| Boiling Point No. 30 - April 1993 |
At the November 1989 Annual Meeting it was felt opportune to examine ESMAP's recent record, present capabilities and its future role, to determine how it could best position itself to perform to the highest standards during the l990s.
WHAT IS ESMAP?
The Energy Sector Management Assistance Programme (ESMAP), and the magnitude of the task it should be expected to assume in order to determine how it could best position itself to perform to the highest standards grew out of an earlier incarnation as the joint UNDP/World Bank Energy Assessment Programme (EAP). EAP was established in 1980, following the second oil shock of 1979, to assist developing countries to economize on energy use, improve efficiency in domestic energy supplies, and mobilize financial resources for greater investment in energy. The assessments were policy-orientated studies, offering a list of recommendations, which increasingly related to rural energy issues and new and renewable energy sources. In response to requests from governments for follow-up assistance to implement the recommendations, in 1983 the UNDP and World Bank launched the ESMAP programme, which since 1987 has subsumed the work of EAP. Since then, the bulk of ESMAP's work has focused on completing the assessments, household energy, and pre-investment studies, especially concerning energy efficiency. In the last few years ESMAP has been reviewing its policies, strategies and structure. The findings and proposals for enhancing ESMAP's role are set out below in a series of extracts from the following documents:
• ESMAP in the 1990s: The Findings of the Commission to Review ESMAP, October 1990
• ESMAP's primary function is to provide technical assistance to countries to enable them to better plan, manage and regulate the energy sector and to set the stage for action by the governments concerned, bilaterals, the multilateral financing institutions, and the private sector. The Commission believes that ESMAP's role will continue to centre around strengthening energy sector institutions through well-planned and effectively-implemented programmes over a number of years. As a consequence, ESMAP should focus on those energy issues which are of pressing concern to the individual countries in which it works.
The Commission suggests that ESMAP's operations could be improved by taking greater account of recipient country concerns in the choice, design and conduct of the Programme's activities. For ESMAP to make significant contribution in the field of energy policy advice, it must provide advice over a Sustained period within individual countries. This implies a long-term commitment to the institutional strengthening of a country's capacity to manage its energy sector.
Household and Rural Energy: Nearly 50% of ESMAP's resources have been used to fund household energy activities. The Commission acknowledges that the scale of investment in this sub-sector may not be the most pertinent factor in gauging the economic benefits realised as a result of inter-fuel substitution, the introduction of more efficient technologies (say in stoves) and the deceleration of deforestation. The magnitude of ESMAP's effort must be measured against the beneficial impact it has gained at a national level.
ESMAP's comparative advantage needs to be carefully assessed in relation to the single most important determinant of success - the effectiveness of the local authorities. Their efforts may be hampered, not helped, by the involvement of transient expatriates. ESMAP has undoubtedly done a great deal of useful work in household and rural energy development. It has been instrumental in helping governments to focus on an important set of issues through its household energy surveys. These have added a significant dimension to the Assessment work done by the Programme. Even so, in the future ESMAP Can only have a relatively small role to play in the implementation of household energy programmes given the leading roles of local authorities and non-governmental organizations, both local and foreign. Outside involvement in the operational phase invaribly brings about counter-productive tensions.
So the Commission believes J. that there is considerable merit in devolving the implementation of household strategies to local governmental and non-governmental authorities. The opportunity costs of an international effort such as ESMAP engaging in extension and promotional work in this area are extremely high and the prospects of making a significant difference are not particularly promising. Furthermore, in terms of policy impact, especially the importance that such work plays in addressing poverty reduction, the Commission believes that a broader-based approach is more likely to produce results. For example, fuelwood production and consumption needs to be addressed within the context of rural development, forestry management, population policy and other poverty-reducing programmes.
The Commission states that the difficulties in identifying a larger potential investment in this sub-sector arise from:
a. the design of the studies, which are not sufficiently oriented towards pragmatic investment opportunities;
b. the inherent difficulties of translating investments in this sub-sector into action;
c. the lack of receptivity by recipient countries which would enable these studies to be integrated into their respective public expenditure programmes;
d. the possibility that the findings of such studies are more easily Implemented by non-government bodies than government agencies (ESMAP's main interlocutors); and
e. the reluctance of financiers to fund the results of such studies, on the grounds that the returns are economically unattractive.
Therefore, the Commission believes that continuing the household energy work in its present form should be seriously reconsidered except where country priorities affirm this approach. Efforts should be refocused: away from new studies towards greater consolidation on the basis of the considerable knowledge that has been built up by ESMAP, and follow-up to those studies already completed in a number of countries. ESMAP has accumulated almost ten years' experience in this field and is in a position to advise on the implementation of the large number of generic issues which, the Commission believes, pervades work in this area.
It should not be inferred that the Commission believes that the rural and households sector is unimportant, but rather that considerably greater attention to the implementation phase is warranted. Nevertheless, in the context of ESMAP assistance strategies within individual countries, it is likely that the share of resources devoted to this sub-sector would decline.
3. Final Communiqu' of the ESMAP Consultative Group (November 1991)
a. ESMAP in its country-based approach should reflect the needs of the developing countries for strategic energy sector appraisal, encourage co-operation, and exchange information. Building institutional capacity and capability for energy planning and management is important including those aspects related to the efficient production and use of energy.
b. ESMAP should consider environmental issues more explicitly taking into account global environment considerations that influence national policies in the energy sector.
c. Recognition should be given to the major importance of the household energy sector, especially when providing energy services for low-income rural and urban households. ESMAP should develop a strategy paper on household energy as soon as possible. Special attention should be given to the institutional and financial framework of this sub-sector.
The 1991 Annual Report explains how ESMAP's new orientation is being put into practice. Its Work Program is designed with a new country focus, chosen according to three broad categories: (a) conditions within the country that favour receptivity and effectiveness of technical assistance; (b) factors related to the ability of ESMAP to provide the required assistance; and (c) donor preferences. Countries which meet these criteria include: Bolivia, Cameroon, China, Colombia, Cote d'Ivoire, Ecuador, Ghana, Hungary, India, Indonesia, Morocco, Pakistan, Peru, The Philippines, Poland, Senegal, Tanzania and Zimbabwe. Those that do not meet the criteria but stand a good chance of being included are: Angola, Bangladesh, Bulgaria, Egypt, Haiti, Jamaica, Jordan, Kenya, Madagascar, Malawi, Mozambique, Namibia, Nicaragua, Nigeria, Romania, Rwanda, Uganda, Vietnam, and Zambia. To facilitate the shift to country-based focus the three former divisions of ESMAP were reorganised into two divisions. The first division, the ESMAP Strategy and Programs Division, is responsible for broad country by country strategy work and for developing individual country work programs. It has prime responsibility for preparing new ESMAP 'Country Papers'. The second division, the ESMAP Operations Division, is in charge of detailed design and implementation of most tasks as well as maintaining technical and subsector expertise. The ESMAP Operations Division is divided into four groups looking after technical issues: (a) gas, oil and refinery; (b) energy efficiency, the environment, power and coal; (c) renewable and household energy; and (d) restructuring, reforms and privatisations.
4. ESMAP Strategy for Household Energy (April 1992)
The general pattern of fuel use for cooking in developing countries dictates that with increasing income people move up the energy ladder from firewood to charcoal or kerosene and then to LPG, natural gas, or electricity. This progression occurs most often in urban areas, because in rural areas, scarce cash income combined with freely available biomass resources tend to encourage reliance on biomass for cooking. Indeed, in rural areas, when firewood is scarce people typically move down the energy ladder to use crop residues and dung for cooking. It is evident that many families have been prevented from making a switch to modern fuels because of low incomes and poor market distribution systems for modern fuels, especially in smaller cities and towns.
Largely because of the unprecedented urban population growth and the low incomes in developing countries, demand for woodfuels has become increasingly concentrated. The evidence indicates that in many areas the traditional systems and practices for supplying, distributing and consuming woodfuels are no longer adequate for meeting the growth of demand in an environmentally sustainable and efficient manner.
Household Energy Strategy Studies 1986-91: The majority of ESMAP activities have been Urban Household Energy Strategy Studies, review that rapid urbanization, especially in sub-Saharan Africa, was critical in driving supply and demand imbalances for traditional fuels in most recipient countries.
A cross-sectional review of ESMAP work in the household energy field indicates that the rapid growth in the numbers of urban poor is exacerbating the breakdown of traditional energy systems whose management practices have not changed. Furthermore, the transition from traditional to modern energy has been marked by distortions such as unserved demand, high costs, and accelerated environmental degradation. There is a growing consensus, based on ESMAP's relatively short but intensive involvement in household energy strategy studies, that the most critical issues for strategy formulation emanate from the ongoing transition by low-income households from the use of traditional fuels to alternative fuels such as kerosene, LPG and electricity.
The energy situation in rural areas can only be understood within the context of the total rural economy. The fuel and agricultural systems are closely inter-related and inter-dependent. Understanding the energy situation requires a conception of energy that includes the alternative use of biomass food, fodder, fertilizer and fibre. In addition, rural energy activities are an important source of income to poor peasants, especially to poor women.
Even ESMAP's involvement with rural issues will not involve participation in broad, integrated rural development strategies or research and development activities; rather, it will be limited to the strategic energy issues.
ESMAP Strategy, 1992-93: The expertise of ESMAP in the field of household energy enables it to evaluate energy policies and strategies as they relate to such complex problems as alleviation of poverty, improvements in quality of life, and enhancement of the environment. ESMAP should maintain a strong presence in the field of household energy. Hence enhancing local capabilities and institutional capacity forms a key part of overall development activities.
The lessons learned from the comparative review of household energy and from the operational lessons from individual countries indicate that the main focus of [ESMAP's] work on household energy should be urban inter-fuel substitution and energy transition, energy demand management, appropriate policies and strategies for energy pricing, and better management of existing supplies of both wood and modern fuels. Specific strategy proposals include:
• Country-specific studies to assess the strategies to alleviate rural energy problems will be carried out in ESMAP core countries.
• Building local capacity for household energy strategy work will be an important aspect of ESMAP Country Programmes, primarily as the follow-up to completed Household Energy Strategy Studies.... ESMAP will enhance the capabilities of energy policy-makers in developing countries to collect and analyse data necessary for examining strategic household energy issues.
ESMAP's involvement in work on household energy can be characterized as having followed an evolutionary path, moving from an initial recognition of the importance of the sector, through a phase in which information-collecting activities and development of methods to analyse the sector were necessary, and finally to a stage in which concrete recommendations can be made. ESMAP is committed to continuing its innovative strategy work on household energy in the context of country programmes. ESMAP's work must continue to focus on household and rural energy, including the management of all forms of energy supply, energy efficiency, institutional strengthening, and the impact of pricing and fiscal reforms. A key objective is to find means for improving the quality of life of people in developing countries by helping them to move from inefficient ways of using traditional energy sources to more efficient environmentally sustainable ways of using energy, as part of a strategy to achieve overall energy sector efficiency.
5. Energy and the Environment: ESMAP beyond UNCED (October 1992)
Energy-environment linkages extend in a continuum from the highly localized household-level to the global level. At the local level, the most serious energy-environment problems facing developing countries are the effects of emissions of particulate matter (dust and smoke), indoor air pollution arising from the use of biomass fuels, and the use of leaded petroleum-based fuels.
The use of biomass fuels for cooking gives rise to high levels of indoor air pollution and cause ecological damage; for example, the use of dung and crop residues depletes the soil productivity, and deforestation contributes to soil erosion. Finally, the low thermal efficiency of biomass use helps to explain the relatively high energy intensities of many developing countries and their relatively high CO2 and particulate emissions.
The transition to commercial fuels would improve energy efficiency and reduce emissions; however, this strategy has proved slow and difficult. One promising and complementary strategy is to devise less polluting ways of burning biomass. Several countries have developed and disseminated improved biomass cookstoves, although with mixed success. ESMAP's Improved Stoves project in Rwanda, however, has been particularly successful and is regarded as a highly replicable model.
To formulate policies to support sustainable energy development and reduce environmental degradation in the context of the energy transition of urban households and rural communities, it is necessary to gain a better understanding of interfuel substitution and the social impact of energy pricing reforms.
Agenda 21 is an agenda for action agreed at the UNCED conference, establishing environmental
action programmes for the international community into the 21st centry.
a. Promotion of the development, transfer, and use of improved energy-efficient technologies.
b. Co-ordination of energy plans regionally and study of the feasibility of efficient distribution of energy from new and renewable sources.
c. Co-operation to increase the capability of relevant technologies of renewable energy sources.
d. Development of energy production and consumption policies that improve energy efficiency.
e. Promotion of the application of economic and regulatory measures that take into account environmental and other social costs.
f. Building of energy efficiency and renewable issues into energy planning and management activities.
g. Development and strengthening of energy efficiency and emission standards.
h. Support to educational programmes on efficiency at the local. state and national levels.
ESMAP has had considerable success in evaluation the sustainability of biomass use, particularly in Africa, and biomass will necessarily remain a key fuel source in Africa for some time. Nonetheless, smoke from domestic cooking with biomass fuels is the main cause of indoor pollution as well as an important source of outdoor pollution. This situation argues for the need for accelerated fuel substitution using kerosene, LPG and natural gas. Fossil fuel price subsidies may be warranted on environmental grounds, but the policy issue means of targeting the subsidies must be examined on a case-by-case basis.
Readers' comments on ESMAP's policies would be extremely valuable.