17. Leapfrogging strategies for developing countries

José Goldemberg

1. Introduction

In the past it was generally accepted that economic growth, as measured by gross domestic product (GDP), was linked to the growth in consumption of raw materials and energy and in the unpleasant consequences of consumption, namely pollution.

If such linkages were to last for many decades the consequences for mankind would be disastrous. At present, only approximately a quarter of the world population (concentrated in the OECD countries) has reached a standard of living that can be considered acceptable. Of the remaining three-quarters - spread over more than 100 countries - only a small fraction has reached a reasonable standard of living; the remainder are at a level little above absolute poverty.

In the developing world (low-income economies!), GDP/capita is at least 10 times smaller than that in the OECD countries, and consumption of raw materials and energy is also at least 10 times smaller. Such disparities in income will not last forever. The economies of a number of very populous developing countries are growing rapidly and - barring unexpected set-backs -their GDP/capita will approach that of the developed countries. This will result in great strains on access to raw materials and energy, as well as an increase in pollution.

Fig. 17.1 GDP and primary energy consumption: OECD, 1973-1985 (1973 = 1. Sources: energy data - BP Statistical Review of World Energy, London, June 1986; GDP data - OECD, National Accounts of OECD Countries, Vol. 1, Paris, 1985)

Efforts to delink GDP growth and consumption/pollution are, therefore, a high priority in the strategies of many governments. Figure 17.1 shows the evolution of primary energy consumption and of GDP for OECD countries in the period 1973-1985 relative to 1973.

The delinking of energy and GDP growth occurs for several reasons:

-the saturation of consumer goods markets - in industrialized societies economic activity has moved towards services not heavy industry;

- a shift towards the use of less energy-intensive materials;

- a shift from traditional, inefficient non-commercial fuels to such energy sources as electricity, liquid and gaseous fuels, and processed solid fuels;

- the adoption of new and more energy-efficient technologies. These trends have not so far spread significantly to developing countries although successful efforts are being made in some of them.

Projections of primary energy consumption give an idea of what might happen in the future. However, depending on the assumptions made, the results can be quite different (as shown in fig. 17.2). More recently, projections such as the ones prepared by the World Energy Council (WEC) tend to cluster at the lower end of such projections (Goldemberg et al., 1987; WEC Commission, 1993).

Fig. 17.2 Projections of primary energy consumption, 2020-2030 (Note: A = WEC Commission high-growth case, B = reference case, B1 = modified reference case, C = ecologically driven case)

As far as pollution is concerned, the situation is more complex because some pollutants are associated with low income, such as concentrations of particulate matter, and others with high income, such as CO₂ emissions, as shown in fig. 17.3 (World Bank, 1992). The goal of many governments is to achieve an evolution over time of the type shown in fig. 17.4.

2. The prospects of success in delinking GDP and energy

The way energy is used in different countries and the efficiency of its use are usually quantified by an indicator called energy intensity, that is, the ratio between energy consumption (E) - measured in kilojoules (kJ), BTUs, or tons of oil equivalent (toe) - and GDP measured in US dollars. Long-term studies of the evolution of energy intensity in a number of countries (Martin, 1988) indicate that this ratio climbs during the initial phase of development when heavy industrial infrastructure is put in place, reaches a peak, and then decreases (fig. 17.5).

Fig. 17.3 Environmental indicators at different country income levels.

Fig. 17.3(a) Urban concentrations of particulate matter.

Fig. 17.3(b) Urban concentrations of sulphur dioxide.

Fig. 17.3(c) Municipal wastes per capita.

Fig. 17.3(d) Carbon dioxide emissions per capita (Source: World Bank, 1992)

Only commercial energy consumption is considered in figure 17.5. Other factors besides technology, such as geography, population, and history, play a role in the evolution of energy intensity. This is why it is difficult to compare the evolution of different countries. It is quite clear, however, that latecomers in the development process follow the same pattern as their predecessors but with less accentuated peaks: they do not have to reach high E/GDP ratios in the initial stages of industrialization because they can benefit from modern methods of manufacturing and more efficient systems of transportation developed by others. In other words, what was once considered an iron link between energy and GDP growth is not a general feature of modern economies. This was true even before the oil crisis of 1973, and rising oil prices only accelerated the pace of structural change in the industrialized countries.

Fig. 17.4 Evolution over time of the growth in GDP and pollution

In contrast, as figure 17.5 shows, energy intensity in the developing countries is increasing. The adoption of outdated technologies foisted on them by the industrialized countries seems to be part of the reason. Other reasons might be the transfer of "dirty industries" or highly energy-intensive industries (such as aluminium smelters) to developing countries. A notable exception to the prevailing increase among the developing countries is China, where energy intensity is diminishing rapidly. As a whole, however, the energy intensity of the world is decreasing, as shown in figure 17.6.

One way for developing countries to avoid environmental and economic stress is to leapfrog the technologies used by industrialized countries in the past. This means incorporating energy-efficient technologies early in the development process.

Fig. 17.5 The evolution of energy intensity in various countries (Source: Martin, 1988)

Fig. 17.6 The evolution of world energy intensity, 1970-1990 (Source: World Energy Council, Survey of Energy Resources, London, 1992)

The result could be a decrease in the yearly growth of energy consumption without hampering development. In Brazil, for example, action planned for the period 1990-2010 is expected to lead to a 30 per cent reduction in projected energy consumption by the end of this time-span, compared with what it would be if no action were taken (Brazilian Ministry of Infrastructure, 1991).

Brazil's energy system relies heavily on renewable resources such as hydropower and biomass (fuelwood, charcoal, ethanol, and biogas from sugar cane): 62.7 per cent of all energy used is renewable and 37.3 per cent is non-renewable in the form of oil, gas, and coal. Energy consumption in Brazil has grown quite rapidly - 4.8 per cent a year in the past decade. At this rate, total consumption would grow from 183.6 million metric tons of oil equivalent (Mtoe) in 1990 to 473.6 Mtoe in 2010, i.e. a 2.6-fold increase. The new energy matrix of the Brazilian government incorporates energy conservation, an increase in the consumption of natural gas, and the continued use of biomass coupled with modern technology (including gasification for electricity generation using highly efficient gas turbines). Under the new plan, the present consumption of 183.6 Mtoe would grow to 386.6 Mtoe in 2010, which is 30 per cent below the historical trend (table 17.1). This would result in savings of US$85 billion in investments and a 30 per cent reduction in CO₂ emissions.

Table 17.1 Brazil's growth in GDP and energy consumption: Historical trend and new energy matrix, 1990-2010

	Historical trend	New energy matrix
GDP' annual growth rate	4.3%	4.3%
Energy consumption, annual growth rate	4,8%	3.8%
Increase in energy consumption	473.6 Mtoe/183.6	386.6 Mtoe/183.6
(year 2010/1990)	Mtoe = 2.6	Mtoe = 2.1

Another way to look at the energy intensities of different countries is to analyse the way they change not with time but with GDP, as shown in table 17.2 and figure 17.7 (WRI, 1993). East European countries were excluded because they use energy very inefficiently. Energy intensity increases very slowly as income per capita increases, which means that highly industrialized countries have incorporated modern and efficient technologies into their infrastructure.

3. The prospects of success in delinking GDP and pollution

Appreciable success has been achieved in delinking GDP and certain types of pollution as GDP increases. Figure 17.8 shows the evolution of GDP and emissions of particulates, lead, and sulphur oxides, which are all linked to fossil fuel consumption. Reductions in nitrogen oxides have not been achieved (World Bank, 1992).

Another area where progress has been made is solid waste, which is becoming increasingly important owing to problems of disposal (WRI, 1993). Table 17.3 presents data on municipal solid waste per capita for a number of countries. The amount of waste per capita increases by a factor of 4 when one goes from low- to high-income countries owing to the increasing importance of packaging. In analogy with the energy intensity indicator one can introduce a "solid waste intensity" indicator (the ratio of solid waste to GDP) and plot this indicator as a function of GDP. Figure 17.9 shows that countries with high per capita incomes produce much less waste per unit of GDP than do countries with low per capita incomes. Low-income countries produce an inordinate amount of waste considering their per capita incomes, whereas industrialized countries have incorporated efficient technologies that have reduced waste.

Table 17.2 Energy intensity in selected countries (ranked by GDP/capita)

Country	Energy use (million BTU/capita)	GDP/capita ($PPP/capita)	Energy intensity (million BTU/$PPP)
China	24.3	2,656	0.009
Peru	21.7	2,731	0.008
Iraq	29.7	3,510	0.008
Colombia	35.1	4,068	0.009
Argentina	61.5	4,310	0.014
Brazil	47.4	4,951	0.010
Chile	43.7	4,987	0.009
Portugal	55.3	6,259	0.009
Greece	90.7	6,764	0.013
Ireland	102.8	7,481	0.014
Spain	82.5	8,723	0.009
Saudi Arabia	176.9	10,330	0.017
Israel	83.7	10,448	0.008
Oman	95.4	10,573	0.009
New Zealand	187.7	11,155	0.017
Austria	144.2	13,063	0.011
Belgium	189.0	13,313	0.014
Netherlands	188.7	13,351	0.014
Italy	115.3	13,608	0.005
United Kingdom	150.1	13,732	0.011
Denmark	138.9	13,751	0.010
France	149.3	14,164	0.011
Japan	127.8	14,311	0.009
Germany	178.8	14,507	0.012
Finland	222.4	14,598	0.015
Sweden	265.8	14,817	0.018
Singapore	138.4	15,108	0.009
Australia	214.7	15,266	0.014
Kuwait	230.7	15,984	0.014
Norway	369.7	16,838	0.022
Switzerland	155.4	18,590	0.005
Canada	399.7	18,635	0.021
USA	308.9	20,998	0.015

Source: WRI (1993).

Fig. 17.7 Energy intensity vs. per capita GDP (Source: WRI, 1993)

Fig. 17.8 The evolution of GDP and emissions of pollutants: OECD countries, 1970-1988 (Note: GDP and emissions of nitrogen oxides and sulphur oxides are OECD averages; emissions of particulates are estimated from the averages for Germany, Italy, the Netherlands, the United Kingdom, and the United States; lead emissions are for the United States. Sources: OECD, 1491; US Environmental Protection Agency, 1991)

Table 17.3 Solid waste intensity in selected countries (ranked by GDP/capita)

Country	Waste (lbs/capita/day)	GDP/capita ($PPP/capita)	GDP/capita/day ($PPP/capita/day)	Waste intensity (lbs/$PPP)
Liberia	1.1	937	2.57	0.43
Kenya	1.1	1,023	2.80	0.39
Côte d'Ivoire	1.1	1,381	3.78	0.29
Indonesia	1.3	2,034	5.57	0.23
Romania	1.3	3,000	8.22	0.16
Iraq	2.4	3,510	9.62	0.25
Colombia	1.2	4,068	11.15	0.11
Poland	1.3	4,770	13.07	0.10
Bulgaria	1.3	5,064	13.87	0.09
Hungary	1.6	6,245	17.11	0.09
Portugal	1.5	6,259	17.15	0.09
Trinidad & Tobago	1.1	6,266	17.17	0.06
Former USSR	1.3	6,270	17.18	0.08
Greece	1.5	6,764	18.53	0.08
Czechoslovakia	1.1	7,420	20.33	0.06
Ireland	2.0	7,481	20.50	0.10
Spain	1.9	8,723	23.90	0.08
Saudi Arabia	2.4	10,330	28.30	0.08
Israel	2.4	10,448	28.62	0.08
Oman	2.4	10,573	28.97	0.08
New Zealand	4.0	11,155	30.56	0.13
Austria	1.3	13,063	35.79	0.04
Belgium	2.0	13,313	36.47	0.05
Netherlands	2.6	13,351	36.58	0.07
United Kingdom	2.2	13,732	36.64	0.06
Italy	1.5	13,608	37.28	0.04
Denmark	2.6	13,751	37.67	0.07
France	4.0	14,164	38.81	0.10
Japan	2.0	14,311	39.21	0.05
Germany	1.8	14,507	39.75	0.05
Finland	2.4	14,598	39.99	0.06
Sweden	2.0	14,817	40.59	0.05
Singapore	1.9	15,108	41.39	0.05
Australia	4.2	15,266	41.82	0.10
Kuwait	2.4	15,984	43.79	0.05
Norway	2.9	16,838	46.13	0.06
Switzerland	2.2	18,590	50.93	0.04
Canada	3.7	18,635	51.05	0.07
USA	3.3	20,998	57.53	0.06

Source: WRI (1993).

Fig. 17.9 Solid waste intensity vs. GDP/capita/day (Source: WRI, 1993)

A serious pollution problem in developing countries involves indoor emissions of particulates and other pollutants originating in fuels used for cooking (WHO, 1992). The results are shown in table 17.4 and are quite alarming. As far as particulates are concerned, table 17.5 shows that firewood gives off larger amounts than coal briquettes. The SO₂ concentrations given off by various fuels are shown in table 17.6. This demonstrates that a switch from coal to liquefied petroleum gas (LPG) would represent enormous progress as far as SO₂ emissions are concerned. Regarding particulates, the same would be true if firewood were to be replaced by LPG.

Table 17.4 Indoor air concentrations of pollutants in developing countries^a

Pollutant	Concentration	WHO daily exposure guidelines
Total suspended particulates (TSP)	1 · 120 mg/m³	0.12 mg/m³
CO	10 · 50 mg/m³	10 mg/m³
NO2	0.1 - 0.3 mg/m³	0.15 mg/m³
Benzo-alpha-pyrene	1 · 20 mg/m3b	0.001 mg/m³

Source: WHO (1992).

a. India, Nepal, Nigeria, Kenya, Guatemala, and Papua New Guinea.

b. At these concentrations there is a link with cancer in 1 out of 100,000 people after a life-time's exposure.

Table 17.5 Concentrations of total suspended particulates in kitchens from various fuels

Fuel	Concentration (mg/m³)
Firewood	0.79
Briquettes	0.49
LPG	0.19
Biogas	0.18
Outdoors	0.18

Source: WHO (1992).

Table 17.6 Concentrations of SO₂ in kitchens from various fuels

Fuel	Concentration mg/m³
Coal briquettes	0.49
Firewood	0.04
Biogas	0.02
LPG	0.02
Outdoors	0.01

Source: WHO (1992).

Fig. 17.10 Strategies to reduce greenhouse gas emissions

4. Conclusions

In developing countries, pollution reduction seems to be closely connected to modernization. Growth along traditional lines would produce unbearable amounts of pollution, but the data show that industrialized countries have achieved important reductions in emissions per unit of GDP. This evidence is not so dramatic in the case of emissions causing the greenhouse effect (mainly CO₂). Greater progress in the future will require a combination of the strategies described in figure 17.10.

Note

1. The World Bank classification of countries is as follows:

· Low-income economies are those with a GNP per capita of US$610 or less in 1990.

· Middle-income economies are those with a GNP per capita of more than US$610 but less than US$7,620 in 1990. A further division, at GNP per capita of US$2,465 in 1990, is made between lower-middle-income and upper-middle-income economies.

· High-income economies are those with a GNP per capita of US$7,620 or more in 1990.

References

Brazilian Ministry of Infrastructure. 1991. Brazilian Energy Matrix. Brasilia.

Goldemberg, J., T. B. Johansson, A. K. N. Reddy, and R. H. Williams. 1987. Energy for a Sustainable World. New Delhi: John Wiley.

Martin, J. M. 1988. "L'intensité énergétique de l'activité économique dans les pays industrialisées." Economies et sociétés - Cahiers de l'ISMEA 22(4), April.

OECD (Organization for Economic Co-operation and Development). 1991. The State of Environment. Annual Report. Paris: OECD.

US Environmental Protection Agency. 1991. National Air Pollution Emission Estimates 1940-1989. Research Triangle Park, N.C., Report EPA-450/4-91-004, March.

WEC (World Energy Council) Commission. 1993. Energy for Tomorrow's World The Realities, the Real Options, and the Agenda for Achievement. London: Kogan Page.

WHO (World Health Organization). 1992. Indoor Air Pollution from Biomass Fuel. Geneva: WHO.

World Bank. 1992. World Development Report 1992. Development and the Environment. Oxford: Oxford University Press.

WRI (World Resources Institute). 1993. Environmental Almanac. Washington, D.C.: WRI.

18. A development-focused approach to the environmental problems of developing countries

Amulya K. N. Reddy

1. Industrialized countries and global environmental degradation

The developing countries, with three times more population than the industrial countries, have been, and continue to be, far less responsible for "polluting" the global atmosphere with greenhouse gases (GHGs). However, their contribution to the concentration of greenhouse gases in the atmosphere is rising. For example, a general consensus exists that, "during 1988, almost three-quarters of the CO₂ from fossil-fuel combustion was released in industrialized countries. But when non-industrial sources are included (e.g., burning of forests and other land-use changes) the contribution of industrialized countries was about 56%.... Analysis of the available data suggests that the historical fossil-fuel related emissions from developing countries represent only about 14% of the global total, as compared to 28% of current fossil-derived CO₂ emissions" (Grubb et al., 1992: 310).

Thus, in a world stratified into rich and poor countries, the bulk of the degradation of the global atmosphere has originated primarily from the rich industrialized countries but the contribution from the poor developing countries is increasingly rapidly.

2. Environmental degradation in dual societies

Most developing countries, however, are internally stratified. They consist of dual societies with small élites living in little islands of affluence amidst vast oceans of poverty inhabited by the more populous masses. The élites and the masses differ fundamentally in their consumption patterns and therefore in their impacts on the environment. Environmental degradation is none the less evident at both ends of the income spectrum (Ready, 1986) - the rich pollute owing to the wasteful over-use of resources and the poor degrade the environment by surviving at its expense. Thus, the global phenomenon of non-uniform and skewed contributions to atmospheric degradation is mirrored within developing countries.

Further, attention is now being drawn to the fact that the nature of the environmental degradation caused by the élites and the masses is also different (José Goldemberg, personal communication, May 1993). For example, the rich are responsible for CO₂ pollution from automobiles and electricity generation, CFCs from refrigerators, etc. In contrast, the poor are responsible for deforestation in those countries and regions where cooking fuel is obtained by felling trees and where forests are cleared for agriculture to gain access to land in a highly skewed land ownership regime. In addition, the kerosene burnt by the poor for illumination contributes to CO₂ emissions.

Thus far, the contribution of the various income strata to national emissions in developing countries has not been scrutinized and unravelled. In fact, these emissions have not even been disaggregated crudely into the contributions of the rich and the poor. The basic problem seems to be that adequate information is lacking on the emissions from various end-use devices such as automobiles, two-wheelers, three-wheelers, buses, trucks, electric lighting, and kerosene lighting.

Nevertheless, an impressionistic conclusion is that the poor in developing countries contribute only marginally to the greenhouse gas emissions from these countries. This has two implications of major significance:

1. an emphasis on basic-needs-oriented development with a direct attack on poverty involves virtually no conflict with global environmental concerns;

2. however alarming and ominous the high population growth rates of the poor in developing countries may be from an economic growth point of view, these growth rates do not threaten the global atmosphere as much as the smaller growth rates of industrialized-country populations and of the rich in developing countries.

3. A developing-country perspective on environmental problems

Most developing countries view the challenge of development to be far more important than the threat of climate change. Thus, if they address the threat of climate change at all, they would prefer to tackle it along with the advancement of, or as a bonus from, development. This bonus principle, which is the other side of the coin of the "no regrets" principle, requires that the short-term measures that advance development in developing countries yield the bonus of combating climate change.

This does not mean that developing countries can ignore all environmental issues. Invariably, local environmental concerns and developmental tasks are intimately intertwined. Business-as-usual economic growth in developing countries with dual societies has led neither to basic-needs-oriented development nor to environmentally sustainable patterns.¹ Economic growth catering to the élites and neglecting the poor - involving a variety of subsidies, price distortions, inefficiencies, etc. - has resulted, as pointed out, in environmental degradation caused by both segments of the dual society. Environmental degradation impedes and frustrates sustained development. More directly, the hardest-hit victims of environmental degradation are the poor, not only because they cannot commute or move away from pollution, but because their poorer health status makes them more vulnerable. Thus, an attack on poverty - an essential requirement of development (if not of blind economic growth) - has necessarily to include environmental protection.

The relative lack of responsibility of the developing countries for the degradation of the global atmosphere and the environmental degradation arising from élitist growth patterns suggest a step-by-step environmental approach for developing countries, apparently first enunciated by Yokobori (personal communication, 1993):

Step 1: Address local environmental problems such as unsafe rural water supplies, kerosene consumption for lighting, indoor particulate pollution due to smoke from fuelwood stoves, and urban vehicular pollution due to two-, three-, and four-wheeler personal transportation.

Step 2: Tackle regional environmental problems such as acid rain or river pollution.

Step 3: Focus on national environmental problems.

Step 4: Turn attention to global environmental problems such as greenhouse gas accumulation in the atmosphere.

Such a step-by-step approach will be more politically saleable within developing countries. This is because zeroing in on global environmental problems right at the initiation of environmental awareness is often viewed as succumbing to a stratagem of the industrialized countries to get the developing countries to fix a mess that the rich countries created. In addition, the equity pay-offs from this approach are substantial, because those who suffer most from environmental degradation become the first beneficiaries. There is also historical justice in this step-by-step approach because it demands that developing countries first address the problems that they themselves created and only then become environmentally altruistic by turning to problems that the industrialized countries created. Finally, an emphasis on the initial step(s) very often yields as a bonus environmental benefits corresponding to subsequent step(s), in particular global environmental benefits. Thus, a reduction in local urban vehicular pollution caused by two-, three-, and four-wheeler personal transportation also results in a reduction in GHG accumulation in the global atmosphere.

4. The crises of energy systems

The step-by-step approach begs the question of how environmental problems are to be addressed. It is submitted here that the best way of addressing an environmental problem is invariably not directly, but indirectly via the implementation of a development objective, particularly the energy component of such an objective. This is because energy production and consumption are major causes of environmental degradation. Hence, attempts to address environmental problems must preferably begin with an analysis of energy systems. However, the energy systems of developing countries are trapped in several crises, if a crisis is defined as a situation that does not permit continuation of old patterns of behaviour.

First, there is the environmental crisis, which involves local and global impacts. In the case of electricity, for instance, the local impacts consist of submergence of forests by hydroelectric projects, acid rain and other forms of atmospheric pollution from thermal power projects and vehicle use, and radiation hazards from nuclear power plants. The global impacts occur through increasing concentrations of greenhouse gases in the atmosphere, which have raised the spectre of global warming. In the case of petroleum products, vehicular pollution is choking third world metropolises and making life impossible. The transport systems of developing countries are blindly replicating all the mistakes of the systems in the industrialized countries, by being iniquitous, energy intensive, highly polluting, and harmful to the global atmosphere.

In addition, the electricity systems of developing countries face a serious capital crisis, because the capital requirements of the energy systems are three to five times greater than can be provided by the suppliers of capital. This unbridgeable gap, first highlighted at the level of the whole developing world by the World Bank in 1989 (Churchill and Saunders, 1990), also exists at the country level and within countries at the state level (Ready, 1993). In India, the energy sector has been compared to the demon, Bakasura, of Indian mythology who had an insatiable appetite and, however much he was fed, wanted even more to eat. As for the petroleum consumption patterns of developing countries, they have serious capital, foreign exchange, and balance-of-payments implications, as shown by recent studies on the energy-debt nexus in Brazil, India, and Mexico (Rammanohar Reddy et al., 1992).

The environmental and capital crises are related, because the industrialized countries are pressurizing the developing countries to cut their emissions and adopt environmental measures as a quid pro quo for capital. This link between the capital and environmental aspects of the energy crisis may be unfair, but it is Realpolitik. It is often interpreted by developing countries as a conflict between environmental protection and the advancement of development.

Finally, there is the equity crisis. Even though energy systems are expanded in the name of development, they tend to bypass the poor. For example, in the state of Karnataka in South India, estimates show that half the population do not benefit directly from the electricity system primarily because their homes are not electrified although the village is (Ready et al., 1991).

5. Overcoming the crises of energy systems through a new paradigm for energy

In the final analysis, the environment-development conflict and the crises threatening the energy systems of developing countries stem from the conventional energy paradigm or mind-set determining the thinking of energy decision makers. This mind-set is based on the so-called energy-GDP correlation according to which GDP increases can be achieved only by increases in energy consumption. In this paradigm, the magnitude of energy consumption becomes the indicator of development. And, once projections are made of energy requirements in the future, attention shifts to increasing supplies to meet these requirements.

The way out of the crisis is through a new paradigm for energy (Ready, 1990) in which it is recognized that what human beings and their individual and collective activities require is not energy per se but the work that energy performs and the services that energy provides: illumination, warmth, "coolth" (to coin a word), mobility, etc. In this approach, although development requires, particularly for the poor, a substantial increase in energy services, such increases can be achieved not just by increasing the supply of energy to the devices (lamps, heaters, air conditioners, vehicles, appliances, etc.) but also by increasing their efficiency. It was efficiency improvements that led to the decoupling of GDP growth from energy consumption that characterized the economies of many OECD countries (particularly Japan) during the 1980s (Boyle and Taylor, 1990; Yamaji, 1991).

Efficiency improvements have associated costs, but very often the costs of saving energy are only one-third to one-half the costs of generation. Nevertheless, the costs of saving energy must be carefully compared with the costs of producing energy. Also, the magnitude of energy that can be saved must be taken into account. All this means that it is necessary to identify a least-cost mix of saving and generation options for energy.

Thus, the new challenge to the energy systems of developing countries is to reduce the coupling between GDP growth and energy consumption by identifying and implementing a least-cost mix of saving and generation options for increasing energy services, particularly for the poor. Energy, therefore, must acquire a human face and become an instrument of development, the crux of which must be poverty eradication. Energy planning must acquire a development focus and an end-use orientation directed towards energy services. Energy for whom? Energy for what? Energy how (efficiently)? These become central questions in the new approach.

What is required, therefore, is a development-focused end-use-oriented service-directed (DEFENDUS) paradigm for energy. A commitment to poverty eradication and development must guide the construction of energy demand and supply scenarios and the evolution of energy systems that in turn should become the basis of environmental protection and management. The slogan must be: "From the needs of the poor and the imperatives of development to the design and implementation of efficient energy systems and thereby to a better environment!"

Fig. 18.1 The traditional system of obtaining water, light, and fertilizer

The remainder of this paper will be devoted to illustrations - at the village, state, and national levels - of this approach.

6. How Pura village triumphed over the Tragedy of the Commons

Pura is a typical village in the drought-prone part of Tumkur District in the Deccan part of Karnataka State in South India. It has a human population of about 470 (in approximately 90 households) and approximately 250 cattle. The traditional system of obtaining water, illumination, and fertilizer (for the fields) in Pura village is shown in figure 18.1. It implies a low quality of life characterized by poverty and environmental degradation in the form of unsafe water from an open tank, considerable effort to get this unsafe water, and inadequate illumination from traditional fossil-fuel-based kerosene lamps or from unreliable, low-voltage grid electricity.

This traditional system was replaced in September 1987 with the present Community Biogas Plants system (Ready and Balachandra, 1991; Rajabapaiah et al., 1993). The main components and the flows of inputs/outputs are shown in figure 18.2. The operation of the system consists of the activities implicit in figure 18.2. Apart from the delivery of dung to the plants and the removal of sludge, all the other activities - involving the operation of the biogas plants, the electricity generation and distribution subsystem, and the water supply sub-system - are carried out by two village youths who are employed by the project.

Fig. 18.2 The present Community Biogas Plants system at Pura

A comparison of the present Community Biogas Plants system with the traditional system of obtaining water, illumination, and fertilizer shows that the households are winners on all counts. Not only have the households lost nothing, but they have gained the following:

- better and safer water,

- less effort to get this improved water,

- better illumination,

- cheaper illumination for the households using kerosene lamps,

- improved fertilizer, which has greater nitrogen content and is less conducive to the growth of weeds compared with farmyard manure,

- a dung delivery fee to those (mainly women and children) who deliver the dung to the plants and take back the sludge.

Thus, there has been a step towards development a significant improvement in the quality of life and a diminution of some characteristics of poverty -along with an upgrading of the environment.

In addition, the village (as a collective) through its Grama Vikas Sabha (Village Development Committee) has gained in the following ways:

· training and skill upgrading for two of its youths in the operation and maintenance of the biogas system,

· challenging jobs for these two youths,

· revenue for the village, to the extent that the total payment received for the system outputs delivered inside the houses exceeds the expenses for diesel and dung delivery fees,

· a powerful mechanism that initiates and sustains village-scale cooperation, without which the village would revert to a less pleasant way of life in the matter of water and illumination,

· a distinct improvement in the quality of life with regard to water (and therefore health) and illumination,

· a small but significant advance in checking the growing erosion of self-reliance, thanks to the realization that the current status and the future development of the energy system can be decided and implemented by the village, i.e. their future in this matter is in their hands.

Since Pura village has witnessed both an increase in individual benefits as well as the advancement of community interests, it is appropriate to mention here the discussion of individual gain versus community interests in the famous "Tragedy of the Commons" de scribed by Hardin (1968). In that description, the personal benefits that each individual/household derives from promoting the further destruction of the commons (i.e. community resource) are larger and more immediate than the personal loss from the marginal, slow, and long-term destruction of the commons - hence, each individual/ household chooses to derive the immediate personal benefit rather than forgo it and save the commons.

The Pura Community Biogas Plants system illustrates a principle that may be termed the "Blessing of the Commons" (Ready, 1992)² - the converse of the "Tragedy of the Commons." According to the "Blessing of the Commons," the price that an individual/household pays for not preserving the commons far outweighs whatever benefits there might be in ignoring the collective interest. In other words, there is a confluence of self-interest and collective interest so that the collective interest is automatically advanced when individuals pursue their private interests. In the case of Pura, non-cooperation with the Community Biogas Plants results in access to water and light being cut off by the village, and this is too great a personal loss to compensate for the minor advantage of being a loner.

With the growing experience and awareness of the defects of state control, operation, and maintenance (regulation) of the commons, the privatization (deregulation) option, with its emphasis on the market, is being offered as a solution to the problem of monitoring and control of common resources and facilities. The market may be an excellent allocator of people, materials, and resources, but it does not have a very successful record in dealing with equity, the environment, the infrastructure, and the long term. In this debate, it is invariably forgotten that the type of individual initiative subject to local community control necessary for the "Blessing of the Commons" situation is a distinct third option that has very attractive features. There must have been many examples of "Blessing of the Commons" (the maintenance of village tanks, common lands, woodlots, etc.) that have contributed to the survival of Indian villages for centuries in spite of the centrifugal forces tearing them apart.

In Pura, this third option has successfully maintained and operated water-supply and electrical illumination systems for several years without external control. It has ensured the careful husbanding of resources and enlisted the cooperation of every one of the households in the village. It has performed better than the centralized electricity system in terms of the reliability of supply and of the collection of dues. And, above all, it has shown that the path to environmental improvement must start via energy with an attack on poverty as the basis of a development strategy.

7. The DEFENDUS electricity scenario for Karnataka

Apart from causing local atmospheric pollution (in the form of particulates and thermal pollution of water) and regional pollution (in the form of acid rain), the generation of electrical power is the most important source of CO₂ GHG emissions: table 18.1 shows that it accounted for as much as 40 per cent of India's 1989/90 emissions (Sathaye and Reddy, 1993). Hence, any concern for CO₂ emissions must address the problem of environmentally more benign electricity scenarios. An example of how this can be done is briefly described for the state of Karnataka (Ready et al., 1991).

In 1987, a committee for the Long-Range Planning of Power Projects (LRPPP) set up by the government of Karnataka State in South India (19 million hectares and home to 37.1 million people) projected that the state would require a sixfold increase in electricity supplies by the year 2000 from the 1986 consumption of 7.5 terawatt hours (TWh) of electricity to 47.5 TWh and from the 1986 installed capacity of 2,500 megawatts (MOO) to 9,400 MW. This sixfold increase would require the construction of a 1,000 MW super-thermal plant and 2,470 MW of nuclear power facilities. The infrastructure would also have to be expanded by constructing transmission lines, new rail facilities, etc. The bill for this projected increase in supply would be an annual carrying cost of US$3.3 billion, which could be achieved only by spending more than 25 per cent of the state's budget and borrowing from the central government and international sources.

Table 18.1 India's carbon dioxide emissions, 1989/90

Sector		Million metric tons	%
Coala
	Steel	51.2	9.7
	Power	213.0	40.3
	Railways	12.3	2.3
	Cement	20.5	3.9
	Sponge iron	1.8	0.3
	Fertilizer	10.2	1.9
	Soft coke	5.7	1.1
	Others	51.0	9.7
	Lignite	19.1	3.6
	Coal subtotal	384.8	72.8
Oilb
Light distillate
	Liquefied petroleum gas	6.8	1.3
	Mogas	10.7	2.0
	Special boiling point hexane	0.4	0.1
	Others	0.6	0.1
	Sub-subtotal	18.4	3.5
Middle distillate
	Kerosene	25.6	4.8
	Aviation turbine fuel	5.5	1.0
	High-speed diesel	64.4	12.2
	Light diesel oil	4.7	0.9
	Mineral turpentine oil	0.4	0.1
	Jet propulsion oil	0.3	0.0
	Others	0.3	0.0
	Sub-subtotal	101.1	19.1
Heavy ends
	Furnace oil/TDO	14.3	2.7
	Low-sulphur heavy stock	13.8	2.6
	Sub-subtotal	28.1	5.3
	Refinery fuel	8.2	1.6
	Naphtha	2.1	0.4
	Asphalt
	Lubes	1.4	0.3
	Petroleum coke	1.2	0.2
	Wax	0.4	0.1
	Miscellaneous	0.8	0.2
	Sub-subtotal	14.0	2.7
	Oil subtotal	161.6	30.6
Forests		-17.6	-3.3
TOTAL		528.8	100.0

Sources: coal - Mitra (1992); oil - Mehra and Damodaran (1993); forests 1986 data from Makundi et al. (1992).

a. Emissions figures assume 90% conversion.
b. Emissions figures allow for 1.5% carbon unburnt.

Despite this investment and expansion of supply, the committee was frank enough to warn that energy shortages would not be eliminated; shortages would continue into the next century, with little hope of improvements thereafter. In fact, that would be an appropriate epitaph for the conventional paradigm for energy.

In response to the LRPPP projection, a DEFENDUS scenario was constructed, not just with the objective of increasing supplies, but with a

· a focus on development, through the electrification of all homes and a shift to non-energy-intensive employment-generating industries;

· a focus on end-use efficiency, through efficiency improvements, replacement of electricity with other heat sources, and load management;

· a focus on augmenting electricity supply, through the reduction of transmission losses, implementation of co-generation in sugar factories, use of non-conventional sources, and decentralized electricity generation at the village level.

This alternative scenario requires far less increase in supply - only 17.9 TWh of electricity and an installed capacity of 4,000 MW - and resulted in the shelving of the LRPPP projection. Since the requirements of electricity and installed capacity are only about 40 per cent of those in the conventional LRPPP projection, the annual bill for the DEFENDUS scenario is only US$618 million, i.e. one-third. In other words, it is very expensive to keep poor people poor; it is much cheaper to make a direct attack on poverty. Further, because of a reduced reliance on centralized generation, with its long gestation times, the gestation time of the DEFENDUS scenario is significantly less. Finally, the efficiency improvements, electricity substitution measures, and decentralized sources greatly lessen the environmental impacts of the alternative scenario.

Champions of efficiency and renewables have been arguing for the past decade or so that alternative scenarios are much quicker, cheaper, and environmentally sounder than conventional plans In the past, however, these recommendations have invariably been based on emotional pleas and hand-waving arguments. Now the situation is different. The mix of efficiency, renewables, and clean centralized sources constituting the DEFENDUS scenario is the result of rigorous quantitative exercises that have survived presentations at local, national, and international forums.

The DEFENDUS electricity scenario for Karnataka has shown that an emphasis on development objectives in the construction of electricity scenarios would lead to lower CO₂ emission levels than if these objectives are ignored. An environmentally more benign approach would be a bonus from the pursuit of basic-needs-oriented development.

8. A strategy for the reduction of India's oil consumption

India's serious balance-of-payments problems, which are a major developmental obstacle, are overwhelmingly due to its rapidly growing oil consumption (Rammanohar Reddy et al., 1992).

India's transport sector is a major oil consumer, but, quite unlike the industrialized countries, the country's transport runs mainly on diesel, consumption of which has been growing at about 8.6 per cent per year and accounts for 70 per cent of the oil used in the transport sector. Diesel consumption is mostly by trucks, which are far less energy efficient than railways in hauling high-bulk-density goods. Despite this, the share of total freight transported by trucks has increased enormously because of the low price of diesel, which has been subsidized and pegged at a price slightly above that of kerosene. Diesel prices cannot be increased without roughly equal increases in kerosene prices because, if the price of kerosene is very much lower than that of diesel, trucks adulterate their diesel fuel with kerosene and immediately create a kerosene shortage. This causes great hardship to the poor because kerosene is used almost wholly in the household sector. For the same reason, kerosene prices cannot be increased under present conditions.

Though electric lighting is far more energy efficient than kerosene lamps, the number of non-electrified kerosene-illuminated homes in India is increasing at the rate of about 1 million households per year. Under these conditions, India has been forced to increase kerosene consumption at a rate of 7.8 per cent per year.

India's problem of growing oil consumption is, therefore, primarily a problem of the two middle distillates, diesel and kerosene (in that order). Together, they account for as much as half of its oil consumption, and incidentally account for the bulk of India's imports of petroleum products.

In contrast, gasoline is currently a small problem because it represents less than one-tenth of oil consumption. However, it is a rapidly growing problem in India because the decision makers have not only failed to provide the funds necessary for public transportation but also encouraged the proliferation of mopeds, scooters, motorbikes, cars, and three-wheeler autorickshaws. De facto, the planners and government have "chosen" personal and hired vehicles as the preferred mode of intra-city passenger movement.

On the basis of this analysis, a four-pronged strategy for resolving India's oil crisis and advancing the country's development has been suggested.³ It is based primarily on reducing demand for diesel, kerosene, and gasoline. The strategy consists of:

Prong 1: implementing efficiency improvements in the use of petroleum products.

Prong 2: shifting passenger traffic from personal vehicles to public transportation.

Prong 3: shifting freight traffic from road to rail, through the removal of subsidies on kerosene and diesel once homes have been electrified and kerosene replaced as an illuminant.

Prong 4: replacing oil with alternative non-oil fuels, particularly biomass-derived fuels.

Prong 1, namely efficiency improvements in the transport sector, can be achieved straight away by better house-keeping and by long-term measures such as improvements in the fuel efficiency of the truck fleet. In the case of gasoline, a reduction in consumption also requires Prong 2, i.e. a change in the modal mix for passenger traffic away from personal vehicles to public transportation through overall measures such as massive investment in infrastructure for public transportation. For intra-city passenger movements, special supplementary measures such as major increases in the number of buses and, where possible, suburban trains are also necessary.

The crux of Prong 3 of the proposed strategy is a massive programme of home electrification. When all homes are electrified, kerosene becomes unnecessary as an illuminant. To make kerosene completely redundant, additional measures are required for replacing kerosene as a cooking fuel in cities. Once this is done, the subsidy on diesel can be removed and its price can be brought on par with that of gasoline.

The increase in diesel prices is necessary, but not sufficient? to decrease truck freight; it would, however, create a favourable environment in which supporting policy measures could be adopted. For the railways to exploit the situation and increase their freight haulage, there must be substantial investments in the improvement of the railways' freight operations. These funds can come from the diversion of the implicit subsidies on kerosene and diesel.

The combination of this strategy of shifting freight from trucks to rail along with a strategy of shifting short-distance inter-city passenger traffic from diesel locomotives to buses could reduce diesel demand in the transport sector from about 36 million tonnes in the year 2000 projected by the Planning Commission of the Government of India to about 21 million tonnes, which is only about 10 per cent above present consumption.

Even with this combination of strategies, the oil problems would not be eliminated. Intra-regional or short-haul traffic would still require road transport and, therefore, a considerable amount of oil. So, in order to advance the objective of sustainable development, the possibility must be explored of completely eliminating the dependence of road transport on non-renewable oil resources. In other words, a comprehensive oil-reduction strategy requires, over the longer term, Prong 4, which is the much more radical solution of shifting to alternative fuels for road transportation.

Producer gas and biogas have limited scope for use in road transport. Since natural gas is not only more abundant than oil but also much cheaper, far less polluting, and as easily distributed, the compressed natural gas (CNG) option is an attractive alternative for urban fleets of vehicles - buses, taxis, city delivery vehicles. Although hydrogen produced by solar photovoltaics may well turn out to be the transport fuel of the future, it is only the liquid fuels -ethanol and methanol - that are widely applicable alternative fuels in road transport. They could be distributed through the nationwide network already established for gasoline and diesel. Mixtures of ethanol and gasoline - so-called "gasohol" - could be used widely as gasoline extenders. And pure methanol, although never used extensively, is, like pure ethanol, an excellent fuel for internal combustion engines.

Producer gas, biogas, ethanol, and methanol can all be obtained from biomass sources. A synergistic coupling between the transport sector and the agricultural sector would therefore be possible whereby "fuel farms" are established to supply fuel for transportation in the same way that rural farms produce food for urban demands.

The fuel-food conflict can be avoided by turning to non-agricultural land for cellulosic resources, particularly fuelwood, to produce methanol and/or ethanol. But this solution to the oil crisis could aggravate the domestic fuelwood problem, particularly for the poor. Domestic cooking fuel is one of the basic energy needs, and the satisfaction of this need has to be an essential feature of an overall development-oriented energy strategy. Hence, the solution to the oil crisis must be compatible with the solution to the fuelwood problem.

One way of achieving a compatible solution would be to extend the synergism between the agricultural and transport sectors to include the domestic sector, in two steps. The first step is based on the fact that, if alternative high-efficiency fuels were provided for cooking, or the efficiencies of fuelwood stoves were radically improved, then the resulting drastic reductions in fuelwood consumption could free a vast fuelwood resource base for the production of liquid fuels for the transport sector. In villages, either biogas stoves, or fuelwood-efficient stoves, or a mix could be introduced. In cities and towns, the LPG option could be adopted because there is considerable scope for the expansion of LPG supplies. And, once the pressure on forests as a source of cooking fuel decreases, conditions become established for managing the growth of forests and dramatically improving their fuelwood yields. In other words, silvicultural practices - agriculture in the general sense - can be implemented to increase fuelwood availability. This is the second step in the extension of the synergism; it consists of including agriculture in the domestic-transport synergism.

In all, therefore, the provision of high-efficiency cooking fuels and/or devices in rural and urban areas would make available large amounts of wood provided that all the firewood being used today for cooking can still be collected. This saved fuelwood could be converted into methanol. If diesel fuel in trucks and buses were replaced with methanol, then the only diesel demand from the transport sector would come from the railways, and this demand would be quite small.

In the case of India, therefore, it appears that the country has been engulfed by a grave oil crisis because it has ignored two crucial basic needs of poor households: efficient energy sources for lighting and for cooking. The oil strategy proposed here shows that, by providing electric lighting and efficient cooking fuels/devices to all homes, India could move towards a virtually oil-free road transport system and drastically reduce its dependence on oil, which in turn would accelerate development.

Table 18.2 India's oil-related carbon dioxide emissions, 1989/90

	Million metric tons	%
High-speed diesel	64.4	39.8
Kerosene	25.6	15.9
Furnace oil/TDO	14.3	8.8
Low-sulphur heavy stock	13.8	8.5
Mogas	10.7	6.6
Refinery fuel	8.2	5.1
Liquefied petroleum gas	6.8	4.2
Aviation turbine fuel	5.5	3.4
Light diesel oil	4.7	2.9
Naphtha	2.1	1.3
Lubec	1.4	0.9
Petroleum coke	1.2	0.7
Miscellaneous	0.8	0.5
Other light distillates	0.6	0.4
Special boiling point hexane	0.4	0.2
Mineral turpentine oil	0.4	0.2
Wax	0.4	0.2
Jet propulsion oil	0.3	0.2
Other middle distillates	0.3	0.2
Asphalt	-	0.0
Total	161.6	100.0

Source: see table 18.1.

What are the environmental implications of the strategy outlined above? The combustion of petroleum products accounted for about 30 per cent of India's CO₂ emissions in 1989/90, as against 70 per cent in the case of coal (table 18.1). A disaggregation of the CO₂ emissions from these petroleum products is given in table 18.2, from which it can be seen that high-speed diesel, kerosene, furnace oil, low-sulphur heavy stock, gasoline, and refinery fuel are the "A" class items accounting for 85 per cent of emissions. It is clear from table 18.2 that diesel and kerosene, which accounted for 55 per cent of India's oil-related CO₂ emissions, should be the first targets of an emissions-reduction strategy. But the achievement of a reduction in CO₂ emissions is the automatic result - a bonus - of the pursuit of a basic-needs-oriented oil strategy that leads to a significant reduction, and even elimination, of the consumption of precisely these petroleum products. And it is not only CO₂ emissions from oil that are reduced; local vehicular pollution is reduced by shifting passenger traffic from personal vehicles to public transportation. Hence, in the ease of oil too, the pursuit of development objectives via energy-efficient strategies is tantamount to addressing local and global environmental concerns.

The lesson is simple: "Look after the people by producing and using energy efficiently, and the environment will look after itself!"

Notes

1. The ruling élites of countries with dual societies would of course like to persist with business-as-usual economic growth but they would adopt environmentally benign technologies in the interests of the global environment if the incremental costs were paid for from external sources. (A cynical third world environmentalist once described the attitude of developing country governments to the industrialized countries in the following words: "If you don't give us money, we won't do anything for the environment; if you give us money, we will do anything!")

2. See the report by Sinha and Herring (1993).

3. Presentation at the PETRAD Seminar on The Role of Petroleum in Sustainable Development, Penang, Malaysia, 7-11 January 1991, International Programme for Petroleum Management and Administration (PETRAD) in cooperation with ECON, Centre for Economic Analysis, Norway, and PETRONAS, Malaysia, and revised in the light of comments and discussions at the Seminar.

A simpler two-pronged version of the strategy proposed here was presented more than a decade ago in Reddy (1981a,b). The two-pronged strategy was updated and incorporated in Goldemberg et al. (1988).

References

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19. Economic development, energy, and the environment in the people's Republic of China

Fengqi Zhou

1. Economic development and the increase in energy consumption

China's internal reforms and its opening up to the outside world during the 1980s pushed the Chinese economy to new heights, resulting in an average annual GNP growth rate of 9 per cent between 1981 and 1990. Thus China has one of the most rapidly developing economies in the world today. If the GNP rate continues to increase at 6 per cent until 2000, the national economy is expected to quadruple by the end of the century.

At the beginning of 1992, the Chinese government decided to make the transition from a low-efficiency and highly centralized planned economy to a high-efficiency market economy, and to establish a socialistic market system with Chinese characteristics. Since then, the annual increase in GNP has been 13 per cent. Judging from these developments, the average annual increase in GNP in the 1990s will probably reach 8-9 per cent.

In 1990, total primary commercial energy consumption in China was 987 million tons of coal equivalent (Mtce), consisting of coal (76.2 per cent), petroleum (16.6 per cent), natural gas (2.1 per cent), and hydroelectricity (5.1 per cent). Final energy consumption by sector was: industry 68.5 per cent, residential 16.0 per cent, and others 15.5 per cent.

During the 1980s, primary commercial energy consumption grew at an annual rate of 5.1 per cent. Energy consumption per capita increased from 0.614 lee in 1980 to 0.869 lee in 1990 - an average annual growth rate of 3.5 per cent.

Total electricity generation in 1990 was 621.1 terawatt hours (TWh), of which thermal power provided 494.4 TWh (79.6 per cent). The annual growth rate of electricity generation was 7.5 per cent during the 1980s. In 1990, the total energy used for electricity generation was 212 Mtce, in which coal, fuel oil, and diesel accounted for 89, 7, and 3 per cent, respectively. Final electricity consumption by sector was: industry 78.2 per cent, residential 7.7 per cent, agriculture 6.9 per cent, and others 7.2 per cent. Electricity consumption per capita increased from 306 kilowatt hours (kWh) in 1980 to 549 kWh in 1990, with an average annual growth rate of 6.5 per cent.

Depending on the rate of growth of the economy, the Energy Research Institute has made a forecast of energy demand for the year 2000. If the coefficient of elasticity of primary energy consumption is 0.45 (it was 0.56 in the 1980s), and the annual average rate of energy conservation is 4 per cent, the aggregate of primary energy consumption will be 1,450 Mtce, including 1,500 Mt of raw coal, 165 Mt of crude oil, 25 billion m³ of natural gas, and electricity generation of 1,350 TWh, including 240 TWh of hydropower and 10 TWh of nuclear power.

2. The environmental challenge of energy development

The main energy-related environmental problem in China is urban air pollution caused by the burning of large amounts of coal. In 1990, coal consumption in China was 1,055 Mt. 80 per cent of which was burnt directly, which caused serious air pollution.

In 1990, total emissions of particulates were 13.24 Mt in China, 70 per cent of which were from coal combustion. The daily average concentration of total suspended particulates in China's cities is 387 mg/m³, and it is higher in the northern cities than in the southern cities.

In 1990, total SO₂ emissions were 14.95 Mt in China, 90 per cent of which were from coal combustion. The daily average concentration of SO₂ in cities was 93mg/m³. These massive emissions of SO₂ are leading to serious SO₂ pollution in urban areas. In a quarter of cities in northern China, the SO₂ concentration has exceeded level 3 of the national standard (which is 100mg/m³). In southern China, especially in the south-western area, there is acid rain in some regions. In the worst places, the pH value of precipitation is below 4.

It is estimated that CO₂ emissions from fossil fuel combustion were 564 MtC in 1990, 85 per cent of which were from coal combustion. In addition, overconsumption of biomass energy, vegetation loss, and the failure to return large amounts of straw to the land resulted in soil erosion and a reduction in organic content. The national area of soil erosion has reached 150 million hectares, and the national average organic content in farmland is below 1.5 per cent.

Given that coal consumption is predicted to reach 1,500 Mt in 2000, air pollution will continue to get worse. The right strategy and effective measures are needed to control serious air pollution.

3. An energy efficiency strategy

Energy conservation and improvements in energy efficiency are the best means of harmonizing the development of energy and protection of the environment.

China has made considerable progress in energy conservation. From 1980 to 1990, the average annual increase in commercial energy consumption was 5.1 per cent, whereas the average annual growth rate of GNP was 9.0 per cent, giving an elasticity of energy consumption of 0.56. Energy consumption per 10,000 yuan GNP decreased from 13.36 lee in 1980 to 9.3 lee in 1990, a drop of 30 per cent. This represents an average annual energy conservation rate of 3.7 per cent, and a cumulative saving of over 280 Mtce. Nearly two-thirds of this was saved indirectly through changing macroeconomic structures; the rest was saved directly by industrial enterprises.

Goldemberg suggested in chapter 17 that energy intensity in developing countries is increasing, with the notable exception of China, whose energy intensity is clearly declining. This indicates a de-coupling of energy consumption and economic growth (see fig. 19.1).

Improvements in energy efficiency are at the core of efforts to reduce air pollution and greenhouse gas emissions. During the 19801990 period, it is estimated that, as a result of energy conservation, there was a reduction in particulate emissions of 0.5 Mt and in SO₂ emissions of 0.55 Mt every year.

China's development target calls for further reductions in commercial energy intensity of at least 35-40 per cent per unit of GDP from 1990 to 2000. This further energy saving can be achieved, but there are major obstacles to be overcome. Success will require both further substantial structural savings and an acceleration in technical reform to increase energy efficiency.

Fig. 19.1 De-coupling energy consumption and economic growth in China, 1978-1992

4. A strategy of clean coal technologies

China is one of the few countries that uses coal as its major energy source. In 1990, coal accounted for 76.2 per cent of primary energy consumption, supplying 70 per cent of fuel for electricity generation, 60 per cent of raw materials for the chemical industry, and 80 per cent of residential fuel utilization. It is estimated that, by the year 2010, coal will still account for 66.7 per cent of consumption, and even in 2050 the share of coal will be above 50 per cent. This coal-dominated energy structure is unlikely to change in the near future unless there is a breakthrough in new energy technologies.

The important role of coal is determined by the state of its reserves. Because proven reserves of coal comprise 90 per cent of the total proven reserves of primary energy in China, it would be impossible not to use it. The best strategy would therefore be to spread "clean coal technologies" (CCT), which is the general name for technologies that increase energy efficiency and reduce pollution. In the United States and Japan, CCT has played a leading role. China has also paid great attention to it in recent years and made some progress. Ten kinds of CCT have been studied and ranked according to assessments of technological and economic characteristics: coal selection, briquette coal, coal water mixture (CWM), advanced combustor, fluidized bed combustion (FBC), integrated gasification combined cycle (IGCC), flue gas treatment, coal gasification, coal liquefication, and fuel cells.

China is a developing country and it would be impossible to halt or delay economic development. However, we should show responsibility towards the world and posterity, by making every effort to reduce the effects of energy development on the environment. We should admit that clean coal is the "future energy" and that developing clean coal technologies is an important strategy.

Comments on part 6

Hoesung Lee

The papers in part 6 all emphasize the importance and desirability of pursuing an energy-efficient development path. Professors Goldemberg and Reddy both argue for the de-linking of energy and GDP growth in developing countries through the adoption of energy-efficient technologies early in the development process. They provide examples from Brazil and India that demonstrate the possibility of moving toward energy-efficient growth, although the Brazilian example is of future plans for such growth and the Indian example is a small village development experience. They conclude that developing countries should be able to leapfrog old technologies to achieve an energy-efficient growth path.

I agree with their conclusions for energy-efficient growth strategies for developing countries. It is difficult to take issue with a growth proposal that has energy efficiency at its core, especially when energy efficiency improvements are one of the most cost-effective ways to reduce carbon dioxide emissions. But how do we achieve the goal of an energy-efficient growth path? One can observe many practical barriers standing between reality and the goal. These are what I shall comment on.

The energy/GDP ratio is lower in industrialized countries because, as the authors indicate, (a) energy efficiency in each individual sector is better than in developing countries, and (b) the economy is dominated by energy-efficient industries. This implies that the first task for the developing countries is to improve end-use energy efficiency. More specifically, they need to find out why energy-efficient technologies are not used as much in developing countries as in the industrialized countries. Developing countries may enjoy latecomers' advantages, as suggested by Professor Goldemberg, but the prospects for improving energy/GDP ratios are not bright.

In most developing countries, energy prices are subsidized to keep them considerably below costs. In these circumstances, it is likely that an energy-intensive industrial structure will be sought. As a result, the physical energy input per unit of output the energy/GDP ratio in aggregate - will be higher than otherwise.

However, this does not necessarily imply that energy expenditures per unit of output will also be higher. What matters in the investment decision is energy expenditures, not the quantity of energy use. A high energy/GDP ratio reflects an energy-inefficient outcome, but, given low energy prices, it makes good business sense to have high energy intensity. This is why the inefficient outcome is sustainable.

In order to achieve a lower ratio for energy/GDP in developing countries, energy prices should be rationalized. But this is easier said than done. Energy prices in developing countries reflect a complex mixture of economic, social, and political interdependencies. The task then is how to induce the adoption of energy-efficient technologies in a situation of low energy prices. Market competition and energy efficiency regulations play a critical role.

Experience in Korean manufacturing industries indicates that the more the industries are subject to competition, especially export competition, the higher the energy efficiency in those industries. Energy efficiency standards are also effective and complement market competition. Industries are, however, generally reluctant to see the tightening of efficiency standards.

In conclusion, in order to realize an energy-efficient growth strategy, the following conditions must be satisfied:

· no energy price subsidies
· market competition
· energy efficiency regulations.