisms help achieve increased access, improved efficiency and lower cost. Market mechanisms must be designed to achieve these objectives.

14 Energy Sector Reform III Energy Market Development is about Good Governance Improved governance attracts foreign direct investment FDI Against Power Sector Governance

15 Energy Sector Reform IV Good Governance: In general, good governance refers to how decisions are made, implemented, and enforced within a sector as well as how disputes are resolved. Good governance means informed participation, coupled with the principles of accountability, transparency, and rule of law.

16 Energy Sector Reform V In a global economy, energy sector reform requires: Autonomous regulatory authorities Utilities that function as commercial entities Safeguards for the poor Enabling environment for private sector participation Effective environmental protection Public understanding and participation

17 Energy Sector Reform VI Energy Sector Reforms should: Increase access to modern energy services Increase the flow of private capital Redirect public sector funds Improve transparency Reduce corruption Encourage cost savings

18 USAID Energy Programs I USAID Energy Programs Provide: Innovative technological and institutional energy solutions to the problems of energy sector governance, and rural and urban sustainable development A menu of energy interventions and development strategies that link energy with the broader social and economic dimensions of development Service to USAID missions and bureaus and in-country stakeholders in the form of training and technical assistance The The exact nature of of every energy intervention is is ultimately determined by by local local conditions as as defined by by the the USAID mission and and the the host host country

19 USAID Energy Programs II 25+ YEARS OF IMPROVING ENERGY SECTOR PERFORMANCE Goals: Establish market conditions for private sector participation Improve institutional capacity Increase public understanding and participation USAID works with Governments, Utilities, and Citizens

20 USAID Energy Programs III Recent and Ongoing Work: Angola Electricity Support Program Brazil: Luz Para Todos Consensus Building Central African Power Pool Creation Electricity Governance Toolkit Energy Partnership Program Ghana & W. Africa: Smart Development Project Development of Secondary Gas Market Global Regulatory Network & Partnership Program India: Karnateka Capacity Building for Representation of the Public Interest Mozambique: Establishment of Energy Regulatory Body Nepal: Community-Based Rural Electrification Program Rwanda: Development of Tariff Mechanism Southern Africa Power Pool--Establishment of Private Sector Participation Sri Lanka: Wind Market Development Zambia Rural Electrification Master Plan: Phase 1: Rapid Resource Assessment Zambia: Rural Electrification and Regulation

21 ANGOLA ELECTRICITY SUPPORT PROGRAM Fostering Stability Through Increased Access to Electricity

22 ANGOLA ELECTRICITY SUPPORT PROGRAM II Transparency International Corruption Perceptions Index: 124th out of 133 countries World Economic Forum Global Competitiveness Report: 103rd out of 104 countries World Bank Governance Matters : Bottom 3 % of Countries Adhering to Rule of Law

23 ANGOLA ELECTRICITY SUPPORT PROGRAM III Population size: 17,380,000 Population under the age of 15: 9,230,000 Urban population: 66 percent Population living in Luanda: 33 percent

24 ANGOLA ELECTRICITY SUPPORT PROGRAM IV Nearly 1 in 4 Angolans lives on less than $0.75 per day 2/3rds of the population lives on less than $2.00 day 45 percent of children suffer from stunted growth Infant mortality is 150/1000 Africa-wide average is 91/1000 Fertility rate: 7.2 babies per mother Principal cause of mortality and morbidity: malaria National adult HIV prevalence: 2.8 percent Low enrollment in schools Enrollment in some regions affected by war: 25 percent 27 percent of children who enter grade 1 do not complete grade 4

25 ANGOLA ELECTRICITY SUPPORT PROGRAM V Africa Bureau s Fragile States Framework Strategic Priorities: Enhance Stability Improve Security Encourage Reform Develop the Capacity of Institutions

26 ANGOLA ELECTRICITY SUPPORT PROGRAM VI USAID s Fragile States Framework Guiding Principles: Engage Strategically Focus on Sources of Fragility Seek Short-Term Impact Linked to Longer-Term Structural Reform Establish Appropriate Measuring Systems

27 SOURCES OF STABILITY Increased Economic Opportunity Agriculture + Improved Service Delivery Enterprise Education Water/Sewage Energy Health

28 ANGOLA ELECTRICITY SUPPORT PROGRAM VIII Objectives Improved Service Delivery Increased Economic Growth Improved Governance/Management capacity

29 ANGOLA ELECTRICITY SUPPORT PROGRAM IX DESCRIPTION: Luanda Urban Rehabilitation and Micro-Enterprise Project (LURE) Funded by DFID Implemented by CARE and Development Workshop Focus on Community Mobilization for Improved Service Delivery (water, sanitation, micro-credit)

30 ANGOLA ELECTRICITY SUPPORT PROGRAM X The LURE for USAID: USAID will fund an electricity service delivery component Build the capacity of newly electrified communities: focus on sustainability and productivity Provide TA to national utilities, ENE and EDEL Provide training to CARE staff on energy sector management and energy economics Fund utility partnership program between Brazilian utility and ENE/EDEL

31 ANGOLA ELECTRICITY SUPPORT PROGRAM XI FRAGILE STATE CONTEXT: The program addresses the Agency s goal of managing crisis and promoting stability, recovery and democratic reform through (i) reintegrating persons into crisis affected communities; (ii) increasing the provision of essential services by local and national institutions; (iii) advancing participatory governance reform; and (iv) restoring economic activity

32 ANGOLA ELECTRICITY SUPPORT PROGRAM XII In the short run... the program will contribute to Angola s stability by improving service delivery in urban and peri-urban areas. In the long run... the program will contribute to Angola s stability by expanding transparency, accountability and participation at the grassroots level, the provincial level and the national level.

33 Essential Service Delivery (Elec.) Democracy Economic Growth STABILITY RECOVERY ECONOMIC REFORM

34 THANK YOU!