Sapiens 823

S.A.P.I.EN.
S
Surveys and Perspectives Integrating Environment and
Society
2.1 | 2009
Vol.2 / n°1
Sustainable energy for developing countries

Dilip Ahuja et Marika Tatsutani
Daniel Schaffer (éd.)
Édition électronique
URL : http://journals.openedition.org/sapiens/823
ISSN : 1993-3819
Éditeur
Institut Veolia
Référence électronique
Dilip Ahuja et Marika Tatsutani, « Sustainable energy for developing countries », S.A.P.I.EN.S [En ligne],
2.1 | 2009, mis en ligne le 27 novembre 2009, consulté le 23 octobre 2020. URL : http://
journals.openedition.org/sapiens/823
Licence Creative Commons

S.A.P. I . E N.S
2009
VOLUME 2 ISSUE 1
Perspectives
Sustainable energy for

developing countries
Dilip Ahuja1, Marika Tatsutani2
1. ISRO Professor of Science and Technology Policy at the National Institute of Advanced Studies (NIAS) in
Bangalore, India.
2. Independent consultant.
’’
This paper is a revised version of a report originally published by The Academy of Science for the developing
World (TWAS).
Correspondence to: drahuja@gmail.com
Overall, at least 1.6 billion people—one-fourth of the world’s population—currently live without
Abstract
electricity and this number has hardly changed in absolute terms since 1970. And yet, the electricity
required for people to read at night, pump a minimal amount of drinking water and listen to radio
broadcasts would amount to less than 1 percent of overall global energy demand.
Developing and emerging economies face thus a two-fold energy challenge in the 21st century:
Meeting the needs of billions of people who still lack access to basic, modern energy services while
simultaneously participating in a global transition to clean, low-carbon energy systems. And historic
rates of progress toward increased efficiency, de-carbonization, greater fuel diversity and lower
pollutant emissions need to be greatly accelerated in order to do so.
To a significant extent, fortunately, the goal of reducing greenhouse gas emissions may be aligned
with the pursuit of other energy-related objectives, such as developing indigenous renewable
resources and reducing local forms of pollution. In the near term, however, there will be tensions.
Sustainable energy policies are more likely to succeed if they also contribute toward other societal
and economic development objectives. Governments should look across policies to maximize positive
synergies where they exist and avoid creating cost-cutting incentives.
Keywords: Energy, services, policies, sustainable development, electricity,

developing, emerging, economies, low-carbon
TABLE OF CONTENTS
1. Introduction
2. Historic Energy Trends
2.1. Rising Consumption and the Transition to Commercial Forms of Energy
2.2. Increasing Power and Efficiency
2.3. De-carbonization and Diversification, Especially in the Production of Electricity
2.4. Reduction of conventional pollutants associated with energy use
3. The Energy Challenge
4. The Technology Challenge
5. Policies and Actions
5.1. Energy efficiency
5.2. Subsidy Reform
5.3. Indigenous Sustainable Resources
5.4. Technology Transfer and Development of Human and Institutional Capacity
5.5. Clean, Efficient Cook Stoves
6. Conclusion
Received: 14 April 2009 – Revised: 14 April 2009 – Accepted: 16 September 2009 – Published: 27 November 2009.
Edited by: Daniel Schaffer – This paper has been reviewed by two anonymous referees
© Author(s) 2009. This article is distributed under the Creative Commons Attribution 3.0 License.
http://sapiens.revues.org/index823.html 1
1
SUSTAINABLE ENERGY FOR DEVELOPING COUNTRIES
1. INTRODUCTION biomass-based fuels such as wood, dung and charcoal) to

commercial forms of energy (primarily fossil fuels).
Since the dawn of the industrial age, the ability to harness and use • Steady increases in both the power and efficiency of energy-
different forms of energy has transformed living conditions for producing and energy-using technologies.
billions of people, enabling them to enjoy a level of comfort and • De-carbonization and diversification of fuels, especially
mobility that is unprecedented in human history, and freed them to for the production of electricity, throughout most of the
perform increasingly productive tasks. For most of the last 200 years, 20th century.
the steady growth in energy consumption has been closely tied to • A reduction in the quantities of conventional pollutants
rising levels of prosperity and economic opportunity in much of the associated with energy use.
world. However, humanity now finds itself confronting an enormous
energy challenge. This challenge has at least two critical Each of these trends has contributed to the shaping of our
dimensions. It has become clear that current patterns of energy use current energy situation. All will be important in determining
are environmentally unsustainable. The overwhelming reliance on the nature and magnitude of the sustainability challenge that
fossil fuels, in particular, threatens to alter the Earth’s climate to an humanity confronts in the decades ahead. In particular, much
extent that could have grave consequences for the integrity of both will depend on how the last three of the four trends described
natural systems and vital human systems. At the same time, access above interact with the first. In other words, the ability of
to energy continues to divide the ‘haves’ from the ‘have-nots.’ developed and developing countries to manage the
Globally, a large fraction of the world’s population—more than two consequences of rising consumption and demand for
billion people by some estimates—still lacks access to one or commercial forms of energy seem likely to depend on whether
several types of basic energy services, including electricity, clean it will be possible to greatly accelerate progress toward higher
cooking fuel and an adequate means of transportation. efficiency, more de-carbonization, greater fuel diversity and
lower emission of pollutants.
Of course, the need for a profound transformation of the world’s
energy-producing and using infrastructure has been widely 2.1 RISING CONSUMPTION AND THE TRANSITION
recognized in the mounting concern about global climate change. TO COMMERCIAL FORMS OF ENERGY
Countless reports have been written on the subject of sustainable
energy, but few have approached this specifically from the Before the industrial revolution, humans relied on natural energy
perspective of a developing country. In nations where a significant flows and animal and human power for heat, light and work. Draft
portion of the population still lacks access to basic energy animals, wind and water were the only sources of mechanical
services, the worry about long-term environmental sustainability energy. The only form of energy conversion (from chemical
is often overshadowed by more immediate concerns about energy to heat and light) came from burning various forms of
energy access and affordability. biomass. The per capita use of energy did not exceed 0.5 tons of
oil-equivalent (toe) annually.
This report addresses the two-fold energy challenge that
confronts developing and emerging economies—expanding Between 1850 and 2005, overall energy production and use grew
access to energy while simultaneously participating in a global more than 50-fold—from a global total of approximately 0.2 billion
transition to clean, low-carbon energy systems.
At a macro level, the policy options recommended here will be Combustible

familiar as similar prescriptions have been widely advocated in Renewable & Waste Other
10% 1%
energy policy discussions generally and in the context of a variety of Hydro
Natural gas
different country. However, these arguments have often been based 2%
21%
on experience or evidence from wealthier, industrialized countries. Coal
To successfully implement a sustainable energy agenda, it will be 25%
essential for developing countries to design and implement policies
that (a) are responsive to their particular needs and constraints and
(b) advance the realization of many goals, including economic,
social development, and environmental objectives.
Nuclear
2. HISTORIC ENERGY TRENDS 6%
Oil
The energy use of human societies has historically been marked 35%
by four broad trends:
Figure 1. Share of World’s Primary Energy Supply in 2005
• Rising consumption as societies industrialize, gain wealth (total=11.4 M toe). Source: IEA,
and shift from traditional sources of energy (mostly http://www.iea.org/textbase/nppdf/free/2007/key_stats_2007.pdf, p.6.
2 AHUJA ET AL | P2
S.A.P. I . E N.S
toe to 11.4 billion toe (IEA, 2007). Most of this occurred in Even as technologies like the steam engine vastly increased the
industrialized societies, which had come to rely heavily on the power available to humans, improvements in energy-producing
ready availability of energy. On a per capita basis, people in these and -using technologies steadily increased the efficiency at which
societies now use more than 100 times the quantity of energy that energy could be converted to different forms and used to deliver
was used by their ancestors before humans learned to exploit the goods and services. For example, it has been estimated that the
energy potential of fire (UNDP, 2000, p. 3). thermal efficiency of steam engines has increased by a factor of
about 50 since 1,700, whereas the efficiency of lighting devices
As societies industrialized, they not only began to use more energy, has increased by a factor of about 500 during the past 150 years
but also began to use energy in different forms, typically (Ausubel and Marchetti, 1996). Large efficiency gains also
switching—as household incomes rose—from such traditional resulted from the development of the internal combustion engine
fuels as wood, crop residues and dung to such commercial forms as a replacement for steam engines in many forms of transport
of energy (i.e., fuels that can be bought and sold) as oil, natural gas, (Grubler, 1998, p. 251).
propane and electricity. Reliable estimates of the use of traditional
waste and biomass are difficult to obtain, but these fuels are Massive improvements in the efficiency of technologies and
estimated to account for approximately 10 percent of overall devices have facilitated continuing reductions in the quantity of
primary energy use. Much of this use is concentrated in the rural energy required to produce a unit of goods and services in
areas of developing countries. More reliable statistics are available industrialized economies. This has resulted in the “decoupling” of
for the consumption of commercial energy, which grew rapidly economic output from energy consumption—two measures
during the second half of the 20th century.1 Most commercial forms which, until recently, were assumed to grow more or less in
of energy are derived from fossil fuels (notably coal, oil and natural lockstep with each other. Figure 2 shows that the rates of growth
gas) and consumption of them has grown even faster—increasing of primary energy use and gross domestic product (GDP) for
roughly 20-fold in the 20th century alone. Non-renewable, carbon- member countries of the Organization for Economic Co-operation
emitting, fossil fuels now supply approximately 80 percent of the
world’s primary energy needs (see Figure 1).
8
A projection of the current trends suggests that overall energy use will 7
continue to grow strongly—doubling or even tripling by 2050. More Electricity
troubling from a sustainability perspective is that fossil fuel 6
consumption could grow nearly as strongly as total energy

5
consumption. This would mean that fossil fuels would continue to
dominate the overall supply mix—again assuming a continuation of 4
current, business-as-usual trends. GDP
3
Of course, these are the outcomes that a policy agenda that is guided 2 Primary energy
use
by climate concerns and other sustainability considerations Population
1
presumably would seek to change. However, altering the present
1971 1975 1979 1983 1987 1991 1995
trajectory will require governments, businesses and individuals
around the world to join in a concerted effort to accelerate the other 5
historic trends discussed in the next subsections, particularly the Electricity
4.5
trends toward higher efficiency and lower-carbon energy sources.
5
2.2 INCREASING POWER AND EFFICIENCY 3.5
Harnessing oxen increased the power available to human beings 3

GDP
by a factor of ten. The waterwheel increased it by an additional 2.5
factor of six and the steam engine by another factor of ten (UNDP, Primary energy
2 use
2000, p. 3). Cumulatively, these innovations increased the power
1.5 Population
that was available to humans by a factor of 600. The development
of the steam engine—initially powered by coal—was particularly 1
important. It enabled the provision of energy services to become 1960 1965 1970 1975 1980 1985 1990 1995
site-independent because coal could be transported and stored
anywhere. Steam engines fuelled the factory system and the Figure 2. Changes in GDP, Population and Energy Use. Changes in
industrial revolution. Used later in locomotives and ships, these GDP, Population, Primary Energy Use and Electricity Use in OECD
countries 1960-97 (Figure 2A, upper panel), and in developing
engines revolutionized transport as well (Grubler, 1998, p. 249).
countries 1971-97 (Figure 2B, lower panel)
By the beginning of the 20th century, coal provided almost all of Source: Source: UNDP, 2000, Figure 1.1, p. 34 (upper panel) and
the primary energy needs of the industrializing countries. Figure C.1 (d), p. 459. (lower panel)
1
Starting around 1970, the global consumption of commercial forms of energy grew by approximately 2 percent per year. Global growth rates moderated somewhat in the 1990s with
the economic contraction of a group of countries (primarily in Central and Eastern Europe and Central Asia) that were transitioning from centrally planned economies to market-based
systems. Strong global growth resumed after 1998. Recently, high energy prices and recessionary pressures that have caused a diminution of global credit and an increase in the
volatility of several major currencies may again be causing a global slowdown.
AHUJA ET AL | P3 3
and Development (OECD)2 were almost the same between 1960 fuels to fossil fuels had the opposite effect, despite an associated
and 1978, but then began to diverge, providing more output for reduction in carbon intensity. The reasons are discussed in
less energy. A similar divergence appears in Figure 2B, which footnote 3.) In the three decades before 2000, the carbon intensity
presents the same data for developing countries, although it of the global economy—in kilograms of carbon (kgC) per U.S.
occurs nearly 15 years later (in 1993). dollar of gross world output (GWP)—declined from 0.35 in 1970 to
0.24 kg in 2000. This reduction is equivalent to an average annual
Overall, the energy intensity of the OECD countries—where decline in carbon intensity of approximately 1.3 percent. More
energy intensity is measured simply as the ratio of GDP to recently, however, the rate of decline in carbon intensity has
primary energy consumption—has been declining in recent years begun to slow and even reverse. Globally, carbon intensity per
by an average rate of 1.1 percent per year. Interestingly, energy dollar of economic output has increased at a rate of approximately
intensity has been falling even faster in non-OECD countries, 0.3 percent per year since 2000 (Canadell/PNAS, 2007).
presumably because many are in the process of modernizing
from a fairly inefficient industrial base. However, it is worth It is unclear whether the last few years represent an anomaly and
emphasizing that electricity intensity throughout the world has global carbon intensity, even without climate-related policy
not been declining. In fact, because of electricity’s versatility, interventions, will resume the downward trend that was underway
convenience and lack of emissions, its use as a share of total before 2000. Despite global warming concerns, higher prices and
energy use has tended to rise as societies modernize and become concern about the long-term supply of oil and natural gas are likely
wealthier. Consequently, the growth of electricity has been to prompt increased utilization of coal and unconventional oil
outpacing the rate of economic growth in all regions in recent resources (e.g., tar sands and oil shale). This could substantially
years. This is relevant to the discussion of trends in electricity increase the carbon intensity of the global energy supply mix.
production in the subsection that follows. Indeed, this may already be occurring to some extent.
2.3 DE-CARBONIZATION AND DIVERSIFICATION, Many experts believe that, in the long term, climate change and
ESPECIALLY IN THE PRODUCTION OF ELECTRICITY other concerns will necessitate a shift to natural gas and then to a
hydrogen economy that is dependent on the introduction of non-
Another historic trend that is likely to be relevant to future energy carbon energy sources and the sustainable use of biomass (Ausubel,
sustainability involves a change in the carbon content of fuels 1996, p. 4). Based on the historic rate of energy de-carbonization,
used as primary energy sources. The shift from wood and other this process could take 80 years to unfold in the absence of further
traditional biomass fuels to a reliance on coal during the first part policy interventions. It could take even longer if rising prices and oil
of the industrial age to, more recently, an energy mix that and natural gas supply constraints, coupled with a lack of cost-
includes large shares of oil, natural gas and nuclear power, in competitive non-fossil-fuel alternatives, create countervailing
addition to coal, has implied that there is a gradual reduction in pressures to move to more carbon-intensive fuels like coal.
the overall carbon intensity of the world’s energy supply.3 In fact,
the ratio of tons of carbon in the primary energy supply to units of A second distinct trend, and one that is linked to the gradual
energy consumed globally has declined by about 0.3 percent process of de-carbonization that is described above, began in the
annually since 1860, which is sufficient to reduce the overall ratio early 20th century and continues today. It is characterized by a
by 40 percent (Nakicenovic, 1996). proliferation of end-use technologies that rely on a diversity of
fuels to generate electricity. Figure 4 shows the current and
With regard to climate change, the trend toward lower carbon projected production of electricity by fuel for developing
intensity during the second half of the 20th century has helped to countries, based on the International Energy Agency’s (IEA) 2005
slow the rate of increase of atmospheric concentrations of carbon reference scenario forecast. It suggests that production of
dioxide. (In contrast, the earlier transition from traditional biomass electricity by developing countries will nearly triple during the
next 25 years. Non-hydropower renewables are expected to
increase their share of the total electricity supply mix from
fossil fuel intensity
0.35 roughly one percent to four percent during that period. Overall,
(kgC/US$)
however, coal will continue to dominate and account for roughly

0.30
half of the total production of electricity by developing countries in
0.25 2030. Of course, the IEA projections do not account for the effect
of new policies that might be introduced to address climate
1960 1970 1980 1990 2000
change and other concerns during the decades ahead. Such
time (y)
policies could further expand the contribution of non-fossil
Figure 3. Declining Global Carbon Intensity. Source: Canadell, Josep primary energy sources to the world’s electricity supply mix over
G., etc., in PNAS, 2007, p. 18868. the next several decades.
2
The OECD was established in 1961. Its 30 member countries include the world’s major developed economies.
3
The ratio of hydrogen atoms to carbon atoms in wood is effectively 1:10. The ratio is between 1:2 and 1:1 in coal. It is 2:1 in oil and 4:1 in natural gas. However, not all sources of carbon
have impact climate change equally. Provided that biomass feedstocks are managed sustainably, the carbon dioxide that is released by the combustion of biomass fuels is offset by an
equivalent uptake of carbon dioxide from the atmosphere to support the growth of new biomass. As a result, there is, at equilibrium, no net change in atmospheric carbon dioxide
concentrations. In contrast, the combustion of coal and other fossil fuels puts into the atmosphere carbon that has been stored—and thus kept out of circulation—for millennia. It
therefore produces a net increase in atmospheric concentrations. Together, human activities, primarily fossil fuel combustion and land use changes, are believed to be responsible for
an increase in atmospheric carbon dioxide concentration of approximately 40 percent since pre-industrial times (from roughly 270 parts per million around 1750 to 380 parts per million
in 2005) (IPCC, 2007, Fourth Assessment Report, Summary for Policymakers, p. 5).
4
4 AHUJA ET AL | P4
S.A.P. I . E N.S
20 000 nitrogen oxides, hydrocarbons and particulate matter) can be

expected to also reduce emissions of greenhouse gases. A good
15 000
billion kWh
example is the use of natural gas for the production of electricity.

10 000 This became increasingly common in the United States in the
1990s. One reason is that natural gas plants do not require the
5 000
same pollution controls that coal-fired plants do (e.g.,
0 electrostatic precipitators, sulfur dioxide scrubbers, etc.). This
1990 2004 2015 2030
has helped them to become competitive with coal-fired power
Non-Hydro Renewables Nuclear Oil
stations in many countries that regulate conventional pollutant
Hydropower Gas Coal
emissions. Some conventional pollutants, such as black carbon,
Figure 4. Electricity generation in developing countries: directly contribute to global warming. In those cases,
2006 IEA reference case forecast. Source: IEA, World Energy Outlook conventional emission controls can provide automatic climate co-
2006, p. 513. benefits. In other cases, the relationship is more complicated. For
example, sulfur particles have a cooling effect on the
An effective response to the threat of climate change will require atmosphere. In general, most post-combustion conventional-
a significant acceleration of the historic trends to de- pollutant control technologies do not reduce the emissions of
carbonization and fuel diversification. This acceleration must take carbon dioxide, the chief greenhouse gas. Moreover, agreements
place globally. It cannot be restricted to the developed countries, to reduce or control emissions that could disrupt global climate
but must be pursued with equal or even greater vigor in systems have proved to be difficult to negotiate.
developing countries.
Devising effective policy responses to a problem that is truly global
2.4 REDUCTION OF CONVENTIONAL POLLUTANTS ASSOCIATED and multi-generational in scale presents a challenge that is both
WITH ENERGY USE unprecedented in the history of environmental regulation and
daunting to developed and developing countries alike. The
The archetypal symbol of the industrial age was the smokestack challenge for developing countries is greatly complicated by the
and, in many developing countries, large energy facilities need to expand access to essential energy services and to
continue to represent modernity and economic opportunity. simultaneously provide low-cost energy for economic development.
However, with increasing affluence and a better understanding of
the adverse environmental and human health impact of most 3. THE ENERGY CHALLENGE
conventional air pollutants, the public’s willingness to accept dirty
technologies has declined, especially during the last 30 years. Global consumption of commercial forms of energy has
The result has been a clear link in many countries between rising increased steadily over the last four decades and has been
incomes and an increase in emphasis on environmental recently marked by especially dramatic growth rates in many
performance. Over time, energy end-use technologies (e.g., developing countries. Yet, stark inequalities persist throughout
cooking stoves, automobiles) and energy conversion technologies the world in the access to modern energy services. Between 1970
(e.g., power plants) have become progressively cleaner, at least and 1988, the developing countries’ share of global primary
with respect to visible, local and immediately harmful pollutants. energy consumption rose from approximately 13 percent to about
30 percent. In 2005, the non-OECD countries accounted for just
In fact, the energy technology that has the most potential to over half (52 percent) of global primary energy consumption. This
immediately improve human health and well-being in many increase in energy consumption has not, however, resulted in a
developing countries is relatively simple. It is the improved cooking more equitable access to energy services on a per capita basis. In
stove. The use of such traditional fuels as wood and dung for 2005, the average per capita consumption of energy in the OECD
cooking is inefficient and generates extremely high levels of indoor countries was more than four times the per capita average in all
pollution. Accelerating the transition to more expensive, but far non-OECD countries, and nearly seven times the per capita
cleaner kerosene, liquefied petroleum gas (LPG), or electric stoves, average in Africa (IEA, Key Energy Statistics 2007, p. 48).
would dramatically reduce the exposure to unhealthy levels of
particulate pollution in many developing countries, particularly Overall, at least one quarter of the world’s 6.6 billion people are
among women and children. Other sectors that offer great unable to take advantage of the basic amenities and opportunities
opportunities to reduce conventional levels of air pollutant made possible by modern forms of energy. The inequities in per
emissions and to improve public health are transport and electricity capita use of electricity are even greater than the inequities in per
production. More stringent pollution control requirements for capita use of primary energy. In 2005, the average citizen in the
automobiles, heavy-duty vehicles and equipment and power plants, OECD countries used 8,365 kwh of electricity. In contrast, the
in particular, would substantially improve air quality. average citizen in China used 1,802 kwh and the per capita
average for the rest of Asia was 646 kwh. The per capita average
In some cases, technology improvements that reduce the use of electricity in 2005 in Latin America and Africa were
emissions of conventional air pollutants (such as sulfur dioxide, 1,695 kwh and 563 kwh respectively.
AHUJA ET AL | P5 5
Energy Service/Development Need Typical energy services Electricity demand kWh/month per household
Lighting 5 hours/day @ 20 W/household 2.0-6.0
Radio/Music 5 hours/day @ 5 W/household 2.0-6.0
Communications 2 hours/day @ 10 W/household 2.0-6.0
Potable Water Community electric pump providing 5 liters/day/capita 2.0-6.0
Basic Medical Services 2.5 kWh/day for 100 households 0.5-1.0
Education 2.5 kWh/day for 100 household 0.5-1.0
Income generating productive uses 5 kWh/day for 10 households 0.0-20.0
TOTAL — 3.0-30.0
Table 1. Typical Electricity Requirements for Off-Grid Populations in Developing Countries. Source: Adapted from Table 1, (G8 RETF, 2001, p. 23).
These regionally or nationally aggregated figures mask even activities (e.g., rural clinics and schools), can be provided for an
starker within-country disparities, since the energy consumption average of just 50 kilowatt-hours (kWh) per person annually. (Note
patterns of elites in many developing countries are similar to that this figure includes only basic electricity needs. The energy
those of the general population in developed countries. In fact, requirements of cooking and transportation are not included).
although it has been estimated that developing countries were
spending as much as $40 to $60 billion annually on electricity An estimated 1.6 billion people worldwide lack access to electricity.
systems by the end of the 20th century (G8, RETF, 2001), Providing basic electricity services to these people at an average
approximately 40 percent of the population in these countries annual consumption level of 50 kWh per person would increase the
remained without access to electricity. This means that the global end-use demand for electricity by roughly 80 billion kWh per
number of people throughout the world who had no access to year. This is less than one-half of one percent of global annual
electricity has hardly changed in absolute terms since 1970 electricity production in 2004 (estimated at 18,235 billion kWh) and
(UNDP, 2000, p. 374). Not surprisingly, the rural poor in less than one-fifth of the expected annual increase in global
developing countries account for the vast majority (nearly electricity production for the next two decades, according to the
90 percent) of households that have no access to electricity. IEA’s 2006 reference case forecast for 2004–2030.
Consequently, the most immediate energy priority for many Besides a need to expand access, many developing countries face
developing countries is to expand access. In fact, providing safe, at least two other immediate energy-related challenges.
clean, reliable and affordable energy to those who currently have
no access to such is widely viewed as essential in order to progress The first and most pressing issue for many oil-importing
toward other development objectives. Although there was no countries is economic. A rapid rise in world oil prices has led to a
specific chapter on energy in Agenda 21 (1992) and no specific steep and, for some countries, increasingly unmanageable
United Nations Millennium Development Goal (2000) on energy, increase of their import bill for energy commodities. For example,
the access to basic energy services is directly linked to most social the value of India’s oil imports increased by more than 20 percent
and economic development targets that were outlined in the in a single year, from $33 billion in 2006 to an estimated
Millennium Declaration (WEHAB Working Group, 2002). $40 billion in 2007.4 The Economic Research Service of the U.S.
Department of Agriculture has stated, “For oil-importing
The immediate obstacle to access to energy for many poor developing countries, the $137 billion increase in the energy
households and governments in developing countries is a lack of import bill in 2005 far exceeded the $84 billion of official
financial resources. Moreover, where access to energy is lacking, development assistance they received.”5 Moreover, oil prices have
other urgent human and societal needs also are often not met, continued to rise substantially since 2005, adding further to this
meaning that energy needs must compete with other priorities. financial burden.
Fortunately, people need only a relatively modest amount of
electricity to be able to read at night, pump a minimal amount of For many smaller and poorer countries, the combination of
drinking water and listen to radio broadcasts (G8-RETF, 2001). In rapidly rising energy prices and a recent, similarly precipitous
other words, it is possible to greatly improve the quality of life for escalation of world food prices are generating concerns about
many poor households with a level of energy consumption that is internal economic and political stability. For these countries,
far below that of the average citizen in an industrialized country. diversifying the domestic energy resource base and reducing the
demand for imported fuels would bring a host of benefits, not only
To pay for even basic services, however, households need income- by freeing scarce resources for domestic investment, but also by
generating opportunities. These also require energy. Table 1 below reducing long-term exposure to financial and humanitarian
shows typical electric service requirements for off-grid crises that now loom in many parts of the world.
households in developing countries, assuming an average
household size of five persons. It has been estimated that basic A second, important energy-related challenge is environmental.
household services, along with commercial and community As noted in a previous section, energy use in many developing
4
Source: http://www.upiasiaonline.com/Economics/2007/12/11/india_and_china_lose_with_high_oil_prices/6010/
5
Source: http://www.ers.usda.gov/AmberWaves/February08/Features/RisingFood.htm
6
6 AHUJA ET AL | P6
S.A.P. I . E N.S
countries is a significant and immediate cause of high levels of air developing countries that seek to meet their growing energy
pollution and other forms of environmental degradation. Energy- needs in a global environment that is marked by increasingly
related emissions from power plants, automobiles, heavy intractable environmental and resource constraints.
equipment and industrial facilities are largely responsible—
especially in major cities—for levels of ambient air pollution that 4. THE TECHNOLOGY CHALLENGE
routinely exceed the health thresholds set by many developed
countries, and sometimes by an order of magnitude. In both The various energy supply technologies that will probably be used
urban and rural areas, indoor air pollution caused by the use of in a carbon-constrained future have been extensively reviewed
traditional fuels for cooking and space heating daily exposes elsewhere. The usual list includes renewable energy
billions of people, especially women and children, to significant technologies (e.g., wind, solar and biomass), nuclear technology
cardiovascular and respiratory health risks. In many cases, and advanced fossil-fuel systems with carbon capture and
adverse environmental impacts begin well upstream of the point sequestration. Natural gas systems are widely viewed as a crucial
of energy end-use. The extraction of commercial fuels like coal ‘bridge’ technology. In addition, energy efficiency is often cited as
and oil is often highly damaging to local ecosystems and becomes a critically important and an often lower-cost complement to
an immediate cause of land and water pollution. Meanwhile, supply side improvements.
reliance on traditional fuels, such as wood, can produce its own
adverse impacts. In principle, the same supply- and demand-side options are
available to all countries. Nevertheless, some options, especially
It is expected that the longer-term, climate change that is caused technologies that are in very early stages of commercialization or
by energy-related emissions will pose many risks to developing require very large, initial capital investments or substantial
countries. Even though emissions in developed-country are outside expertise to operate, are likely to face additional obstacles
overwhelmingly responsible for current levels of heat-trapping to their use in developing countries.
gases in the atmosphere, numerous analyses conclude that the
myriad burdens of global warming are likely to fall For purposes of this report, we focus on renewable energy
disproportionately on developing countries. This is because technologies because they can be particularly attractive in
developing countries are likely to be more sensitive to such dispersed, ‘off-grid’ applications. Therefore, they represent
adverse impacts as the effects on water resources and important options for rural areas that lack electricity
agricultural productivity. They are also more likely to lack the transmission and distribution infrastructures. Other low-carbon
financial and institutional means to implement effective supply technologies are reviewed briefly (at the end of this
adaptation measures. section), while energy efficiency is covered as part of the policy
discussion in the section that follows.
Because it is believed that developing countries account for a large
and growing share of overall greenhouse gas emissions, active A number of renewable energy technologies have been so
participation by such countries in the efforts to de-carbonize the improved that they can now provide electricity at a lower cost than
world’s energy systems is essential as a matter of self-interest and other supply options wherever extension of the grid is
also to help to avert a global environmental catastrophe. prohibitively expensive or uneconomic. There are six broad
categories of renewable energy technologies. They are biomass,
Fortunately, the goal of reducing greenhouse gas emissions may wind, solar, hydro, geothermal and marine. They can be tapped by
be aligned to a significant extent with the pursuit of such other using a variety of conversion technologies or processes to
energy-related objectives as the development of indigenous produce a range of energy services, including electricity, heat (or
renewable resources and the reduction of local forms of pollution. cooling), fuels, mechanical power and illumination. The
However, there will be tensions in the near term. This is competitiveness of different renewable technologies in different
particularly likely if policies designed to discourage the use of settings depends on their cost and performance, as well as the
carbon-intensive conventional fuels, many of which implicitly or local cost and availability of fossil-based energy. All of these
explicitly have the effect of raising energy prices, are seen as factors still vary widely and depend strongly on local conditions.
conflicting with the goal of expanding access to essential energy
services for the poor or promoting economic development or For example, many renewable energy sources are inherently
both. Thus, the pursuit of a sustainable energy agenda for intermittent. Thus, their integration into a unified electricity grid
developing countries requires leveraging the positive synergies of can pose challenges, especially on a large scale, and may make
efforts devoted to achieving other societal and economic them less competitive with conventional generating systems.6 In
objectives, while minimizing potential conflicts between different dispersed, off-grid applications, intermittency may pose less of a
public goals. problem and renewable technologies may be more cost-effective
than the next available conventional option. In addition, the
How this may be accomplished by well-designed policies is modularity of many renewable energy technologies facilitates
discussed in a later section of this report. However, it is useful to their deployment in relatively small increments. This can be
first review some of the technology options available to advantageous in cost and risk to many developing countries.
6
In the longer term, the development of cost-effective storage systems can overcome this drawback of renewable technologies like wind and solar.
AHUJA ET AL | P7 7
Potential averaged as much as 30 percent per year, creating some of the

Current Future world’s most rapidly expanding markets for energy technology.
Energy Energy
Costs Costs
Source Units Low High Low High For comparison, typical (wholesale) electricity production costs in
Biomass-Ethanol $/GJ 8 25 6 10 many developed countries in recent years have been on the order
Bio-diesel $/GJ 15 25 10 15 of 2–4 c/kWh; retail prices have been on the order of 8 c/kWh;
Geothermal-heat c/kWh 0.5 5 0.5 5 prices in off-grid niche markets have been on the order of
Biomass-Heat c/kWh 1 6 1 5 14 c/kWh and peak power prices have typically ranged from
Geothermal-electricity c/kWh 2 10 1 8 15–25 c/kWh (G8, RETF, 2001).
Large Hydro c/kWh 2 10 2 10
Small Hydro c/kWh 2 12 2 10 An expectation of declining costs in the future due to greater field
Solar low-temperature experience and larger-scale deployment is not unique to
heat c/kWh 2 25 2 10 renewable energy technologies. They would apply also to other
Wind electricity c/kWh 4 8 3 10 relatively new, low-carbon technology options, such as carbon
Biomass-Electricity c/kWh 3 12 4 10 capture and sequestration. Figure 5 compares the decline in unit
Marine-current c/kWh 10 25 4 10 costs for wind and photovoltaic technology in the United States
Solar Thermal
Electricity c/kWh 12 34 4 20 and Japan to the historic decline in the prices of gas turbines. The
Marine-Wave c/kWh 10 30 5 10 figures show that the declines were more rapid at first for gas
Solar PV electricity c/kWh 25 160 5 25 turbines, but slowed as the technology matured. This is typical of
Marine-ocean thermal c/kWh 15 40 7 20 maturing technologies.
Marine-tidal c/kWh 8 15 8 15
All renewable energy sources can be converted to electricity. In
Table 2. Current and Projected Future Costs of Renewable Energy
Technologies. Source: (adapted from UNDP, 2004, Table 7, p. 50). principle, energy can always be converted from one form to
For comparison, typical (wholesale) electricity production costs in many another. In actual practice, however, there will be some forms that
developed countries in recent years have been on the order of 2–4 c/kWh;
retail prices have been on the order of 8 c/kWh; prices in off-grid niche will be preferred due to cost-effectiveness. Table 3 suggests some
markets have been on the order of 14 c/kWh and peak power prices have specific near-, medium-, and long-term options for supplying
typically ranged from 15–25 c/kWh (G8, RETF, 2001).
basic energy needs in rural areas using low-carbon technologies.
The optimal mix of options in different settings will depend on
In general, the costs of most forms of renewable energy have costs, scale, location, timing and availability of local resources and
declined substantially in recent decades. In the early 1990s, only expertise and a host of other factors. In general, a greater diversity
hydropower was competitive with electricity
generated by conventional power plants for on-
Research, development, and deployment phase
grid applications. However, expanding markets Commercialization phase
20 000
and experience-proven cost reductions have 1981
Photovoltaics
(learning rate - 20%)
since made wind and geothermal power
competitive or nearly competitive with other, 10 000
conventional sources. Solar photovoltaic United States
1992
1000 dollars per kilowatt-hour
Japan
technology remains more expensive, but can 5 000
1995
compete in some off-grid niche market
applications. These comparisons are, of course, Windmills (United States)
1982 (learning rate - 20%)
based on narrow criteria of strict cash flow and 2 000
ignore such other advantages as environmental
benefits, which renewable technologies can
1 000 1987
confer (G8 RETF, 2001, p.16-17).
Table 2 shows current and projected future costs 500 1963
for selected renewable technologies. The figures Gas turbines (United States)
(learning rate - 20%, -10%)
are somewhat dated, but indicate the extent to 1980
200
which additional experience, larger-scale
deployment and continued technology
improvement may reduce future costs. The 100
prospects for continued cost reductions are 10 100 1000 10 000 100 00
promising in view of the recent rapid growth in Cumulative megawatts installed (log)
renewable energy markets. During the past
several years, the global rate of increase in Figure 5. Experience curves for photovoltaics, windmills, and gas turbines in Japan
installed wind and photovoltaic capacity has and the United States. Source: UNDP, 2000, Figure 12.1, p. 436.
8
8 AHUJA ET AL | P8
S.A.P. I . E N.S
Energy Source /service Present Options Near Term Options Medium Term Options Long Term Options
Electricity Grid-based or no electricity Natural gas combined cycles, Biomass gasifiers coupled to Grid-connected photovoltaics
biomass gasifiers coupled to micro-turbines; mini grids and solar thermal, biomass
internal combustion engines, with combinations of gasifiers coupled to fuel
wind, photo-voltaics, small photovoltaics, wind, small cells and fuel cell/turbine
hydro for remote applications. hydro, batteries. hybrids.
Fuel Wood, charcoal, crop Natural gas, liquid petroleum Syngas, dimethyl ether. Dimethyl ether from biomass
residues, animal dung gas, producer gas, biogas. with electricity as a co-product.
Cogeneration — Internal combustion engines, Micro-turbines with Fuel cells, fuel cell/turbine
turbines. integrated combined cycles. hybrids
Cooking Woodstoves Improved wood-stoves, liquid Producer gas, natural gas, Electric stoves, catalytic
petroleum gas, biogas. dimethyl ether. burners.
Lighting Oil and kerosene lamps Electric lights Fluorescent and compact Improved fluorescent lamps,
fluorescent lamps compact fluorescent lamps
Motive Power Human, and animal power IC engines, electric motors Bio-fueled prime movers, Fuel cells
improved motors
Process heat Wood, biomass Electric furnaces, Induction furnaces, Solar thermal furnaces
cogeneration, producer biomass/solar with heat storage.
gas, natural gas/solar thermal furnaces.
thermal furnaces.
Table 3. Technological Options for Rural Energy. Source: Adapted from table 10.3, UNDP. 2000, p. 380.
of supply options will help to reduce exposure to resource and In comparison to the main non-renewable, low-carbon, electrical
technology risks. Of course, there are also trade-offs to consider. generating options, modern natural gas systems are relatively
Some standardization can help to reduce deployment costs and clean and efficient and can be cost-competitive where ample
make it easier to develop the local expertise required to operate supplies of natural gas are available. They can also be deployed
and maintain new technologies and systems. relatively quickly and in small (<100 MW) increments. In contrast,
nuclear technology is far more demanding. China and India are
Along with a need to extend basic electrical services to rural poised to make substantial investments in nuclear power during
areas, many developing countries face a rising demand for grid- the next few decades. However, this technology is unlikely to be
connected power to meet industrial and manufacturing energy attractive to smaller developing countries in the short- to mid-
needs and to provide electricity in fast-growing urban areas. In term because of the operational and waste management
countries that have access to substantial coal supplies, challenges it presents and the high initial investment required.
conventional coal-fired steam-electric power plants are often the Advanced coal systems with carbon capture and sequestration are
cheapest near-term option for the addition of large-scale, grid- in an even earlier stage of the research, development and
connected generating capacity. However, such investments risk deployment trajectory. Because of the high capital cost and the
locking-in decades of high carbon emissions and, unless modern relatively unproved nature of the advanced coal systems, most
pollution controls are used, substantial emissions of conventional analysts believe that developed countries will need to take the lead
air pollutants. These economy-environment trade-offs are in demonstrating and commercializing this option.
difficult to resolve, especially for poorer countries that have
pressing near-term needs for low-cost power. For those As noted in an earlier section, the mix of technologies and fuels
countries, assistance from developed countries will be essential used to meet electricity needs has become more diverse over time.
to offset the additional costs and technology demands of more In contrast, the transportation sector has remained, with few
expensive, but cleaner and lower-carbon, technologies. exceptions, overwhelmingly dependent on petroleum fuels. This
poses a problem to the environment as transportation accounts for
Shorter-term, commercial alternatives to high-emitting roughly one-quarter of global energy-related carbon dioxide
conventional coal plants include such renewable technologies as emissions. Further, the reliance on petroleum fuels fails to
wind and biomass;7 higher-efficiency conventional coal plants address the issue of energy and economic security despite recent
(e.g., super-critical and fluidized bed systems); nuclear power trends in world oil markets. The rapid growth in vehicle ownership
and, if natural gas is available, integrated, combined-cycle gas and overall travel are potential problems for many developing
turbines. In the long-term, advanced coal technologies, such as countries that already are contending with high levels of urban air
integrated, combined-cycle gasification systems, coupled with pollution and seeing a sharp rise in expenditures for imported oil.
carbon capture and sequestration must be successfully
commercialized to make continued reliance on coal resources In the short- to medium-term, developing and developed
compatible with global carbon limits. countries have two primary options for advancing sustainability
7
In addition, concentrating solar-thermal technology for the production of electricity has recently attracted renewed attention, with demonstration projects planned or underway in
several countries.
AHUJA ET AL | P9 9
objectives in the transportation sector: (1) improving vehicle • Reforming and re-directing energy subsidies.
performance by improved efficiency and emissions controls and • Identifying the most promising indigenous renewable
(2) promoting sustainable, low-carbon biofuels as an alternative energy resources and implementing policies to promote
to petroleum-based fuels. Both options have drawn increased their sustainable development.
attention in recent years. A number of countries with large vehicle • Seeking developed-country support for the effective
markets, including China and India, have adopted more stringent transfer of advanced energy technologies, while building
emissions standards and are considering the adoption of the indigenous human and institutional capacity needed to
automobile fuel economy standards. At the same time, global support sustainable energy technologies.
interest in biofuel development has intensified, due in part to • Speed the distribution of clean, efficient, and affordable
the adoption of aggressive fuel mandates in developed countries cook stoves.
like the United States. Brazil is already a world leader in this
area, having successfully developed a major domestic sugar Before proceeding to a more detailed discussion of these policy
cane ethanol industry that is economically competitive with recommendations, a caveat on the need for harmonized policies
conventional gasoline. and holistic approaches should be repeated. First, as noted in the
introduction, sustainable energy policies are more likely to
The current worldwide boom in biofuels is proving to be a mixed succeed if they also contribute to other societal and economic
blessing at best, especially in many developing countries where development objectives. Second, governments should review
biofuels are blamed for contributing to accelerated rates of policies to maximize positive synergies where they exist and to
deforestation, habitat destruction and high food prices. These are avoid creating cost-cutting incentives. In responding to various
significant issues that should be addressed expeditiously by a pressure groups, governments often adopt conflicting policies
thoughtful re-examination and reform of current biofuel policies that undermine each other, at least in part. For example,
in the developing world and also in the developed countries that government efforts to promote energy efficiency can be undercut
are behind much of the recent drive to expand global production. by subsidies that tend to promote increased consumption.
In the long run, the viability of biofuels as an alternative to oil, and
the ability to reconcile or minimize the conflicting interests of food Harmonization is not always possible due to political or other
production and habitat preservation, will depend on successful reasons. Thus, it may not be possible to pursue a comprehensive
commercialization of improved feedstocks and conversion set of policies all at once. Nevertheless, governments should
technologies. In general, such improvements as the ability to recognize that maximum benefits can be achieved by an
cost-effectively convert ligno-cellulosic feedstocks to ethanol approach that considers the interactions of different policies,
would also greatly enhance the net environmental benefits and leverages multiple opportunities where possible and responds to
greenhouse gas reductions achieved by switching from the specific needs and constraints of individual countries.
conventional fuels to biofuels.
5.1 ENERGY EFFICIENCY
5. POLICIES AND ACTIONS
Assessments of the cost of mitigating climate-change
The energy challenges that developing countries face are consistently find that energy efficiency improvements offer the
significant and increasing. Further, it is clear that developing largest and least costly emissions-reduction potential, while
countries will be unable to avoid the potentially large and adverse providing such important ancillary benefits as energy cost
consequences without concerted policy interventions by savings, reductions in emissions of conventional pollutants, a
developing and developed countries alike. reduction in the dependence on imported fuels and improved
economic competitiveness. Energy efficiency can be especially
This section focuses on a relatively short list of policy actions that important in rapidly industrializing countries as a way to manage
will help developing countries to avoid or minimize such rapid demand growth, improve system reliability, ease supply
consequences. None are easy to implement. All require the active constraints and allow energy the production and distribution
engagement of all sectors of society, including individual consumers infrastructure to ‘catch up.’
and local communities, non-governmental organizations, private
businesses and industry, the science and technology research As discussed earlier, historic trends reveal steady progress
community, governments, intergovernmental institutions and toward improved energy efficiency and lower energy intensity
charitable organizations. Developing countries must take the lead in (where intensity is measured by the amount of energy required to
charting new energy courses for themselves. However, developed deliver a unit of goods or services).
countries must stand ready to provide support, recognizing that they
have a vital stake in the outcome. These policy actions include: This historic rate of improvement can be expected to continue.
Nevertheless, without policy intervention, such improvements
• Promoting energy efficiency and adopt minimum are unlikely to keep pace with the continued growth in demand,
efficiency standards for buildings, appliances and especially in countries that are still in the early stages of
equipment, and vehicles. industrialization. Moreover, experience shows that market forces
10 AHUJA ET AL | P10
S.A.P. I . E N.S
by themselves often fail to exploit all cost-effective opportunities minimum standards. For example, governments can adopt
to improve energy efficiency.8 labeling requirements and pro-active public procurement
policies. Intergovernmental and non-governmental organizations
Countries like the United States have significant untapped energy and charitable associations can encourage or require the use of
efficiency potential. The U.S. economy, as often noted, is only half more efficient equipment. In some countries, utility companies
as efficient as the Japanese economy. In other words, the United have been successfully enlisted to help promote efficiency by
States consumes twice as much energy per dollar of GDP as end-use customers. There is a substantial history of such
Japan. However, the opportunities are also great in some rapidly programs in the United States. However, there are also examples
industrializing economies. China, for example, consumes nine in other countries (text box A describes a utility-led initiative in
times as much energy per dollar of GDP as does Japan. Overall, India). Energy-efficiency or ‘demand-side management’
a recent assessment of global efficiency opportunities by the programs can provide a number of benefits in developing
McKinsey Global Institute (2007) indicated that the average countries, including lower costs to customers, an fewer electrical
annual rate of decline in global energy intensity could be raised in supply problems, greater system reliability and a more moderate
a cost-effective way to 2.5 percent per year. This would be growth in demand.
essentially double the recent global rate of decline, which has
been averaging approximately 1.25 percent per year. This is a 5.2 SUBSIDY REFORM
significant finding as it confirms that even relatively small
changes in year-to-year improvement of energy efficiency can Although energy subsidies have declined during the last decade
produce a wide divergence of outcomes over time. in many parts of the world, subsidies for fossil fuels still amount
to tens of billions of U.S. dollars in developing countries.
Although it might seem insensitive to recommend energy
conservation to countries that consume so little by global
standards, the historical record indicates that small, incremental BOX A. A UTILITY-LED EFFICIENT LIGHTING PROGRAM
and cumulative improvements in efficiency over long periods can IN BANGALORE, INDIA
deliver enormous benefits by making the economies of countries
less wasteful, more productive and more competitive. The The Bangalore Electric Supply Company (BESCOM), a distribution
potential benefits of such improvements are very significant in company that serves the Bangalore metropolitan area in the state
countries that have a rapidly growing demand for new of Karnataka recently partnered with the International Institute
infrastructures, buildings, appliances and equipment. It is usually for Energy Conservation to implement a program to replace
much easier and more cost-effective to create a high level of inefficient incandescent light bulbs with compact fluorescent
efficiency at the outset than to improve efficiency later. Moreover, lights (CFLs).
policies that “ride the waves” of grand transitions (in the sense
that they are consonant with other major societal or technological The program was motivated in part by the need to address peak
changes) are less likely to encounter friction than those that run power shortages.
counter to them. In most situations and all countries, it is
essential to have programs that promote more efficient use of Within the developing world, the BESCOM Efficient Lighting
energy (G-8 RETF, 2001, p. 5). Program (BELP) was innovative for several reasons: The program
was undertaken on a substantial scale so that distribution utilities
Governments have important roles to play in promoting energy everywhere could witness its implementation and impact.
efficiency and conservation. Efficiency standards for appliances,
equipment and automobiles have proved to be extremely cost- • Over nine months, BESCOM's monitoring and verification
effective in many developed countries and are often relatively program indicated that 100,000 customers bought an
easy to implement compared to other policies, particularly if they average of two CFLs. The estimated program benefits
can be harmonized with the standards adopted in other large included a 300-percent increase in CFL sales, a reduction of
markets. Efficiency standards or codes for buildings, especially 12 megawatts in peak-power demand, energy savings of 10
commercial buildings, are extremely important because of the megawatt-hours and a total of 100 tonnes of carbon dioxide
long useful life of most structures. However, to be effective, reductions.
countries will need to educate architects and builders and • The utility and industry formed a novel and replicable
develop the means to monitor performance and enforce partnership, in which BESCOM used its billing and
compliance with the codes. By setting a floor or baseline for collection system to pass on energy savings to customers
energy efficiency, minimum standards can ensure that there will and CFL vendors agreed to meet international product
be substantial energy savings in the future. specifications and provide improved warranties.
• Except for the program design, which was funded by the
To secure additional benefits and ensure that manufacturers U.S. Agency for International Development, all marketing
continue to innovate, other policies and incentives are needed to costs were borne by BESCOM, demonstrating that
generate a demand for products that perform above the subsidies are not always necessary.
8
A recent report by the McKinsey Global Institute found that half of all growth in global emissions could be avoided at a negative net cost by using energy efficiency measures. Specifically,
the report stated that a global investment of $170 billion US per year in energy efficiency would yield $900 billion US in benefits annually by 2020, providing an average internal rate of
return on investment of 17 percent per year. See: http://www.mckinsey.com/mgi/publications/Curbing_Global_Energy/index.asp
AHUJA ET AL | P11 11
The BELP program was widely viewed as a success and promotion of sustainable energy outcomes. The research
subsequently served as a model for lighting programs sponsored community and non-governmental organizations (NGOs) should
by other companies. In addition, the Ministry of Power's Bureau of respond to this challenge and explore possible solutions,
Energy Efficiency (BEE), which implements the Energy including new mechanisms for transferring aid to poor
Conservation Act of 2001, recently announced a bulk purchase households to enable them to meet their basic needs.
program to further reduce the price of CFLs and invited distribution
utilities in India to participate. Several vendors have agreed to Of course, in the longer-run, energy prices for fossil fuels should
reduce their prices by an across-the-board carbon financing not only be subsidized, but also increased to reflect
mechanism, and BESCOM has continued to scale-up its program. environmental and public health externalities that are not
presently recognized by the marketplace. In principle, monetizing
positive and negative externalities and ensuring that they are
Cumulatively, these subsidies are less than the taxes imposed on included in energy prices is an elegant way to address many
such fossil fuels as petrol (G-8 RETF, 2001). However, they have issues of sustainability. Without this step, the market will tend to
several effects that undermine, rather than bolster, sustainable over-allocate resources where there are negative externalities
energy objectives. First, by artificially reducing the price of certain (such as pollution) and under-allocate resources where there are
fuels, they distort the market and encourage inefficient levels of positive externalities (such as improved energy security).
consumption (that is, consumption in excess of what the society
would use if it was necessary to pay a price that was based on The difficulties associated with internalizing externalities are
market demand or on real costs). Second, fossil fuel subsidies essentially parallel to those associated with removing subsidies,
make it more difficult for energy efficiency and cleaner sources of with the added complication that it is often difficult to place a
energy to compete. precise monetary value on certain impacts. Figure 6 illustrates
the results of one attempt by the European Commission to
The usual justification for subsidies is that they help the needy. In quantify the external costs of global warming, public health,
fact, many developing-country governments rely on subsidies occupational health and material damage associated with
largely because they lack other reliable mechanisms to make different ways of generating electricity. It shows that the ignored
transfer payments to the poor. However, even as a mechanism to costs that are associated with coal, lignite and oil often greatly
alleviate poverty, the use of subsidies is unsound. Because it is often exceed the current cost differential with many renewable
difficult or impossible to restrict the use of subsidies to the neediest technologies. However, there is considerable uncertainty about
households, most of the benefit typically goes to wealthier the specific number for external costs that should be assigned to
households, which can afford a higher level of consumption. any technology.
Of course, fossil fuel subsidies are not restricted to developing These difficulties are not insurmountable. Governments are
countries. They are provided in many countries. They are also continually forced to make decisions based on reasonable
addictive and those who benefit from them are usually unwilling judgment and negotiated in a political process in the face of
to give them up. Thus, analysts may conclude that subsidies uncertainty. In practice, the greatest difficulty is likely to be
should be eliminated or phased out. However, this is difficult for political. Raising energy prices is almost always very unpopular
politicians who must renew their mandates periodically. with business leaders and the public. There will be objections that
higher energy prices may harm consumers and the economy,
Thus, reforming and re-directing energy subsidies, if necessary, particularly competitive industries and low-income households.
over time rather than all at once, may be a more realistic strategy
for developing countries than attempting to abolish all subsidies
simultaneously. For example, a gradual reduction in subsidies for
16
conventional fossil fuels could be used to provide new subsidies for
14
more sustainable forms of energy or more efficient technologies.
12
Alternatively, public resources that are conserved by reducing
10
subsidies could be directed toward other societal needs. 8
6
Where there is concern that poor households will be unable to 4
access basic energy services if they are required to pay the full 2
market price, it might be feasible to provide subsidies of up to only 0
Coal & Oil Biomass Hydro PV Wind
a certain level of consumption. This is more likely to be Lignite
practicable for electricity than for portable fuels like petrol or
kerosene. For example, low-income households could be offered Figure 6. External Costs of electricity production in the EU in
Eurocent/kWh. Source: Data from the European Commission-
reduced electrical rates for the first increments of consumption.
ENERGIE Programme (European Union 5th Research and
In summary, creative policy approaches are needed to reconcile Technological Development Framework Programme). G-8 RETF,
the differing interests of energy access expansion and the 2001, Figure 4, p. 19.
S.A.P. I . E N.S
As in the reduction or removal of subsidies, any effort to addition, researchers and advocates must avoid the tendency to
internalize externalities must deal with the conflicting desires to understate costs or to minimize potential problems with the
raise prices for many conventional forms of energy and to expand technologies that they develop. Other aspects of this challenge are
access for the poor. (This general point applies whether discussed in subsequent sections, which address the importance
government seeks to internalize externalities by a tax or by of expanding and improving international technology transfer
environmental regulation.) Because of the parallel situations, initiatives and the need to build institutional and human capacity.
some of the approaches used in subsidy reform may be helpful,
including the use of a gradual approach and offsetting the impact
on poor households by other forms of assistance. If the BOX B. USING RURAL COOPERATIVES FOR PV ELECTRICITY
mechanism used to internalize externalities is an emissions tax, IN BANGLADESH
the additional public revenues can be used to provide increased
support for social services or other (non-energy) necessities, or The Grameen Bank of Bangladesh, a world-renowned micro-
to subsidize other forms of consumption that primarily benefit lending agency, established a non-profit subsidiary, Grameen
the poor. Shakti, in 1996 to administer loans for photovoltaic solar home
systems to serve those who had no access to electricity. Initially,
5.3 INDIGENOUS SUSTAINABLE RESOURCES Grameen Shakti found that long distances, poor transport
infrastructure, periodically flooded and impassable roads, low
Many developing countries have abundant renewable energy literacy rates, lack of technical skills and transactions based on
potential and could benefit from the positive economic spillovers barter contributed to high transaction costs and difficulty in
generated by renewable energy development, especially in building consumer confidence in their product. In 1998, a Global
underserved rural areas where decentralized, small-scale Environment Facility (GEF) grant enabled Grameen Shakti to offer
renewable energy technologies are likely to be competitive with improved credit terms to its customers and install thousands of
conventional alternatives. systems. It also found that a critical mass of installations in an
area (of the order of 100 systems) built consumer confidence,
In most cases, however, government policies and public support making it easier and less time consuming to expand the
will be necessary to take advantage of these opportunities. The customer base (G8, RETF, 2001). Grameen Shakti now expects to
World Bank has concluded that incentives are usually required to be able to draw additional financing for scale-up activities from
motivate the private sector to invest in providing services to the commercial banks.
remote and underdeveloped areas where the poor reside. There
is a case for providing intelligently designed incentives and/or
subsidies for the development and use of appropriate It is obvious that government support is required to demonstrate
technologies in these areas, preferably in ways that are targeted, new sustainable energy technologies and in the early stages of
simple, competitive and time-limited (G8 RETF, 2001). deployment described above. However, government involvement
is needed even more in the early stages of research and
Incentives or subsidies alone will not always suffice to overcome development (R&D). Not surprisingly, developed countries have
market barriers, especially for risky projects in less accessible historically taken the lead in energy R&D spending because they
areas of developing countries. In those cases, direct financial have had the resources to do so. This will likely continue.
support from the government or outside groups or institutions However, this does not mean that there is no role for developing
may be necessary to implement renewable energy projects. countries. Some of the larger developing countries have sufficient
There is ample precedent for such interventions. International aid resources to permit them to invest significantly in technology.
organizations and other entities have invested millions of dollars Others can participate by targeting investments and/or working
in sustainable energy projects in developing countries. However, cooperatively with other countries or institutions to ensure that
the record if success for such investments is decidedly mixed. their R&D efforts address the specific opportunities and
Many projects have failed over time as a result of inadequate constraints that apply in developing countries. Investment in
attention to practical problems, local conditions and a need for energy R&D can also be seen as a way to build indigenous human
ongoing maintenance and operational expertise. capital in science and engineering. Brazil, for example, has
nurtured a viable domestic biofuels industry through all stages of
Because of the enormity of the challenge in relation to the technology development, deployment and commercialization
resources available, it is essential that future efforts are more (see Box C).
successful than in the past. This can be accomplished in part by
taking greater care in the design and implementation of projects However, governmental support for energy R&D is declining in all
and by ensuring that the skills and financial resources needed to countries (UNDP, 2000, p. 448). In view of the challenges, this
sustain new energy installations are in place. For its part, the trend must be reversed because only governments take a long
research community should put greater emphasis on developing enough view (in the order of decades) to support the long-term
renewable energy technologies that are robust and well-adapted investments in energy R&D that are needed to fully
to the specific conditions found in developing countries. In commercialize new technologies.
BOX C. NATIONAL ALCOHOL PROGRAM IN BRAZIL • Effective mechanisms and enhanced means for the
removal of obstacles to, and provision of, financial and other
When concerns about gasoline (petrol) shortages emerged in the incentives for the scaling up of the development and
first half of the 20th century (1896–1943), many European nations transfer of technology to developing countries to promote
experimented with programs to blend gasoline and alcohol. access to environmentally sound technologies.
However, as supply concerns faded, so did these programs. Brazil’s • Ways to accelerate deployment, diffusion and transfer of
earliest attempts to introduce blended automotive fuels occurred in affordable environmentally sound technologies.
1903. However, a full-scale biofuel effort did not begin until 75 years • Cooperation in R&D of current, new and innovative
later when the National Alcohol Program (Pro-Alcool) was technology.
launched in 1975 in response to a dramatic rise in international oil • The development of effective mechanisms and tools for
prices and the resulting adverse balance of payments. technology cooperation in specific sectors.
At various times, Brazil’s Pro-Alcool program has favored the use While the current situation requires more technology transfer, it
of neat hydrated alcohol (96 percent ethanol, 4 percent water) and also demands that technology transfer be done better. In the past,
gasohol (74 to 78 percent gasoline and 22 to 26 percent anhydrous too many well-intended projects have failed to live up to
ethanol), both of which are produced from sugar cane. Brazil now expectations. To ensure that rural areas of developing countries
has the largest program of commercial biomass utilization in the do not become graveyards for sustainable energy technologies,
world (UNDP, 2000, p. 229). Although automobiles that run on sustained attention must be paid by both host and donor nations
hydrated alcohol are no longer produced in Brazil, those that run to the human and institutional capacities needed to support these
on blends sustain an annual production of 200,000 barrels of technologies on a long-term basis (UNDP, 2000, p. 441).
ethanol per day. From 1975 to 1989, the value of the oil imports
that were replaced by this production was about $12.5 billion US, Research shows that technology transfer is more successful and
although investments in the program during the same period did more likely to produce innovation when the host institution has
not exceed $7 billion US (Rosa and Ribeiro, 1998, p. 466). The the requisite technical and managerial skills. Thus, there is an
value of oil imports displaced reached $40 billion US during the urgent need to develop skills to produce, market, install, operate
first 25 years of the program’s operation. and maintain sustainable energy technologies in developing
countries. Ensuring that as much of this capacity-building as
Brazil’s program has brought many social, economic, and possible takes place in local communities and that companies
environmental benefits. It has created significant numbers of based in the host country have the potential to provide additional
skilled and semi-skilled jobs, played a significant role in benefits in local job creation and economic development because
developing a strong agro-industrial base, reduced urban project developers and operators are likely to be more effective if
environmental pollution by reducing carbon monoxide emissions they have close ties to the population that will use the technology.
and improved the global environment by curbing carbon dioxide One potentially promising approach to capacity building involves
emissions. Subsidies for this program were gradually reduced the development of regional institutes that can provide training in
and then eliminated completely in 1999. Not surprisingly, the basic technology skills to local organizations and individuals
program seems to flourish most when international oil prices are drawn from the local population. Such institutes could also help
high and international sugar prices are low. to provide independent assessments of alternative technologies
and policy choices and explore practical strategies for
overcoming real-world barriers to further deployment of
5.4 TECHNOLOGY TRANSFER AND DEVELOPMENT sustainable energy technologies (UNDP, 2000, p. 441; Martinot et
OF HUMAN AND INSTITUTIONAL CAPACITY al, 2002). The Consultative Group on International Agricultural
Research (CGIAR) has successfully used this approach to
Substantial efforts to facilitate technology transfer from disseminate technological and scientific advances in agriculture
developed countries to developing countries are essential to the to developing countries. This may provide a promising model for
achievement of global sustainability objectives. This is widely the energy field.
acknowledged and was affirmed most recently at the December,
2007, UN Conference on Climate Change in Bali. At that In summary, successful technology transfer and a worldwide
conference, developing-country negotiators called for language expansion of the human and institutional capacities needed to
that explicitly linked mitigation action by developing countries to implement sustainable technologies are essential elements of an
“measurable, reportable and verifiable” support for technology, effective global response to the energy challenges that we face.
finance and capacity-building. To meet these challenges, developed countries will need to
follow through on current commitments and work closely with
Accordingly, Decision 1(d) of the Bali Action Plan9 calls for developing countries to make the most effective use of scarce
enhanced action on technology development and transfer to resources. Developing countries must not be passive
support action on mitigation and adaptation, including the bystanders in that process. They have everything to gain by
consideration of: leveraging future investments to build their indigenous human
9
Source: http://unfccc.int/files/meetings/cop_13/application/pdf/cp_bali_action.pdf
S.A.P. I . E N.S
and institutional capacities and by taking the lead in adapting 6. CONCLUSION

and improving sustainable energy technologies to suit their
particular needs. For the past 10 to 15 years, the energy sectors in most countries
have been in turmoil. Many developing countries have been
5.5 CLEAN, EFFICIENT COOK STOVES attempting to restructure their energy sectors, but are finding it
difficult to implement reforms. The reasons include the
The rationale for immediate policy action to accelerate the multiplicity of actors involved, the changing perceptions of the
transition from traditional cooking methods to the use of clean, relative roles of the market and governments, and the
efficient cook stoves is based on public health and welfare accumulation of policies of past decades, many of which may
concerns. Therefore this recommendation stands somewhat have made sense when they were proposed, but now impose
apart from the others discussed here, which tend to be motivated unsustainable burdens. Meanwhile, a sharp run-up in world
by broader environmental and energy security concerns. energy prices over the last two years and growing concerns about
the supply of conventional petroleum (and natural gas, in some
Improved cook stoves are worth mentioning, however, because parts of the world), combined with projections of continued strong
they offer enormous public health and welfare benefits at a growth of demand globally and greater awareness of the threats
relatively low cost. It has been estimated that exposure to indoor posed by climate change, have brought a heightened sense of
pollution from the use of fuels like wood and dung for cooking and urgency to national and international energy policy debates.
space heating causes as many as 1.6 million deaths annually
throughout the world, primarily women and young children The current energy outlook is challenging to say the least.
(WHO, 2002). In addition, the need to gather fuel can cause local Whether governments are chiefly concerned with economic
environmental degradation and take up great amounts of time, growth, environmental protection or energy security, it is clear
particularly for women and girls that might otherwise be that a continuation of current energy trends will have many
available for more productive activities. A shift away from undesirable consequences at best, and risk grave, global threats
traditional fuels for cooking could marginally increase demand to the well-being of the human race at worst.
for commercial fuels like propane, natural gas or electricity. The
change would be quite small in relation to overall energy The situation in developing countries is in many ways more
requirements and more than justified from a social welfare difficult than that for developed countries. Not only are there
perspective. Various programs have been instituted to distribute obvious resource constraints, but also a significant part of the
improved cook stoves to poor households in rural areas. One is population may lack access to basic energy services.
described in Box D.
Yet, developing countries also have some advantages. They can
learn from past experience, avoid some of the policy missteps of
BOX D. CERAMIC CHARCOAL STOVES IN KENYA the last half century and have an opportunity to “leapfrog”
directly to cleaner and more efficient technologies. Fortunately
The Kenya Ceramic Stove (jiko) is one of the most successful cook many essential elements of a sustainable energy transition can
stove initiatives in Africa (UNDP, 2000, p. 198). Between the mid- be expected to mesh well with other critical development
1980s and the mid-1990s, more than 780,000 of these stoves objectives, such as improving public health, broadening
were distributed. Today, some 16 percent of rural households in employment opportunities, nurturing domestic industries,
Kenya also use these more efficient jiko stoves. expanding reliance on indigenous resources and improving a
country’s balance of trade.
The program promotes a stove that is made of local ceramic and
metal components by the same artisans who make traditional This does not mean that cleaner, more efficient technologies will
stoves. The new stoves do not differ radically from traditional all- usually be the first choice or that difficult trade-offs can always be
metal stoves, except that their energy efficiency is close to 30 avoided. In the near term, many sustainable energy technologies
percent. The remarkable feature of this program is that it has are likely to remain more expensive than their conventional
received no government subsidies. This lack of subsidies has counterparts. Even when they are cost-effective, as is already the
forced private entrepreneurs to undertake the production, case for many efficient technologies, powerful market failures
marketing and commercialization of the stove at prices that and barriers often stand in the way. Changing the incentives and
Kenya’s low-income households can afford. The project has been overcoming those barriers is now more a question of political will
successfully replicated in Malawi, Rwanda, Senegal, Sudan, and coordination than one of adequate resources (at least at the
Tanzania and Uganda (UNDP, 2000, p. 198). global level).
However, the stove still requires charcoal, which must be This doesn’t make the task any easier. In surveying the current
produced and transported. Charcoal production has been very landscape, one can find ample justifications for a profoundly
inefficient historically and will need attention if the program is to pessimistic view—or an equally optimistic view. Which outlook
reach its full environmental potential. proves more accurate will depend to a large extent on how quickly
developed and developing countries recognize and begin to act United Nations Development Programme (2004). World Energy
upon their shared stake in achieving positive outcomes that can Assessment: Overview—2004 Update, Jose Goldemberg and
be managed only by working together. Thomas Johansson (eds.), New York.
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Assessment: Energy and the Challenge of Sustainable
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Ernest Samuels, Houghton Mifflin Company, Boston.
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Ausubel, J. (1996). The Liberation of the Environment, in Energy, WSSD .
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Sciences, Summer pp.1-17. World Bank (2002). Economic Development, Climate Change and
Energy Security: The World Bank’s Strategic Perspective.
Ausubel, J. & C. Marchetti (1996). Elektron: Electrical Systems in
Retrospect and Prospect, in Daedalus, Journal of the American
Academy of Arts and Sciences, pp. 139-169.
Canadell, J.G., et al. (2007). Contributions to accelerating

atmospheric CO2 growth from economic activity, carbon
intensity, and efficiency of natural sinks, in PNAS, Proceedings of
the National Academy of Sciences of the United States of
America, vol. 104, no. 47, p.18866-18870.
Economist, Survey of Energy, 10 February 2001.
Economist, The Dawn of Micropower, 5 August 2000, pp. 77-81.
Grubler, A. (1998). Technology and Global Change, Cambridge

University Press, Cambridge, UK.
G8 Renewable Energy Task Force, Final Report, July 2001.
De Moore, A. & P. Calamai (1997). Subsidizing Unsustainable

Development: Undermining the Earth with Public Funds, the
Earth Council.
Kates, R.W. (1996). Population, Technology and the Human

Environment: A Thread through Time, Daedalus, Journal of the
American Academy of Arts and Sciences, pp. 43-71.
Martinot, E., et al. (2002). Renewable Energy Markets in

Developing Countries, Annual Rev. Energy Environ, 27:309-48.
Nakicenovic, N. (1996). Freeing Energy from Carbon, in Daedalus,

Journal of the American Academy of Arts and Sciences, pp.
95-112.
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Assessment, pp. 31-37, UNDP.
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Dioxide through the Use of Fuels Derived from Sugar Cane,
Ambio 27(6), pp. 465-470.

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Sustainable energy for

Keywords: Energy, services, policies, sustainable development, electricity,

1. INTRODUCTION biomass-based fuels such as wood, dung and charcoal) to

At a macro level, the policy options recommended here will be Combustible

consumption could grow nearly as strongly as total energy

Harnessing oxen increased the power available to human beings 3

however, coal will continue to dominate and account for roughly

20 000 nitrogen oxides, hydrocarbons and particulate matter) can be

example is the use of natural gas for the production of electricity.

Potential averaged as much as 30 percent per year, creating some of the

Table 2 shows current and projected future costs 500 1963

and institutional capacities and by taking the lead in adapting 6. CONCLUSION

REFERENCES United Nations Development Programme (2000). World Energy

Canadell, J.G., et al. (2007). Contributions to accelerating

Economist, Survey of Energy, 10 February 2001.

Economist, The Dawn of Micropower, 5 August 2000, pp. 77-81.

Grubler, A. (1998). Technology and Global Change, Cambridge

G8 Renewable Energy Task Force, Final Report, July 2001.

De Moore, A. & P. Calamai (1997). Subsidizing Unsustainable

Kates, R.W. (1996). Population, Technology and the Human

Martinot, E., et al. (2002). Renewable Energy Markets in

Nakicenovic, N. (1996). Freeing Energy from Carbon, in Daedalus,

Rogner, H.-H. & A. Popescu (2000). Chapter 1, World Energy

Rosa, L. P. & S. K. Ribeiro (1998). Avoiding Emissions of Carbon

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