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OVERVIEW: ENERGY AS AN INSTRUMENT FOR SOCIO-ECONOMIC DEVELOPMENT

JOSGOLDEMBERG1 AND THOMAS B. JOHANSSON2

A better life and an improved standard of living are the fundamental aspirations of the 70 per cent of humanity living in the poor countries of Africa, Latin America, Middle East, and Southeast Asia, and socio-economic development is a means to achieve it. It is estimated that worldwide 2 billion people live below the poverty line. This situation is fertile ground for political unrest. Hopelessness and despair also lead people to emigrate to the industrialized countries in search of a better future.

For the poor, a better life first means satisfying the basic human needs, including access to jobs, food, health services, education, housing, running water, sewage, etc. In providing for these needs, energy is an important element.

To help solve the poverty problem is a major objective of the United Nations. A series of Intergovernmental Conferences, and the on-going work between them throughout the U.N. system, address sustainable socio-economic development issues. However, the role of energy tends to be left out. For these reasons, UNDP, decided to prepare a document dealing with (a) the links between energy, socio-economic development, and wider social issues, and (b) ideas on how changes in the way energy is produced and used can be instrumental in socio-economic development, poverty alleviation, and social change, as well as in improving the living conditions of women.

Energy was an area of intensive debate at the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro in June 1992. In Agenda 21, chapter 9, it was agreed that current patterns of production and utilization of energy cannot be sustained, and that one of the ways of promoting sustainable development is to reduce adverse effects on the atmosphere from the energy sector. Agenda 21 identified two directions in which the energy system could evolve: (1) toward more efficient production, transmission and distribution, and end-use of energy, and (2) toward greater reliance on environmentally sound energy systems, particularly new and renewable sources of energy. Of course, the two approaches are related. Coupled with high energy end-use efficiency, renewable sources of energy are capable of covering a larger share of the world's energy needs.


Figure 1 - The energy system, from extraction of primary energy to energy services. The energy system encompasses the chain from extraction of primary energy to energy services. Examples are given of specific chains. The energy sector is identified as part of the energy system.

Energy is of little interest in itself. However, it is an essential ingredient of socio-economic development and economic growth. The objective of the energy system is to provide energy services. Energy services are the desired and useful products, processes, or services that result from the use of energy, for instance, illumination, comfortable indoor climate, refrigerated storage, transportation, appropriate temperatures for cooking, materials, etc. The energy chain to deliver these services begins with the collection or extraction of primary energy, which is then converted into energy carriers suitable for the end-use(s). These energy carriers are used in energy end-use technologies to provide the desired energy services (see Figure 1). Thus far, most discussions of the energy sector have focussed on supply-side issues. However, the energy system involves much more than what is conventionally considered the energy sector and unless the scope of discussions about energy is extended, energy efficiency will receive less attention than it deserves.3

The efficiency of energy conversion is one characteristic of each step of the energy chain. It is measured through the concept of specific energy use, which is the energy used per unit of an energy service. For instance, in the case of illumination, specific energy use is measured by lux levels per kWh; in the case of refrigeration, it is measured by the number of kWhe per liter of refrigerated volume per year; when the service is a product, specific energy use is measured by the energy used per unit quantity of product (e.g., kWh per kg of steel). Energy efficiency can be improved in each step of the energy chain. Energy efficient technologies, therefore, lead to a lowering of the specific energy use for an energy service.

This paper only addresses energy conservation measures that result in the use of less energy to provide the same energy service, or to achieve more energy services for the same energy. An illustrative example of this is the switch from kerosene wick-lamps to fluorescent tubelights in villages in developing countries. Experience from Pura Village in South India shows that the household expenditure for lighting was cut in half despite the fact that illumination increased by a factor of about 19, and the energy input decreased to one ninth compared to the kerosene originally used.4 This stress on energy services is crucial in developing countries where the current levels of energy services are unacceptably low.

The importance of energy in socio-economic development was first emphasized in work of the Bariloche Foundation in Argentina, that pioneered studies on the role of energy in socio-economic development, using the Latin American World model.5 The energy requirements of this approach have been developed further to estimate the energy requirements to satisfy basic human needs.6 Figure 2 shows a plot of social indicators such as illiteracy rate, infant mortality, life expectancy and total fertility rate versus commercial energy consumption per capita, which is used as a proxy for energy services, for which data are not available. Because the efficiency of energy use in countries with the lowest per capita energy use is much lower than in countries with higher per capita energy use, the relative level of energy services is even lower in the low per capita energy use countries. This inefficiency is large enough to also compensate for the omission of non-commercial sources of energy in Figure 2. Therefore, Figure 2 presents an understatement of the real situation.


Figure 2 - Life Expectancy, Infant Mortality, literacy, and Total Fertility Rate as a Function of Commercial Energy Consumption Per Capita.

Note: Non-commercial fuels are not included.

Sources: World Energy Council, Energy for Tomorrow's World, Kogan Page Ltd, London (1993), and J. Goldemberg (unpublished).

In the majority of the developing countries, where commercial energy consumption per capita is below 1 ton of oil equivalent (toe) per year, illiteracy and infant mortality as well as the total fertility rate are high, while life expectancy is low. Surpassing the annual 1 toe per capita energy use level, therefore, seems to be an important ingredient of development.

Low energy consumption is not the cause of poverty. However, it is an indicator for many of its elements, such as poor education, bad health care, the hardship imposed on women and children, etc. As annual commercial energy consumption per capita increases and surpasses 2 toe per capita (or higher) in industrialized countries, social conditions improve considerably. Average annual energy consumption per capita in OECD countries is approximately 5 toe per year. It should be noted that these graphs illustrate a covariation, and that they relate to energy, not energy services. Also, the relationships are shown for averages of 10 countries, and are not without exception for individual countries.

Energy in itself is not a basic human need. However, it is required in meeting any and all of the basic needs (food, shelter, health, education, employment, etc.).7 Most conventional energy strategies fail to help meet basic human needs for the poor majorities in developing countries. Analysis indicates that energy becomes an instrument for the eradication of poverty only when it is directed deliberately and specifically toward the needs of the poor.8

Energy use varies considerably in the world. Table 1 shows some energy use per capita data on a regional basis. There is a 20-fold difference between North America and South Asia. Fossil fuels contribute 78 per cent and renewable sources of energy 18 per cent, 60 per cent of which is traditional biomass. The biomass contribution in industrialized countries is below 2 per cent, while reaching 46 per cent in South Asia and 53 per cent in Sub-Saharan Africa.

Also in developing countries, differences in energy use are large. People in urban areas use more energy than in rural areas, the relatively few rich use not only more energy, but also shift towards larger fractions of modern energy carriers, especially oil products and electricity. Again, the differences in energy services are larger than the differences in energy use.

Energy and Sustainable Development

In order to gain additional insights into the relationship between energy consumption and social conditions in general, and particularly the situation of women, we asked a number of leading specialists around the world to prepare papers on:

1. the level of energy use necessary for meeting basic human needs and achieving sustainable human development;

2. how the lack of energy, and its inefficient use, constitute obstacles to improve living standards; and

3. how such obstacles can be removed, either by improving the efficiency of energy use or by using new, environmentally benign sources of energy

Ten essays were prepared and they contain a wealth of documented information on particular countries that represent a good sample of the situation in the developing world.

Carlos Suz, along the lines of the classical work conducted at the Bariloche Foundation more than twenty years ago on the Latin American World Model, plots the Human Development Index (HDI)9, as a function of commercial energy consumption with results rather similar to the ones indicated in Figure 2. He also points out that "the developing countries and particularly their lower income sectors, are all located in the first part of the curve (below 1 toe/capita/year). It is, therefore, indispensable to find the ways to increase their (useful) energy availability."

Srilatha Batliwala and Daniel Kammen review, in their respective papers, the costs of obtaining energy services in rural areas, and highlight the fact that the poor pay a much higher price for the energy they need than any other sector of society since energy is used very inefficiently. In Batliwala's words: "In the face of inadequate inanimate energy and a lack of access to efficient technologies of energy use, the poor are forced to depend on their own labour, on animal power, and biomass energy resources, to meet their survival needs."

Table 1 - Primary Per Capita Energy Consumption in Different Regions in 1990 (toe/capita)


Fossil Fuels

Nuclear Energy

Renewable Energy

Total


Coal

Oil

Nat. Gas


Hydro

Trad.

"New"


North America

1.84

2.93

1.80

0.53

0.48

0.14

0.12

7.82

Latin America

0.05

0.49

0.18

0.01

0.18

0.28

0.11

1.29

Western Europe

0.73

1.25

0.56

0.37

0.22

0.04

0.04

3.22

C&E Europe

1.56

0.49

0.64

0.11

0.05

0.04

0.04

2.92

CIS

1.26

1.31

1.97

0.16

0.17

0.09

0.04

5.01

M.E. & North Africa

0.03

0.62

0.43

0.00

0.02

0.08

0.00

1.17

Sub-Saharan Africa

0.14

0.08

0.01

0.00

0.02

0.28

0.01

0.53

Pacific

0.41

0.27

0.06

0.04

0.04

0.19

0.02

1.02

(of which CPA)

(0.46)

(0.08)

(0.01)

(0.00)

(0.02)

(0.17)

(0.01)

(0.76)

South Asia

0.11

0.05

0.02

0.00

0.02

0.18

0.03

1.39

World

0.44

0.52

0.32

0.08

0.09

0.18

0.03

1.66

Source: World Energy Council, Energy for Tomorrow's World, Kogan Page Ltd, London (1993).

The price is paid in the form of: human time and labour; economic cost; health costs (both in cooking and malnutrition due to energy scarcity); and social and gender impact of scarcity of energy services.

The most salient aspect of the energy problem in low-income rural areas in Africa and Asia is the importance of traditional biomass fuels for cooking. Roughly half of the world's population relies on such fuels, mainly fuelwood. The gathering of such fuel is becoming more difficult as land degradation spreads. According to Ndey-Isatou Njie, in the year 2000, the world deficit of fuelwood will reach 960 million cubic metres per year, the energy equivalent to 240 million tons of oil per year. The consequences of such deficit in increasing drudgery and time of collection of fuelwood is staggering. Women are already often forced to walk 10 km per day carrying loads of up to 35 kg of fuelwood. Also very serious are the health hazards of inhaling the smoke from biomass fuels used for cooking, as discussed by Deng Keyun and Daniel Kammen. The supply of fuelwood, especially to urban areas, is a contributing factor to deforestation and land degradation, as discussed both by Ndey-Isatou Njie and Daniel Kammen, although the major cause thereof is expansion of agricultural activities.10

The linkage between poverty, human conditions, and the way energy is used is clear from the observations above. Given the magnitude of these problems and issues, are there ways forward?

Laura Nader makes a number of sobering points, stressing the need for a holistic approach to the energy problem. She states that "anthropologists first defined the energy problem as a social and cultural problem rather than technological. This approach forces a recognition of the roles that values play in planning sustainable futures." This is a rather important point: although the capacity of humans to change the globe in irreversible ways was limited in more primitive societies, that is no longer true today. In addition, citizens are losing control to large structures and bureaucracies because "modern cultures do not provide the necessary cultural knowledge for people to participate in choosing technologies." All this points in the direction of the need to avoid an unduly large energy consumption "by decoupling notions such as high energy expenditures and quality of life." There is no compelling reason for developing countries to imitate the industrialized countries in some of their extravagant ways of using energy, and social and cultural values are very important to that end.

Energy End-Use Efficiency Improvements

The first area to consider is more efficient use of energy. In the case of extraction and conversion of primary energy and the transmission and distribution of energy carriers, the specific energy use can be reduced by about 10 to 40 per cent (with respect to the energy use levels of the present average stock of equipment in industrialized countries). The corresponding figure is 20 to 50 per cent in the case of efficiency improvements in existing energy-using installations and 50 to 90 per cent in the case of new installations. These reductions can be achieved by using the most efficient technologies that are available today. They are less expensive than increasing energy supply on a per unit of energy basis, even when external environmental impacts are not accounted for. In developing countries, the potential for demand reduction is often even larger. The potential for further efficiency improvements through continued research and development is large because physical (thermodynamic) constraints are far away.

Energy needs in the South are also different from those of the North because of differences in climate (e.g., space heating is not required in most of the South) and because satisfaction of basic human needs and infrastructure building must be given paramount attention in the South.

The poor often do not have access to the technology or cannot afford it and have to depend on their own labour, on animal power or fuelwood, and other types of biomass which have a high price in terms of human time and labour. They also have health and gender impacts, which are usually more severe on women.

These hardships are illustrated by the problems associated with cooking, which, in many developing countries, adds to land degradation and is a heavy burden on women and children who gather the fuelwood for primitive cooking stoves. Traditional methods of cooking have dismally low efficiency rates, converting only about 10 to 15 per cent of the energy contained in the fuelwood into useful energy in the pot.

As cooking energy changes from animal dung ® agricultural waste ® traditional woodstoves ® traditional charcoal stoves ® improved wood stoves ® improved charcoal stoves ® kerosene wick stoves ® kerosene pressure stoves ® LPG stoves ® electric hot plate, the efficiency for cooking increases by approximately a factor of five.11 This is the meaning of "climbing the energy ladder." The technical opportunities in this area are large.12 As one climbs the ladder, capital costs also increase, from zero to $50 or more per stove, posing severe problems for the poor. However, this is the direction in which to move, and a large number of programmes in Africa, Asia, and Central America have been successful in disseminating many millions of more efficient stoves used in rural areas and cities. "Climbing the ladder" to higher efficiency applies not only to cooking stoves but is a general strategy that could have dramatic and positive consequences in developing countries.

The potential impact of energy-efficient technologies on total energy use has been studied in great detail. In fact, analysis shows that by shifting to high-quality energy carriers and by exploiting cost-effective opportunities for more efficient use of energy, it would be possible to satisfy basic human needs and provide considerable further improvements in living standards without significantly increasing per capita energy use above the present level. For instance, developing countries could achieve the West European material standard of living during the 1970s with energy requirements as low as 1 kW13 per capita, which is only about 20 per cent higher than the 1985 level in developing countries.14 This remarkable result could be achieved because of the extremely inefficient use of energy today, especially traditional sources of energy, and because of the high energy efficiency obtainable with modern cost-effective energy end-use technologies available today. With a path of development that makes use of technologies with such energy performance, energy supply need not become a constraint on development.

The energy problem of developing countries is not primarily a problem of the scarcity of energy per se, but inefficient energy conversion to obtain the desired services. Non-commercial fuels represent approximately 30 per cent of the total energy use in developing countries as a whole, but more than 50 per cent in many of the poorest countries. Such energy is used in extremely inefficient fashion; similarly, end-use efficiency of commercial energy could be significantly increased as well.

Let us then turn to some integrated demand and supply side opportunities.

Integrated Demand and Supply Opportunities

This volume discusses in detail some of the integrated demand and supply side opportunities available today. Amulya K.N. Reddy and his collaborators describe a successful decentralized community-based biogas facility for electricity generation in Pura Village (approximately 500 inhabitants) in South India. The electricity produced provides both lighting and water pumping. What is interesting in this case is the high degree of cooperation required to supply and operate the biogas plant on the basis of the convergence of individual and collective interests. The electricity is used in high efficiency end-use equipment, making it go further in meeting energy service needs. The Pura Village story is now being replicated in many-villages in India.

In China, in particular, the adoption of biogas at the house- hold level is proceeding rapidly, as pointed out by Deng Keyun. In 1993, some 5.25 million farm biogas digesters were in use, as well as integrated "four-in-one" (solar energy, biogas, crop planting, and animal breeding) biogas, which were digesters developed and popularized as a good example of ecological agriculture with excellent results for the economy and the health of the populace.

Josa. Blanco discusses decentralized small-scale renewable energy systems (photovoltaic, wind and small hydro) for electricity production in Central America; these are benefiting a number of villages which have no hope of being linked to centralized systems in the foreseeable future. Although initial costs of such systems are high, life-cycle costs are often competitive. These systems have a tremendous impact in improving living conditions in small villages or isolated households, especially when combined with energy-efficient end-use technologies.

The chapters by Kammen, Blanco, Deng, and Reddy all deal with small-scale approaches to the energy problem. There is, however, another approach - a large scale approach - in which high quality energy carriers (electricity and liquid fuels) are produced from biomass.

Eric Larson and Robert Williams point out that the popular idea that biomass is the "poor man's oil," because of its widespread use for cooking (with low efficiency), can be radically changed by converting biomass into more desirable forms of energy (like electricity and liquid and gaseous fuels). In particular, the gasification of biomass, coupled with aeroderivative gas turbines, can prove to be an extraordinarily attractive solution for the generation of electricity. Larson and Williams estimate that the recovery of marginal lands in developing countries with high-yield forests (energy plantations) might generate as many as 13 million direct rural jobs in developing countries by 2050 under acceptable environmental conditions. There is need for more work on the availability of marginal land for large-scale biomass plantations, and on their reclamation for productive purposes:

Isaias Macedo shows that the production of ethanol from sugar cane to replace gasoline as fuel for transportation on a large scale in Brazil had important positive social consequences. It helped to create higher quality jobs (some 750,000 in ten years), helped to reverse migration to large urban areas, and to increase the overall quality of life in many small towns.

The approaches outlined by Macedo, and Larson and Williams address social problems in a different way from most of the other contributions in this volume, since the large amounts of energy produced from energy plantations and sugar cane can also address urban energy needs in addition to generating rural jobs and income.

Some Points of Discussion

Although there is substantial agreement between the results and insights presented in the different chapters, it is interesting to note some differences. Srilatha Batliwala and Ndey Isatou Njie observe how the fuelwood crisis has increased the hardship, drudgery, and time involved in the collection of fuel-wood, and how it affects women. Obviously, an increase in the energy efficiency and new energy carriers in cooking would alleviate this problem. Deng Keyun goes as far as stating that biogas digesters, which improve cooking conditions in China, have become important items in marriage dowries. Laura Nader, on the other hand, argues that there is evidence to the contrary and that technological progress has not eliminated the drudgeries of women's work, but has actually increased it, through, for example, cash cropping. If "amenities in the home make life easier," she argues, "paying for these amenities may require working double shifts."

Carlos Suz discusses institutional policies and is very critical of the "current environment in which governments and international organizations are promoting privatization, deregulation, and indiscriminate access to other countries...". However, it is well known that heavy government subsidies to conventional sources of energy in many countries is one of the obstacles to a sustainable energy strategy since they make it harder to introduce energy efficiency and renewable sources of energy. Such subsidies are likely to be reduced in a more competitive market economy.

Ndey Isatou Njie states that "there is still too little understanding of the potential impact of emissions from wood stoves." This has both a scientific and an access to information dimension. That health impacts result from the exposure and inhalation of smoke is clear from Daniel Kammen's review of the voluminous literature on the subject. There might well be more to come with continued study, and the level of understanding of the issues in local areas is not well known.

The small-scale versus large scale approaches are not explicitly discussed. However, the choices of authors were intended to expose the existing debate on this issue. Putting side by side the large-scale opportunities of Eric Larson and Robert Williams, and Isaias Macedo, and the biogas approach of Amulya Reddy and Deng Keyun, and the dispersed electricity generation discussed by Josa. Blanco, we intend to show the complementarity of these approaches to the overall development context, and that both are needed.

Finally, such questions as the sometimes advanced desirability of going back to decentralized systems - considered more adequate to rural areas - and self-sufficiency schemes, were not addressed. The contributions here address the question of what can be done now, and why it should be done, and point to the opportunity of making energy policy an instrument for increasing energy services to improve socio-economic conditions.

An Integrated Approach to Sustainable Energy

The conclusion that emerges from this rich collection of essays is that energy use, as practiced today, is indeed a serious obstacle to development and to the improvement of living standards. It is also clear that improved energy end-use efficiency and increased use of renewable sources of energy would go a long way in solving the energy problems of developing countries.

What strategies and public policies could lead to the growth of energy services, and not necessarily growth of energy consumption available to the poor, in a manner that is compatible with sustainable development? Clearly, the international financial agents, multilateral organizations, national governments, institutions of teaching and research, transnational companies, and other economic agents are the ones that determine the evolution of the fluxes of production, trade and technology.

Areas of action include15:

· rural development (by adapting renewable forms of energy that can increase the amount of daytime available for economic activity and employment generation);

· improved quality of life for women and children (particularly the poor in both rural and urban areas);

· industrial development (by introducing advanced technologies that reduce energy requirements in both the basic materials industries and the manufacturing industry, as well as by enabling the production of more energy-efficient products); and

· agriculture and forestry (through the use of biomass waste streams and biomass plantations that, in turn, help restore degraded land while providing employment and sustainable energy supplies).

Strategies to achieve success in these areas are:

a) building indigenous human capacity;

b) creating the policy environment that will promote sustainable energy development. What this means is that policies should be designed to both protect access to energy services for the poor, and to encourage prices that reflect the true costs of energy, in which factors that are now external to the pricing structure are internalized (for example, environmental effects). Too often, subsidies for energy prices counteract efforts to make energy use more efficient and to introduce renewable sources of energy Government subsidies for energy in developing countries were over $50 billion in 1992, more than the total ODA (official development assistance) to these same countries. This banner to sustainable energy should be gradually reduced in a way that takes care of the situation of the poor, who now benefit from these subsidies.

c) "leapfrogging" past old, unsustainable technologies and patterns directly to newer, more sustainable approaches.

Paramount in these strategies is the concept of "leapfrogging" to new technologies and approaches. Developing countries have the option to "leapfrog" past the methods used by today's industrialized countries, moving quickly and directly to the highest performance technologies and institutional arrangements. In many cases, the available new technologies will require some adaptations to the specific conditions of developing countries. Because they were developed in industrialized countries, where labour is expensive and capital relatively cheap, new technologies tend to be labour-saving and capital-intensive. In developing countries, where capital is expensive and labour relatively cheap, there are different technological requirements. Despite the need for adaptation, however, new technologies and institutional arrangements offer the best hope for today's developing countries to move toward sustainable energy development.

Specific areas of action are:

· technology demonstration projects;

· institutional and regulatory demonstration projects; and

· accelerated development of new technologies through temporary subsidies when required.

The examples and strategies above indicate how energy can be used as an instrument for development. These approaches will not alone lead to sustainable human development; however, they are a necessary element thereof. A fundamental task ahead of us is to make use of these opportunities..

NOTES

1 University of SPaulo, SPaulo, Brazil

2 Energy and Atmosphere Programme, SEED/BPPS, United Nations Development Programme, New York, U.S.A.

3 J. Goldemberg, T.B. Johansson, A.K.N. Reddy, and R.H. Williams, Energy for a Sustainable World (New Delhi: Wiley-Eastern, 1988).

4 Reddy, A.K.N., Electricity Planning: Current Approach and Resulting Problems. Module M2, Course Materials for Workshop for Policy-makers on Electricity Planning and Development, January 4-5 (Bangalore, India: International Energy Initiative, 1994).

5 Fundaciariloche, Catastrophe or New Society: A Latin American World Model, IDRC-064e (Ottawa: International Development Research Center, 1976).

6 H. Krugmann and J. Goldemberg, "The Energy Costs of Satisfying Basic Human Needs," Technological Forecasting and Social Change, Vol. 24, (1983), pp. 45-60; and J. Goldemberg et al., Energy for a Sustainable World.

7 Paul Streeten with Shahid Javel Burki, Mahbub ul Haq, Norman Hicks, and Frances Stewart, First Things First - Meeting Basic Needs in Developing Countries (Washington, D.C.: World Bank, 1981) and Goldemberg et al, Energy for a Sustainable World.

8 J. Goldemberg et al., Energy for a Sustainable World.

9 The HDI is calculated in the Report on Human Development (UNDP, 1994) as the simple average of Life Expectancy, Educational Level and GDP per capita (in parity purchase power dollars).

10 "Assessment of Desertification and Drought in the Sudano-Sahelian Region 1985-1991," The United Nations Sudano-Sahelian Office, UNDP New York, 1991.

11 S.F. Baldwin, Biomass Stoves: Engineering Design, Development and Dissemination. (Arlington, VA: VITA, 1987).

12 G.S. Dutt and N.H. Ravindranath, Bioenergy: Direct Applications in Cooking, in T.B. Johansson et al. (eds.), Renewable Energy: Sources for Fuel and Electricity (Washington, D.C.: Island Press, 1993).

13 kW here represents the average energy use over one year. It is a shorthand for kWyr/yr. 1 kW equals 0.753 toe/yr.

14 J. Goldemberg, T.B. Johansson, A.K.N. Reddy and R.H. Williams, "Basic Needs and Much More with One Kilowatt Per Capita," Ambio, Vol 14, No. 4-5 (1985).

15 This discussion draws on the emerging UNDP Initiative for Sustainable Energy (UNISE). Information on UNISE may be obtained from the Energy and Atmosphere Programme, UNDP One United Nations Plaza, New York, NY 10017.