Transition toward a Low Carbon Society and the Globalization Process: Perspectives from Developing Countries

Transcription

1 Transition toward a Low Carbon Society and the Globalization Process: Perspectives from Developing Countries Yacob Mulugetta Centre for Environmental Strategy University of Surrey

2 Outline Economic transformation in developing countries as a result of globalization? What are the effects on the energy sector? Opportunities & challenges for low carbon development? Focus on Africa s energy system? The case of Ethiopia if time allows!

3 Increasing interdependency

4 Different category of countries performing specific roles

5 World growth, Real GDP, year on year percentage change World Non-OECD OECD \ Note: GDP measured at market exchange rates Source: IMF, OECD, Bank Calculations

6 India China Comparative Scenario 6

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8 Some effects The process of economic globalization has ushered in growth with poverty reduction outcomes in some countries; and given rise to a new wave of consumers Rapid urbanization ala Arthur Lewis an exodus of migrant workers from rural agricultural regions to large cities. The percentage of the nation s urban population rose from 18 per cent in 1978 to 52.6 per cent by 2012, with city dwellers for the first time outnumbering rural counterparts. It took Britain and USA over 100 years to accomplish this.

9 World primary energy use Millions tonnes oil equivalent OECD Non OECD Note: Oil consumption is measured in million tonnes; other fuels in million tonnes of oil equivalent Source: BP Statistical Review

10 Effects of globalization and structural changes in developing countries has created a more intensified use of fossil fuels China 70% energy mix coal; 75% of new coal power stations in India and China Production cannot meet consumption req. Dependency on imports 70 80% oil (China, India); Energy security priorities: Aggressive Energy efficiency programmes Diversifying energy resources by developing alternative clean energy resources Diversifying energy suppliers at the global level

11 Enter climate change CC is a global challenge, especially for developing countries Dependence on climate sensitive sectors Low adaptive capacity to respond effectively Geographical location characterized by vulnerable areas (drought, flooding, sea level rise) Current trends leading to a 4+ degree C rise Threat? YES. New opportunity for mitigation actions? possibly

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13 Energy responsible for 75% of GHG emissions 1200 coal power plants planned across 59 countries. 455 in India; 363 in China Over a third of the carbon dioxide emissions linked to good and services consumed in many European countries actually occurred elsewhere. (Davis & Caldeira, 2010) CO2 exports from China in Millions of tons The United States is both a major importer and a major exporter of emissions embodied in trade. The net result is that the U.S. outsources about 11% of total consumption based emissions, primarily to the developing world.

14 Countries locked into a development pathway intended to correct the injustices of underdevelopment and poverty. So it seems there is a tension between climate action & development Thus, there is a tremendous momentum in decarbonizing the energy sector, not only for climate stabilization reasons alone! Furthermore, developing countries have the longterm challenge of widening access to energy services The clean route may offer possible win win solutions for energy security, energy access and GHG emissions reduction

15 RE costs have declined in the past and further declines can be expected in the future.

16 RE costs may be going down but are still higher than existing energy prices, but in various settings RE is already competitive.

17 African energy system transformation Alarming but also plenty of opportunities High growth: due to higher commodity prices, internal investment, FDI, starting from low base Economic transformation essential for sustaining development. Energy & infrastructure is central to that goal Yet to be built!

18 Level of energy access correlates with HDI Steinberger and Roberts, 2011 Average energy access in sub Saharan Africa = 31%; in rural Africa = 14% EIA, 2011

19 Biomass use - significant Share of agriculture to Economy Share of employment 60 to 80% Share of GDP over 25% EIA, 2011 Tanzania Share of modern energy use Household over 60% Industry 18% Transport 15% Agriculture 2%

20 Africa s power is expensive - Up to $0.30/kWh in Mali, Niger, Senegal - $25/kWh in Burkina, R. Congo, Benin - Even higher for self-generation - Under $0.05/kWh in Ethiopia, DRC, Malawi, Zambia AICD, 2008

21 What opportunities exist? Economic growth in recent years, economic diversification underway Productive sector critical for energy access New thinking and models in regulations and practices

22 Policy Experiments in Africa RE Policies Country Feedin tariff REGULATOR POLICIES FISCAL INCENTIVES PUBLIC FINANCING Biofuels obligatio n, mandate Heat obligation, mandate Tradable renewabl e energy credits Capital subsidy, grant or rebate Investment, production tax credits Reductions in sales, energy, VAT or other taxes Public investment, loans or financing Public competitiv e bidding Algeria X Botswana X Egypt X X X X Ethiopia X X X Gambia X Ghana X X Kenya X X Mali X Mozambiqu X X e Morocco X Rwanda X X South Africa X X X X Tanzania X X X Tunisia X X X Uganda X X X Zambia X

23 What opportunities exist? Considerable natural resource base Regional power pools as new playing field

24 Energy Resource Potential of Africa Energy Type Reserves Regional Distribution Hydro 1,834 TWh/yr Central Africa: 57% Eastern Africa: 32% Other Africa:11% Biomass Woody biomass: 70 billion All regions tonnes Solar Solar insolation: 1800 Most of Africa Wind 2850 kwh/m 2.a Wind speeds: Southern Africa (6 m/s) Northern Africa (5 8.5 m/s) Geothermal 9,000 MW Eastern Africa Most attractive sites in the Northern and Southern coasts. Africa also accounts for: 9.5% of proven crude oil reserves in the world (132.1 billion barrels) 8% of proven natural gas reserves in the world (14.7 trillion M3) 4% of proven coal reserves in the world (31,696 billion tonnes)

25 Africa is has a huge hydro power potential..

26 Power Export Potential

27 existing regional network Missing links

28 Regional power pools Africa Infrastructure Country Diagnostic, 2010

29 Energy development dilemma Abundance of Renewable energy resources Increasing hydrocarbons Scarcity of Skills Capital Governance capacity Latecomer advantage but delay (until new technologies, know how and/or finance is available) is expensive, i.e high social discount Countries can capitalize on comparative advantage Rail in Ethiopia Global partnership critical

30 Some suggestions for energy transformation? A number of actions need to come together Recognize country specific conditions for LCD Fit for purpose policies look beyond statements and include realistic and achievable targets with mid term reviews (Ethiopia) how policies are formulated is critical and the involvement of various actors is central (policy dialogue and build policy coalitions); Address fragmentation; Space for both centralized and decentralized options; Well targeted subsidies; Policy coherence between access, security and sustainability Build robust (but flexible) institutional landscape at different levels to implement policies the energy problem in Africa is not only at national level but goes down to community level

31 Some suggestions for energy transformation? Strengthen knowledge institutions to provide input into national energy actions (with appropriate incentives) Brazil Deal with full energy chain, but understand entry point(s) (Senegal) Finance is critical what works is what matters and not what is ideologically convenient. How to unlock domestic finance through innovative regulatory systems? How to work with international partners? Think bold and act fast losses due to inaction are significant both in terms of economic and wellbeing missed opportunities Short term imperatives & longer term perspectives Greater effort to integrating with global systems, but structural economic transformation needs to happen.

32 I can think of three good reasons why green growth is and cannot but be an essential element of Africa s structural economic transformation and none of them have much to do with what we as Africans can or should do to mitigate global warming. We cannot even think of structural economic transformation in Africa without transforming our agriculture. We need to improve the moisture retention capability of our soil, recharge our underground water resources and increase the flow of our rivers. If we are to promote irrigated agriculture to adapt to the changes we have to rehabilitate our degraded hills and mountains. We cannot hope to mitigate the impact of droughts and floods without a massive re afforestation of our hills and mountains. The second reason why we can and should embark on green development as part of our structural economic transformation is because we are richly endowed with green and renewable sources of energy. There cannot be any talk of structural economic transformation without massive increase in the electricity we generate. And if we are to embark on such a massive programme we have to generate the electricity from the resource that we have in abundance and whose opportunity cost is close to zero. If we generate most or all of our energy from renewable sources then we will have by design or default embarked on a green path of economic transformation. The third reason why we have to create a green economy has to do with global technological trends. It is true that International Negotiations on Climate Change have been stuck in a quagmire and are unlikely to get out of it any time soon. But this has not stopped those countries and companies that have the foresight and the resources from massive and concerted investment in green technologies. Structural economic transformation in Africa will require that we catch up technologically with the most advanced nations. If the future is in green technologies our strategy for catch up cannot be based on technologies that will be out of use by the time we catch up.

33 Africa and other low income countries could try to do better in the pursuit of their development goals Low carbon options could deliver good outcomes with global and local benefits Gao Xiqing of the China Investment Forum at World Economic Forum 2012, speaking to African leaders Do not necessarily do what we did. Policies of sheer economic growth should be avoided. We now suffer pollution and an unequal distribution of wealth and opportunities You have a clean sheet of paper here. Try to write something beautiful.

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40 Plenty of experimentation and ambition

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