(introduction...)

United Nations Development Programme
in collaboration with
International Energy Initiative
and
Energy 21
Stockholm Environment Institute
and in consultation with
Secretariat of the UN Commission for Sustainable Development

Authors

Amulya K.N. Reddy
Robert H. Williams
Thomas B. Johansson

Contributors

Sam Baldwin	Mongi Hamdi	Susan McDade
Gustavo Best	Michael Jefferson	Michael Nicklas
David Bloom	Alexandre Kamarotos	Michael Philips
Timothy Brennand	Johan Kuylenstierna	Kirk Smith
Elizabeth Cecelski	Gerald Leach	Wim C. Turkenburg
Martha DueLoza	Robert Lion	Ernst Worrell
Harold Feivesen

Copyright ©1997
by the United Nations Development Programme
1 United Nations Plaza, New York, NY, 10017 USA

Acknowledgments

This document was prepared by UNDP through the Energy and Atmosphere Programme (EAP) in the Sustainable Energy and Environment Division, BPPS in collaboration with International Energy Initiative (IEI), and Energy 21, Stockholm Environment Institute (SEI), and the World Energy Council (WEC), and in consultation with the Secretariat of the UN Commission for Sustainable Development (DPCSD). The EAP unit consists of Thomas B. Johansson, Suresh Hurry, Susan McDade, Ad Dankers, Lory Dolar and Vivette Riley. Susan McDade was the Project Coordinator for this effort and was assisted by Kim Heismann, Research Assistant in the production process. Special thanks to Pep Bardouille, Anilla Cherian, and Lory Dolar for their efforts in the production of this work during their assignment in EAP. This document was edited by Helen Armstrong and the graphic design work was undertaken by Peter Joseph.

UNDP wishes to thank the Government of Austria for their contribution to this project which supported the initial submissions from the contributors. This Executive Summary is based on the full report on energy entitled Energy After Rio: Prospects and Challenges. The work has benefited from the peer review process, especially the October 1996 review meeting held in New York, as well as the many comments and revisions suggested subsequently. UNDP wishes to thank all contributors and reviewers for their efforts, including:

Pep Bardouille, Corinne Boone, Angela Cropper, Francois Coutu, Bernard Devin, Martha DueLoza, Ad Dankers, Lory Dolar, Gordon Goodman, Josoldemberg, J. Gururaja, Ture Hammar, Kim Heismann, Richard Hosier, Suresh Hurry, Hisashi Ishitani, Harry Lehmann, Roberto Lenton, Andre Marcu, Susan McDade, Nebojsa Nakicenovic, Frank Pinto, Paul Raskin, Annie Roncerel, E.VR. Sastry, Stirling Scruggs, C.S.Sinha, Youba Sokona, Carlos Suarez, Joke Waller-Hunter, Anders Wijkman and Neville Williams.

Cover photo credits: Middle East oil field: Hoa-Qui, Liaison International; LA Traffic: copyright © 1996 PhotoDisc, Inc.; Australian solar thermal technology: Imagenet stock photography; other photos courtesy of the photographers: Andrea Brizzi, Cherie Hart, Chuck Lankester, Costa Manzini, Ruth Massey and Susan McDade.

Foreword

The 1997 review of the United Nations Conference on Environment and Development (UNCED) is the first opportunity to examine progress made in sustainable development. UNCED drew international attention to linkages between environment and economic development, and underscored how the sustainable use of natural resources is an essential element of any international development strategy that addresses the needs of present and future generations.

One of the main goals of the United Nations Development Programme is to lend support to the entire UN System to become a unified and powerful force for sustainable human development. For UNDP, sustainable human development means focusing efforts in four key areas: eradicating poverty, increasing women’s role in development, job creation, and protecting and regenerating the environment. Energy production and consumption are closely linked to these issues, and to reach the objectives established by the UN requires major changes in the approach to energy. Energy is an essential instrument to meet basic human needs.

The importance of energy in sustainable development clearly emerged at Rio. However, no integrated action programme in the field of energy was agreed upon at the Rio Conference in 1992. The essential linkages between energy and socio-economic development were not approached in an integrated fashion. As a result the recommendations concerning energy and development remain dispersed. Global consensus was reached with regard to the important, energy-related issues of climate change and acidification.

Shedding light and focusing international attention on the critical importance of energy to sustainable human development is UNDP’s only objective in preparing Energy After Rio: Prospects and Challenges, upon which this Executive Summary is based. The current patterns of energy production and use, which shape the development process internationally, are unsustainable and have become more so since Rio. In developing countries, energy financing as well as production and consumption patterns increasingly impede national development processes, and will continue to do so, unless new approaches are adopted.

Today, an estimated 2 billion people worldwide lack access to modern energy services. Though we know that energy is absolutely essential for development, little international attention has been devoted to this relation. Agenda 21 called on nations to find more efficient systems for producing, distributing and consuming energy, and for greater reliance on environmentally sound energy systems, with special emphasis on renewable sources of energy. UNDP, through its Initiative on Sustainable Energy, is assisting programme countries to reflect these objectives in national energy policies, investment plans and sustainable development strategies. Change, however, must go beyond aid policies and be reflected in international business, investment, trade, public and private sector policies and decisions.

What must now be done? A more direct, and dynamic debate on the essential linkages between energy and socio-economic development is needed, followed by translation into action, especially in the short term, of the objectives of sustainable energy to achieve sustainable human development.

On behalf of UNDP, I hope that this Executive Summary can serve to foster the international debate and consensus process concerning the importance of sustainable energy and refocus international commitment on these critical issues during the 1997 Review of Rio. The authors of this volume describe the important links between energy and development and suggest pathways that will allow energy to be used in ways that improve peoples’ lives. This is at the heart of sustainable human development and, as we enter the next millennium, is one of the key global issues that will challenge all nations.

I congratulate the authors and contributors on their efforts, and am confident that this Executive Summary will be an important catalyst for decision-makers, policy-makers, academics, the international development community, NGOs and the media in highlighting the importance of energy for achieving sustainable human development.

James Gustave Speth, Administrator
New York, January 1997

Notes on the Authors and Contributors

Authors:

Amulya K.N. Reddy is President of the International Energy Initiative and is a former Professor at the Indian Institute of Science, Bangalore, India.

Robert H. Williams is Senior Research Scientist at the Center for Energy and Environment Studies at Princeton University, USA.

Thomas B. Johansson is the Director of the Energy and Atmosphere Programme of the United Nations Development Programme and is a Professor of Energy Systems Analysis (on leave) at the University of Lund in Sweden.

Contributors:

Sam Baldwin is the Technical Director for International Programs at the National Renewable Energy Laboratory (NREL), USA.

Gustavo Best is the Energy Coordinator at the Food and Agriculture Organisation (FAO) in Rome, Italy.

David Bloom is a Professor at the Harvard Institute for International Development in Cambridge, Massachusetts, USA.

Timothy Brennand is a Research Fellow in Environmental Sciences at the University of East Anglia, Norwich, Norfolk, U.K.

Elizabeth Cecelski specialises in Energy, Environment and Development, and works in Germany.

Martha DueLoza is Acting Director, United Nations International Institute for the Research and Training for the Advancement of Women (INSTRAW), Santo Domingo, Dominican Republic.

Hal Feivesen is Senior Research Policy Analyst, at the Center for Energy and Environment Studies at Princeton University, USA.

Mongi Hamdi is the First Economic Affairs Officer at the Department for Economic and Social Information and Policy Analysis at the United Nations in New York, USA.

Michael Jefferson is the Deputy Secretary-General at the World Energy Council in London, U.K.

Alexandre Kamarotos is a Research Associate at Energy 21 in Paris, France.

Johan Kuylenstierna is Acting Director at the Stockholm Environment Institute at York, U.K.

Gerald Leach is Senior Fellow at the Stockholm Environment Institute in London, U.K., and also Energy Advisor to the Industry and Environment Department at the World Bank.

Robert Lion is the President of Energy 21 in Paris, France, and a member of the Earth Council.

Susan McDade is a Technical Specialist with the Energy and Atmosphere Programme, UNDP, New York.

Michael Nicklas is former President of the International Solar Energy Society and owner of Innovative Design Inc., in Raleigh, N.C., USA.

Michael Philips is the Washington Representative of Energy 21 in Washington, D.C., USA.

Kirk Smith is Professor of Environmental Health Sciences and also the Associate Director for International Programs at the Center for Occupational and Environmental Health at the University of California in Berkeley, USA.

Wim C. Turkenburg is a Professor and Chairman of the Department of Science, Technology and Society at Utrecht University in the Netherlands.

Ernst Worrell is a Co-Director of the Department of Science, Technology and Society at Utrecht University in the Netherlands.

Abstract

In the 1990’s, the UN sponsored a series of major Conferences on issues of global significance. Poverty and development, environment, population, women, and the human habitat have been discussed, and in each of these areas agreements on objectives and agendas for action have been reached. These all contain elements linked to energy as it affects people’s lives.

In this contribution to the preparatory process leading up to the June 1997 General Assembly Special Session for the review and appraisal of the implementation of Agenda 21, UNDP analyses the multi-dimensional nature of the relationship between energy and the issues addressed at the major UN Conferences.

Energy’s critical linkages to poverty and development including gender disparity, population growth and food security; environment including health impacts, acidification, climate change and land degradation; the economy including investment, foreign exchange and trade impacts; and security concerns such as national access to energy supplies and nuclear proliferation, are analysed. From this it is evident that energy is not a sectoral issue but is vitally related to numerous dimensions of development.

The first finding is that current patterns of the production, distribution and use of energy are not sustainable. Based on present trends and policies related to energy, the objectives established and agreed upon at the Conferences cannot be achieved. This applies to poverty eradication as well as protection of the environment. Current unsustainable approaches to energy are a barrier to sustainable socio-economic development.

The options to reorient the development of the world energy system to help meet global objectives are analysed. Three major areas are identified: (i) more efficient use of energy, especially at the point of end-use, (ii) increased utilisation of modernised renewable sources of energy, and (iii) making full use of the next generation of technologies to utilise fossil fuels. It is indicated that the prospects in these areas are sufficiently promising to support a major reorientation of world energy system developments. If such a reorientation were to take place, energy can become an instrument for sustainable development. An integrated approach focusing on the level of energy services provided to impact people’s living conditions, economic development, environmental quality and geostrategic security is advanced.

Such a reorientation is essential, if the goals and commitments reached at the major Conferences are to be met.

The necessary reorientation will not happen by itself, under present rules, regulations and economic frameworks. Currently large subsidies are given to conventional sources of energy and environmental costs are not reflected in market prices. Crucial research and development efforts are being reduced and market introduction of new technologies faces a number of barriers. There is a vital need to focus attention on how public and private interests can be mobilised to formulate and implement the legal, institutional as well as fiscal frameworks required to promote sustainable energy. This requires a public sector-led undertaking, with important contributions from the private sector and civil society at large. It requires a renewed and action-oriented response from the international community.

1. Introduction

Energy use facilitates all human endeavor, as well as social and economic progress. Energy is used for heating and cooling, illumination, health, food, education, industrial production, and transportation. Countries have considered the production and consumption of sufficient energy to be one of their main challenges. The magnitude of energy consumed per capita has become one of the indicators of “modernisation” and progress of a country. Thus, energy issues and policies have been strongly concerned with increasing the supply of energy. The strategic and environmental consequences of energy consumption patterns have been neglected for a long time. The world continues to seek energy to satisfy its needs without giving due consideration to the social, environmental, economic and security impacts of its use. It is now clear that current approaches to energy are unsustainable.

People living in poverty and destitution have benefited very little from conventional energy policies and their implementation. More than two billion people lack access to modern energy carriers and electricity. At the same time, it is widely recognised that without appropriate energy services there can be no true development.

Development strategies so far have overlooked the fundamental role of energy in poverty alleviation. The solution is not primarily one of simply providing enhanced conventional energy supplies. Experience has shown that such a strategy would be a failure both from the point of view of financial implications and environmental concerns. A fundamental reorientation is needed in the approach to energy and energy services.

current approaches to energy are unsustainable

Energy has been a major public policy issue for a very long time. In recent history energy gained great attention in the 1970’s as a result of the 1973 and 1979 oil price shocks. The vulnerability of all economies to energy price and supply fluctuations became evident to government policy makers and consumers alike. Oil importing countries confronted serious balance of payments problems, and in some cases, debt traps. The UN Conference on the Development and Utilisation of New and Renewable Sources of Energy held in Nairobi in 1981 stressed the importance of alternative, renewable sources of energy to offset oil dependence. The hopes raised and plans formulated floundered, however, with the decline of international oil prices. In parallel, acidification and global greenhouse gas emissions were taking on new international significance as were the health concerns related to emissions. No integrated approach linking energy, environment and development emerged.

During the 1990s, the United Nations convened a series of major Conferences on global issues including the 1992 Conference on Environment and Development (UNCED) in Rio de Janeiro, the 1993 Conference on Human Rights in Vienna, the 1994 Conference on Population and Development in Cairo, the Global Conference on the Sustainable Development of Small Island Developing States, the 1995 World Summit for Social Development in Copenhagen, the 1995 Fourth World Conference on Women in Beijing, the 1996 Conference on Human Settlements (Habitat II) in Istanbul, and the World Summit on Food Security in Rome.

development strategies have overlooked the fundamental role of energy in poverty alleviation

At each of these Conferences, Member States agreed on objectives, principles and action programmes. Energy issues have been present at all of the Conferences. In the Platforms and Programmes for Action emanating from the Conferences there are texts which clearly discuss the role of energy (see Box 1). The negative impact on human health and the environment are explicitly recognised in these documents and statements supporting the objectives of providing more energy-efficient technologies and utilizing renewable sources of energy are adopted. In addition, there are also three Conventions closely linked to energy: the Framework Convention on Climate Change (FCCC), the 1979 Convention on Long Range Transboundary Air Pollution and the Convention to Combat Desertification.

implementing sustainable energy strategies is one the most important levers humankind has for creating a sustainable world

There has not been a focused examination, however, of the role of energy for overall sustainable socio-economic development and actions called for concerning sustainable energy have not been integrated into development strategies.

The message from the Conferences with respect to energy is that a new approach to energy is required to meet the societal objectives agreed upon by the community of nations. The impact of poverty on the natural resource base was recognised at the Earth Summit in Rio. Designing and implementing environmental protection and resource management measures to take into account the needs of people living in poverty and vulnerable groups has been repeatedly highlighted at all major United Nations Conferences since 1992. In spite of this, however, the necessary changes are not reflected in the overall trends in energy as observed in the 1990s. Present trends in energy pose serious barriers to the goals of sustainable development and poverty eradication.

In its resolution 47/190 the United Nations General Assembly “decides to convene not later than 1997 a special session for the purpose of an overall review and appraisal of Agenda 21”. The same resolution “urges organisations and programmes of the United Nations to take the necessary actions to give effective follow-up to the Rio Declaration on Environment and Development and Agenda 21”.

This publication was prepared in response to the 1996 General Assembly resolution 50/113 inviting relevant organisations of the UN to contribute to the special session. It builds on the work of the Conferences, drawing new insights from research and development with respect to (i) the role of energy in sustainable development, (ii) technological options to supply energy services, and (iii) experiences of energy policies to achieve objectives in areas linked to energy, such as those contained in negotiated Conference documents, as relevant in the world of the late 1990s.

Starting from a discussion of the social, environmental, economic and security issues of today’s world, an attempt is made to describe the linkages between these issues and energy. This publication advances an integrated perspective on the linkages between these vital issues and energy, and its role in achieving the objectives formulated and agreed upon at the Conferences. Not only is energy one of the determinants of these problems, but energy can contribute to their alleviation, if not to their solution. Implementing sustainable energy strategies is one the most important levers humankind has for creating a sustainable world.

In Chapter 2 linkages between energy and social, environmental, economic and security issues are reviewed and it is concluded that the present energy system and trends are not compatible with sustainable development. In Chapter 3 technology options to bring about a more sustainable energy future are reviewed and in Chapter 4, their potential impact is analysed. Finally, Chapter 5 addresses the policy issues for bringing about a sustainable energy future.

Box 1. Energy and the Major UN Conferences “Agenda 21 constitutes the basic framework and instrument which will guide the world community on an ongoing basis in its decisions on the goals, targets, priorities, allocation of responsibilities and resources in respect of the many environment and development issues which will determine the future of our planet” according to Maurice Strong, Agenda 21 programme areas, activities and objectives from the Rio Conference describe numerous links between sustainable development and energy issues. These are reflected in the chapters on Promoting Sustainable Human Settlement Development, Health, Integrating Environment and Development in Decision-making, Protection of the Atmosphere, Combating Deforestation, Combating Desertification and Drought, Sustainable Mountain Development, and Promoting Sustainable Agriculture and Rural Development. Chapter 34 on Environmentally Sound Technology, Cooperation and Capacity Building is particularly relevant to energy and modern clean energy technology. The Programme of Action adopted at the United Nations Conference on Population and Development emphasises the need to integrate population concerns into all aspects of economic and social activity. Chapter 3 addresses the interrelationships between population, sustained economic growth and comprehensive sustainable development, particularly for the implementation of effective population policies and meeting basic human needs. The Cairo Conference recognised poverty as a major obstacle to solving population problems. The Global Conference on Sustainable Development in Small Island Developing States (SIDS) produced a Plan of Action which deals with energy resources in Chapter 7. It concludes that SIDS “are currently heavily dependent on imported petroleum products, largely for transport and electricity generation, energy often accounting for more than 12 percent of imports. They are heavily dependent on indigenous biomass fuels for cooking and crop drying”. The absence of energy alternatives is a clear factor in unsustainable development patterns in SIDS. As a result it is concluded that “increased efficiency through appropriate technology and national energy policies and management measures will reap both financial and environmental benefits for small island developing states”. The Social Summit Programme of Action represents a global effort to address issues related to social development and the negative impacts of underdevelopment and poverty. Global consensus was reached on the need to create an enabling economic environment aimed at promoting more equitable access to sustainable development, and the goal of eradicating poverty. Chapter 2 recognises that improving the availability and accessibility of transportation, communication, power and energy services at the local and community level is a way of improving the access to productive resources and infrastructure necessary for poverty eradication, especially for isolated, remote and marginalised communities. The implementation and follow-up of recommendations from Cairo and Copenhagen related to health, education, safe food, potable water and sanitation, transportation, employment and poverty eradication, as well as the needs of special groups such as the aging, handicapped, victims of natural disasters, children, refugees and displaced, will all require a substantial increase in energy services. The Beijing Conference Platform for Action, Objective K “Women and the environment” refers to women’s numerous roles in the management and use of natural resources, as providers of sustenance for their families and communities, as well as women’s needs and requirements as users, consumers, managers and decision-makers. It stresses the need to integrate gender concerns and perspectives in all programmes for sustainable development. The United Nations Conference on Human Settlements HABITAT II statement “Sustainable Human Settlements Development in an Urbanizing World” explicitly deals with sustainable energy use. Chapter 4 states that the use of energy is essential in urban centers for transportation, industrial production, household and office activities. “Current dependence in most urban centers on non-renewable energy sources can lead to climate change, air pollution and consequent environmental and human health problems, and may represent a serious threat to sustainable development. Sustainable energy production and use can be enhanced by encouraging energy efficiency, by such means as pricing policies, fuel switching, alternative energy, mass transit and public awareness. Human settlements and energy policies should be actively coordinated”. The promotion of efficient and sustainable energy use and actions for Governments, the private sector, non-governmental organisations, community-based organisations and consumer groups to solve many of the crucial social and economic requirements of sustainable development are recommended. The World Summit on Food Security in its Declaration noted that “unless governments and the international community address the multifaceted causes underlying food security, the number of hungry and malnourished people will remain very high in developing countries, particularly Africa south of the Sahara and sustainable food security will not be achieved”. The importance of energy in agricultural production, food preparation and consumption is clear.

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1.5-2 billion people are without access to electricity

Energy is directly related to the most pressing social issues which affect sustainable development: poverty, jobs and incomes levels, access to social services, gender disparity, population growth, agricultural production and food scarcity, health, land degradation, climate change and environmental quality, and economic and security issues. Without adequate attention to the critical importance of energy to all these issues, the global social goals agreed on at UN conferences in the 1990’s cannot be achieved. Indeed the magnitude of change needed is large, fundamental and directly related to the energy produced and consumed internationally.

2.1.1 Poverty

people living in poverty pay a higher price per unit of energy services than do the rich

Poverty is indisputably among the world’s largest, most urgent and most fundamental issues. Despite this, poverty has received scant attention from an energy perspective. This neglect of the poverty-energy nexus is most surprising since energy is of vital importance to the satisfaction of basic needs, particularly nutrition and health.

A large proportion of humanity does not enjoy the benefits that modern energy sources and devices bring. About 2 billion people still cook using traditional fuels, and 1.5-2 billion people are without access to electricity.

Energy services constitute a sizeable share of total household expenditure in developing countries. People living in poverty pay a higher price per unit of energy services than do the rich. They also spend more time obtaining these energy services. The substitution of modern energy carriers and more efficient energy conversion devices would confer sizeable gains in purchasing power on poor urban households. Improvements in energy efficiency have considerable potential to reduce poverty in all of its key dimensions, and to facilitate development.

improvements in energy efficiency have considerable potential to reduce poverty

Patterns of energy consumption among people living in poverty tend to further worsen their misery. Firstly, because these people spend a higher proportion of their income on energy, they are less likely to accumulate the investments necessary to make use of less costly or higher quality energy sources. Secondly, the use of traditional fuels has a negative impact on the health of household members, especially when burned indoors without either a proper stove to help control the generation of smoke, or a chimney to vent the smoke outside.

Policies and programmes that directly address the creation of opportunities for people living in poverty to improve the level and quality of their energy services (by making more efficient use of commercial and non-commercial energy and by shifting to higher quality energy carriers) will allow the poor to enjoy both short-term and self-reinforcing long-term improvements in their standard of living. By contrast, the standard poverty-alleviation strategies - macro-economic growth, human capital investment, and redistribution - do not focus on the energy-poverty nexus in developing countries. If energy is left out of poverty elimination strategies, such as those promised by the Copenhagen Social Summit, these strategies are doomed to fail.

2.1.2 Gender Disparity

Conventional energy approaches virtually exclude women’s concerns from the current capital-intensive, monetised, expert-dominated energy sector. Consequently, economic growth has unfortunately been accompanied by (often severe) gender disparities. Globally, 70% of people living in poverty are women.

More than half of the world’s households cook daily with wood, crop residues and untreated coal. Home-based industries depend on biomass supplies. Women in developing countries spend long hours working in survival activities - cooking, fuelwood collection, water carrying and food processing. Women’s time in these survival tasks is, however, largely invisible in the statistics compiled on patterns of energy use. Women and children’s time spent on fuel and water collection represents a high social and economic cost to the family and society, and is directly related to the low level of energy services that are available to people living in poverty.

The nutritional status of women is often worsened because, for cultural reasons, they eat last and least and in addition they tend to expend more energy in work than men. Part of this greater labour is related to domestic chores such as gathering firewood, fetching drinking water, etc. These chores could be avoided, for example, by providing access to cooking fuel and/or efficient stoves and to water for domestic purposes.

Women’s key role in environment issues and sustainable development is an accepted fact. What is less well-known is that many of women’s environmental roles and concerns are closely linked to the use, supply and management of energy resources. Strengthening the role of energy in advancing sustainable development will require paying attention to the special role of women, and specific attention to women’s participation in energy activities. This can be achieved by recognising the specific relationships between women’s needs, roles and concerns, and the energy system.

2.1.3 Population

The conventional view is that population determines energy use as an external influence, i.e., exogenously. There is another view that the pattern of energy use influences population growth, through its effect on the desired number of births in a family and the relative benefits of fertility. The implication of this dimension of the energy-population nexus is that one important challenge for the energy system is to accelerate the demographic transition in which the population moves from an old balance of high mortality and high fertility to a new balance of low mortality and low fertility. This acceleration requires a dramatic reduction in fertility to stabilise the global population as quickly as possible, and at as low a level as possible.

women and children’s time spent in fuel and water collection represents a high social and economic cost

The reduction of fertility depends upon crucial developmental tasks such as increased life expectancy, improvement of the living environment (drinking water, sanitation, housing, etc.), education of women, diversion of children from household-survival tasks and employment to schooling, etc. Almost every one of these socio-economic preconditions for smaller family size and fertility decline depends upon energy-utilising technologies. But current patterns of energy use in developing countries do not reflect emphasis on the provision of safe and sufficient supplies of drinking water, the maintenance of a clean and healthy environment, the reduction of the drudgery of household chores traditionally performed by women, the relief from household-survival tasks carried out by children and the establishment of income-generating industries in rural areas.

Thus, current patterns of energy use do not emphasise the type of energy-utilising technologies necessary to satisfy the socio-economic preconditions for fertility decline.

2.1.4 Undernutrition and Food

About 800 million people, approximately 15% of the population in developing countries, are undernourished. The elimination of chronic undernutrition will require at least: (i) elimination of poverty through jobs creation (and thereby better distribution of income), and (ii) increased food production. The Food and Agriculture Organisation (FAO) estimates that a 35% increase of recent food production in developing countries is required by the year 2010. This could be achieved by increasing crop yields, by a greater intensity of cropping and perhaps also by bringing new land into agricultural production.

the pattern of energy use influences population growth

Gastro-intestinal parasites can undermine nutritional status by consuming, perhaps as much as 10-15% of the food intake, often termed the “leaky bucket” syndrome. This problem has to be tackled by health care and the provision of safe water and a clean living environment.

Many measures are necessary such as the raising of incomes through employment generation, the provision of a healthy environment, and programmes of supplementary nutrition for vulnerable groups. Several of these measures are strongly energy-related and if energy is to contribute to the solution of the problem of undernutrition, the energy components of these measures must be built into development strategies.

2.2.1 Health

energy measures to contribute to the solution of under nutrition must be built into development strategies

The energy-health nexus arises because, without proper control, the production and use of energy can be accompanied by adverse impacts on the environment and, ultimately, on human health.

all megacities in developing countries have air pollution levels well above World Health Organisation (WHO) guidelines

The combustion of fossil fuels is the largest source of atmospheric pollution involving sulphur and nitrogen oxides, heavy metals, unburned hydrocarbons, particulates and carbon monoxide, among other directly health-damaging pollutants. Such pollution arises, not only as a result of fossil fuel combustion in power plants and industry, but also from motor vehicles and households.

In urban environments, the transport sector is a major cause of the high levels of air pollution - gaseous pollutants and ultra-fine particulates emitted by petrol-powered vehicles, fine particulates emitted from poorly-maintained diesel engines, secondary (photochemical) pollutants such as ozone and the additional insidious pollutant, lead from traditional petrol use. Of these, suspended particulates are the major cause of concern to human health. All megacities in developing countries, and most industrialised countries, have air pollution levels well above the World Health Organisation (WHO) guidelines. Furthermore, the situation is getting worse because of the high growth rates of vehicle fleets in the context of inadequate road infrastructure and growing urbanisation in many developing countries.

women and children have the highest exposures to indoor air pollution

Household use of biomass (and coal) results in greater human exposure to pollutants because emissions are high, ventilation is often poor, people are generally nearby at the time of use, and the affected populations are large. Significant health effects can thus be expected. The largest direct impacts would seem to be respiratory infections in children (an important class of disease) and chronic lung disease in women.

The energy-health nexus consists, therefore, of the fact that current energy utilisation patterns in rural households give rise to the problem of indoor air pollution affecting an increasing population and, in cities, to the growing problem of urban air pollution.

2.2.2 Acidification

a key concern in developing countries is the potential impact of acidification on agricultural crops

Acidification, the process by which soils and surface waters are depleted of bases and consequently suffer an increase in acidity, results in damage to terrestrial and aquatic ecosystems. Thousands of lakes and small streams have become acidified during this century in Europe and North America, and the flora and fauna in these lakes have changed drastically. Many surface waters are entirely devoid of fish, amphibians and other creatures. There has also been significant damage to forests in Europe and North America.

Emissions of sulphur dioxide, nitrogen oxides and ammonia give rise to acidifying depositions after chemical transformation and transport in the atmosphere. Sulphur and nitrogen oxides are mainly formed during the combustion of fossil fuels in the power and transport sectors. This is the energy-acidification nexus.

Recognition of this linkage has led to a Sulphur Protocol under the Convention on Long-Range Transboundary Air Pollution in Europe requiring significant reductions of sulphur emissions. However, even if the requirements of the protocol were fulfilled, large areas will have acid depositions well above critical levels.

The prognosis indicates that there is potential for serious damage in many parts of the world that have not experienced this type of pollution problem before. Technologies exist to abate these emissions, but they are costly and need to be put in place on a widespread scale.

In many developing countries emissions are increasing to serious levels. A key concern in these countries is the potential impact on agricultural crops. Whereas in industrialised countries farmers can lime the soils if they become acidified, it is unlikely that poor farmers in the developing world can afford to do so. Acidic deposition is likely to become an important regional issue, particularly in Asia, but also in parts of South and Central America and in Southern Africa.

2.2.3 Climate Change

According to the 1995 Scientific Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), “The body of statistical evidence now points towards a discernible human influence on global climate.” This influence is due to the increase in atmospheric concentrations of greenhouse gases since pre-industrial times, and the effect of this increase on the energy balance of the Earth.

It is now the view of the IPCC that continued increases in greenhouse gas concentrations, as a result of human activity, will lead to significant climate change (enhanced global warming) in the coming century. However, uncertainties still exist limiting our ability to quantify human influence and project the future. Nevertheless, it appears that major changes are required in current fossil-fuel-based energy consumption patterns. This is because business-as-usual is likely to increase carbon emissions by a factor of three by 2100, whereas according to the IPCC, emissions will have to fall far below the present level in order to stabilise the atmospheric concentration of carbon dioxide (CO₂).

Earlier IPCC findings spurred governments to sign the United Nations Framework Convention on Climate Change (FCCC) in Rio (1992). Since 1994, the UNFCCC has now been ratified by more than four-fifths of the UN member states (164 as of end of 1996). The UNFCCC involves voluntary, rather than binding, emission stabilisation commitments. Targets and timetables for emission reductions are now being negotiated. Inventories of human-related emissions of CO, (1990-1995 and 2000 projections) have shown that most industrialised countries will not, in fact, meet their voluntary target of limiting their year 2000 emissions to 1990 levels.

The threat of climate change is principally an energy-related problem. Current energy systems are based on the combustion of fossil fuels which account for 76% of the world’s primary energy. This combustion leads to about three-fourths of the annual human-related emissions of the main greenhouse gas CO₂. These annual emissions accumulate, increasing the greenhouse gas concentrations in the atmosphere. Even taking into account the quantitative uncertainties, current energy patterns are leading the world down a path that is unsustainable by threatening the global climate. This is the energy-climate change nexus.

2.2.4 Land Degradation

emissions will have to fall below the present level in order to stabilise the atmospheric concentration of CO₂

Globally about 2000 million hectares of land have been degraded - an area equal to more than one third of all cropland and forested land. Some 300 million hectares are under such severe stress conditions that damage can be considered irreversible. If left unchecked, most of the remaining degraded land is likely to reach similar conditions. Land continues to be degraded at rates that are high by historical standards. The major causes of land degradation are deforestation, shifting cultivation practices in agriculture, over-grazing and the use of bush fires for short-term gains. Land degradation now affects the lives of hundreds of millions of people and is hampering the development of countries. Stopping land degradation is a high priority in many areas of the world.

Although the production of energy (including biomass energy or bioenergy) is not a major global cause of land degradation (although the impact may be large locally and regionally), energy can play a major role in stemming and reversing the problem. Specifically, the introduction of modern biomass energy systems (e.g., for electricity generation) would put a sufficiently high market price on biomass to make it profitable to restore many of the potentially productive degraded lands to “energy farm quality” so as to be able to serve lucrative biomass energy markets. Thus, the energy-land degradation nexus appears “more a cure than a disease.”

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energy sector emissions contribute the majority of global greenhouse gases

Expenditure on increasing energy supply represents a major economic cost to all countries. In the developing world, the financial and opportunity cost of capital, foreign exchange constraints, and the cost of energy subsidies combine to create severe economic constraints to supply-driven models for expanding energy.

2.3.1 Investment Requirements of Energy

The present level of world-wide investment in the energy supply sector, $450 billion per year, is projected to increase to perhaps $750 billion per year by 2020, about half of which would be for the power sector. Such investment levels cannot be sustained by traditional sources of energy financing.

In recent years the financing of large-scale electric power projects in developing countries has become problematic. With the international debt crisis that began in 1982, investments began to fall. External financing also dropped. Although the level of domestic savings in many developing countries is substantial, there have been widespread political, institutional and cultural barriers to the successful harnessing of domestic savings for energy and many other investment purposes.

energy can play a major role in stemming and reversing the problem of land degradation

Underpricing of electricity has meant utilities have little or no retained earnings. Their shaky financial condition has given them poor credit ratings in international commercial capital markets. Governments that have historically provided much of the necessary capital face mounting fiscal constraints that make it ever more difficult to supply major capital for electric utilities. Also, the multilateral financing agencies are able to provide only a small fraction of the capital needed. All of this undermines self-reliance and leads to deals that reflect the high price of capital arising from the high financial risks involved.

the search for new sources of finance has led to a drive for privatisation in the energy sector to attract private capital

There have also been some significant changes in the sources of energy finance. Official development finance has declined as a proportion of total funding and is expected to diminish further. Consequently, external private financing and domestic financing will need to increase. A substantial increase of private investment in developing countries has occurred in the first half of 1990, not always for the creation of new capacity but for buying existing capacity. The search for new sources of finance has led to a drive for privatisation in the energy sector in order to attract private capital.

2.3.2 Foreign Exchange Impacts of Energy Imports

energy imports represent a significant fraction of foreign exchange earnings for many developing countries

The dependence on fossil fuels has created a wide variety of problems for non-oil producing developing countries, as well as for some industrialised countries and economies in transition. In over 30 countries energy imports exceed 10% of the value of all exports, a heavy burden on their balance of trade often leading to debt problems. In about 20 developing countries, payments for oil imports exceed payments for external debt servicing. This is an important aspect of the energy-foreign exchange nexus.

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dependence on oil imports represents one of the significant potential sources of conflict in the world today

Current approaches to energy pose major national, regional and global threats to security, and ultimately sustainable development.

2.4.1 Energy and National Security

There are many security issues related to energy. An issue of dominant concern is the growing dependence of most OECD and developing countries on oil imports from the Middle East. This dependence represents one of the significant potential sources of conflict in the world today.

Dependence on Middle Eastern oil is likely to persist, since 65% of the world’s proven oil reserves are in the Middle East, and oil production costs are especially low there.

Security concerns relating to energy also arise in the harnessing of rivers for hydro-power in watersheds, involving several countries. On the other hand, strong connections between supply sources and markets, such as in the case of natural gas pipelines, can lead to mutual dependence and be a stabilising factor. This is the energy-security nexus.

2.4.2 Nuclear Energy and Nuclear Weapons Proliferation

if nuclear power produces an even more significant proportion of world energy, the safeguarding of weapons-usable materials will become still more daunting

Today, nuclear power accounts for about 5% of the world’s energy, and about 15% of its electricity. Nuclear energy could replace baseload fossil fuel electricity generation in many parts of the world, if generally acceptable responses can be found to concerns such as reactor safety, radioactive-waste transport and disposal, and proliferation.

Nuclear power poses security challenges because of the link between nuclear power and nuclear weapons. Nuclear power programmes require national cadres of nuclear scientists and technicians, a network of research facilities, research reactors and laboratories - all indispensable to a nuclear weapons programme. But the most direct connection between civilian nuclear power programs to produce electricity and nuclear weapons proliferation - the (nuclear) energy-nuclear weapons nexus - is through the production and use of fissile materials, plutonium and highly-enriched uranium, which could be used in nuclear weapons.

For these reasons the Nuclear Non-Proliferation Treaty was developed (and there are now 175 parties to the Treaty as of 5 November 1996) to provide a system of safeguards aimed at assuring that civilian nuclear power programs not be used to divert nuclear materials to weapon usage. Unfortunately, safeguards are an imperfect barrier to proliferation.

If in the long run nuclear power comes to produce an even more significant proportion of world energy, the safeguarding of weapons-usable materials will become still more daunting. A nuclear explosive device can be constructed with less than 10 kg of plutonium, while a 1000 MW power reactor produces more than 200 kg of plutonium per year. It is difficult to imagine human institutions capable of safeguarding these plutonium flows against occasional diversions of significant quantities to nuclear weapons.

2.5 Energy and Global Issues: The Implications

In this chapter, the linkages between energy and social, environmental, economic and security issues have been demonstrated. Most present trends in energy indicate a deteriorating situation. Furthermore, current energy patterns are aggravating this process by an over-preoccupation with centralised energy supply and fossil fuels to the detriment of energy efficiency, decentralised supply and renewable energy. The development of the world energy system at large continues along the trends established before Rio. In other words, major global problems are making the world more and more unsustainable and business-as-usual energy patterns and conventional approaches to energy are contributing to this unsustainability.

current energy patterns contribute to unsustainability

Thus, any attempt to tackle the social, environmental, economic and security issues as done by the UN conferences must pay full attention to their energy aspects. Energy strategies, policies, programmes and projects must contribute to, and be consistent with, the solution of major global issues. Energy issues must be tackled in such a way that the other problems are not aggravated. On the contrary, energy policies which provide a better balance between conventional sources and renewables and efficiency improvements will have powerful direct, and indirect, influences on solving many of the global issues identified.

energy must be viewed as a means of contributing to the solution of major global problems

Energy needs to be looked at with an end-use orientation, an energy service viewpoint. The traditional supply-side approach alone does not adequately consider the opportunities and potentialities arising from changes in energy demand, improvements in energy efficiency, shifts from traditional to modern energy sources, dissemination of new technologies, etc. What is important now is to take an integrated systems approach, giving attention to technological and institutional innovations on both the demand and supply sides.

Energy must be viewed, therefore, as a means of contributing to the solution of major global problems. In fact, the global goal for energy can be stated very simply: sustainable development of the world. Energy must be an instrument for the achievement of sustainable development.

energy must be an instrument for the achievement of sustainable development

This implies that energy strategies and policies should satisfy five fundamental criteria: economic efficiency, equity (particularly for the poor, women and those located in remote areas), empowerment/self-reliance, environmental soundness and peace. Together, these components can be taken as a measure of sustainable development.

3.1 Introduction

only attention to demand side energy issues and the level of energy services delivered will lead to a sustainable approach to energy

The adverse impacts of energy consumption and production can be mitigated either by reducing consumption or shifting energy supplies to options better able to support sustainable development objectives. Of the various entry points for efforts to reduce energy demand, it is technological performance that yields the largest and most accessible opportunities. Technological change has, by far, greater potential than changes in the patterns of consumption of goods and services, but this assessment must not preclude attempts to shift away from irrational and wasteful patterns of consumption.

3.2 Demand Side: Energy and Energy-Intensive Materials Efficiency

There is growing recognition in industrialised countries that some of the greatest and most cost-effective opportunities for sustainable energy development involve improving end-use efficiency by providing the same energy service with less energy inputs or, to achieve more energy services for the same energy input. Over the last decade, much has been learned about these opportunities, about the institutional obstacles to their exploitation, and about how policies might be better shaped to capture these opportunities. These opportunities are not nearly so well understood in developing countries where the need for improved energy end-use efficiency is greatest.

Classification of Energy Efficiency Measures: There are two types of energy-efficiency measures: (1) more efficient end-use of energy in existing installations (efficiency retrofits) through improved operation and maintenance and/or replacement of some components; and (2) more efficient end-use of energy in new installations, equipment, etc. This can be achieved through systematic introduction of more energy efficient systems and technology introduced at the point of capital turnover and expansion.

the greatest and most cost-effective opportunities for sustainable energy development involve improving end-use efficiency

Specific energy consumption can typically be reduced by 20-50% in the case of efficiency improvements in existing energy-using installations and 50-90% in the case of new installations (with respect to the energy use levels of the present average stock of equipment in industrialised countries). These reductions can be achieved by using the most efficient technologies available today and are usually cheaper than increasing supply. In developing countries the potential for demand reduction is often even larger. The potential for further efficiency improvements through continued research and development is high, as the performance of current technologies are far from their fundamental physical limits.

Industry: Significant potential to improve energy efficiency exists in all industries, but particularly in five energy-intensive industries: iron and steel, chemicals, petroleum refining, pulp and paper, and cement, which account for roughly 45% of all industrial energy consumption. Energy typically accounts for a large proportion of production costs in these industries. The introduction of advanced technology to reduce costs, improve product quality, and/or facilitate environmental protection will usually reduce energy requirements as well. Thus, the promotion of technological innovation in these industries will typically lead to substantial gains in energy efficiency. These opportunities are especially important for developing countries where infrastructure-building activities are giving rise to rapid demand growth for basic materials.

Commercial and Residential Buildings: The buildings sector includes a wide variety of specific energy applications such as cooking, space heating and cooling, lighting, food refrigeration and freezing, office equipment and water heating.

Studies estimate the potential savings in energy use from 30-50% in residential buildings for various industrialised countries. In commercial buildings, estimates vary from 25-55% in industrial countries, to up to 50-60% in economies in transition and developing countries. A wide variety of demonstration projects show that even larger reductions in energy use are feasible by a successful combination of currently available technologies in the construction of new buildings.

Transport: Transport energy use can be reduced by: 1) improving the efficiency of transport technology (e.g., improving automobile fuel economy); 2) shifting to less energy-intensive transport modes to achieve the same or similar transport service (e.g., substituting passenger cars with mass transit); 3) changing the mix of fuels used in the transport system; and 4) improving the quality of transportation infrastructure (e.g., roads, railways). See pages 22-23 for a discussion of vehicle technology and fuels.

substantial reductions in energy consumption can be achieved using the most efficient technologies available today and are cheaper than increasing supply

Significant reductions in energy use can be achieved by encouraging shifts to less energy-intensive modes of transport as strong variations in intensities exist for various modes. Shifting commuting from passenger cars to buses can result in a relative intensity drop. This can be achieved through an improved transport infrastructure to increase availability and access and/or by reducing demand. Planners are beginning to examine methods to reduce the demand for transport vehicles, or to optimise the use of existing infrastructure. Policies that encourage large shifts to public transit systems in densely populated areas such as Singapore, Curitiba and Manila have been shown to reduce overall energy demand. The example of Curitiba shows that land-use planning is an important tool to encourage a shift to mass transit.

Agriculture: Energy consumption in agriculture is divided into direct (e.g., tractor fuel, energy for irrigation, crop drying, etc.) and indirect (e.g., fertilisers, pesticides) energy use. It is estimated that only 35% of the total commercial energy utilised in US food production is consumed on the farm. The rest is used in food processing, packaging, storage, transport and preparation.

Potential energy savings can be found through changes in the use and design of tractors, reduced tillage and improvements in irrigation, drying, livestock production, horticulture, and nutrient recycling. Renewable energy sources can also contribute to savings in fossil energy used in agriculture. Examples are solar and wind energy, energy from biomass residues or products from energy cropping for heat and power production, wind as a direct source for irrigation, and solar energy as a direct source for drying.

Material Efficiency Improvement: Decreased use of (primary) materials to manufacture products or perform services will reduce energy use. Reducing material inputs to production can be achieved through more efficient use of materials and closing material chains (i.e., recycling waste and by-products back into the production process). Good housekeeping, material-efficient product design, material substitution or use of materials with improved properties, product and material recycling and decreasing inputs of primary materials all improve material efficiency. Similarly, practices that promote non-recoverable use of materials should be reduced. Reducing material intensity will also have effects on other components in the material chain (e.g., energy savings in transport as well as reduced material demand in providing transport). Eventually such actions will reduce society’s demand for the materials, leading to a structural change within the economy to a lower share of energy/material intensive services.

basic materials production is the most energy intensive so efforts should be made to use these materials efficiently

Recycling material also reduces energy use in the energy-intensive materials industries. Aluminium from recycled scrap reduces specific energy inputs by 90-95%; for iron and steel, the reduction is 60-70%; and for paper, 30-55%.

Macro-economic Impact of Energy Efficiency Measures: A once commonly held, but mistaken, view is that a country’s energy demand is proportional to its gross domestic product (GDP). This is true if, and only if, the structure of the economy and the energy intensities are constant. Thus, the so-called energy-GDP correlation is valid only during periods when there are no changes in the economy’s technical energy efficiency and/or structure. If however, there are changes in energy intensity due to improved efficiency, process or product changes, and/or there are changes in the contributions of different activities to the GDP (e.g., the share of basic materials manufacturing decreases and the share of less-energy intensive activities increases), the proportionality breaks down.

There are three factors responsible for the observed decline of energy intensities in most economies. The first factor is the improved efficiency of production of energy carriers (e.g., an increased number of kilowatt hours of electricity (kWh) generated per tonne of coal burned). The second factor is the improvement of the efficiency of energy end-use technologies - the energy required to perform an energy service (e.g., kWh_e to achieve a certain illumination) or produce a product (e.g., kWh_e per tonne of aluminium) has decreased over the years. The third factor involves structural changes in the use of energy-intensive materials whereby economies become less materials-intensive at higher levels of economic activity, leading to a less energy-intensive economy as a whole. This arises when consumer preferences shift to more valuable, less-materials-intensive products and production shifts to better materials (e.g., through replacement of conventional steels with modern high-strength steels in construction). There have also been declines in energy intensity as a result of a shift from goods production to services production.

By shifting to high-quality energy carriers and by exploiting cost-effective, efficient end-use devices it would be possible to improve living standards without significantly increasing per capita energy use above the present level. For instance, the energy requirements for the West European standard of living of the mid-1970s could be as low as 1 kW/capita, only 20% higher than the 1986 level in developing countries, if state-of-the-art energy-efficient technologies were used.

Conclusions: End-use energy efficiency improvement reduces global warming, air pollution (acid precipitation, smog in the urban and industrial environment), waste production (ash, slag), and water and thermal pollution. End-use efficiency improvement is a cheap energy “source” and, in many cases, far cheaper than new supply. Other economic benefits are reduced costs of energy transformation and generation, reduced fuel imports and increased energy security. Technology developments have neither reached their limits in the provision of continuing improvements to energy efficiency nor will they in the foreseeable future. Large potential exists for energy savings through end-use improved energy efficiency in the buildings, transport and industrial sectors.

The opportunities for improving energy efficiency are far greater with new investments than with retro-fitting existing equipment. These are especially interesting for developing countries because most investments in infrastructure and equipment aimed at economic growth are yet to be made.

3.3 Supply Side: Renewables and Clean Fossil Fuel Technologies

Energy supply options that increase efficiency (the energy efficiency of making energy carriers from primary energy sources), reduce pollutant emissions and reduce emissions of greenhouse gases can contribute to sustainable development objectives. The following are some of the opportunities: a growing role for natural gas, promising advanced fossil and renewable energy technologies for electric power generation, alternative electric-drive technologies for motor vehicles, alternative fuels for transportation, and expanding roles for fossil fuels in a greenhouse-gas-constrained world via fuel decarbonisation and storage of the separated CO₂.

Natural Gas: The contribution of natural gas to the global energy economy has increased and the share of oil and coal has declined. This trend is projected to continue as: 1) ultimately recoverable conventional natural gas resources are expected to be at least as large as ultimately recoverable conventional oil resources and natural gas reserves are increasing faster through exploration than the reserves of oil; and 2) natural gas is currently consumed at approximately 58% of the rate for oil. The shift to natural gas is driven by its low cost in many parts of the world, its convenience for shipping as liquefied natural gas (LNG) and the environmental attractions of natural gas and LNG as a fuel. Natural gas has the lowest specific CO₂ emission rate of all fossil fuels and can, in general, be used more efficiently than coal. Hence, as the role of natural gas expands at the expense of coal and oil, greenhouse gas emissions will be reduced. However, increasing natural gas consumption in many industrialised countries is currently the main source of their rising CO₂ emissions.

as the role of natural gas expands at the expense of coal and oil, greenhouse gas emissions will be reduced

Advanced Technologies for Electric Power Generation: In fuel-based electric power generation there are good prospects for routinely achieving efficiencies of over 60-70% or more in the longer term, compared to the present 30% world average. Large efficiency gains can also be achieved by replacing the separate production of heat and power with combined heat and power (CHP) technologies. Moreover, rapid progress is being made in the use of renewable energy in power generation.

it is possible to raise the standard of living without significantly increasing energy use

Thermal Power Generation: The natural gas-fired gas turbine/steam turbine combined cycle has become the thermal power technology of choice in regions having ready access to natural gas and LNG. This is because of the low unit capital cost of the power plants, high thermodynamic efficiency (now in the range 50-52%, but expected to reach 56% by 2000), low air pollutant emissions (including nitrogen oxides) without the use of stack-gas controls and low CO emissions (almost two-thirds less than for modern coal steam-electric plants).

Since the feasibility of firing combined cycle power plants with coal via the use of closely coupled coal gasifiers was successfully demonstrated in the late 1980s, there has been much progress in commercialising the coal-integrated gasifier/combined cycle (CIG/CC). This technology makes it possible to adapt the continuing advances in gas turbine technology to coal with pollutant emissions as low as for natural gas combined cycles. Efficiencies of around 45% should be reached by 2000, at which time the technology is expected to be fully cost-competitive with conventional coal steam-electric power with flue gas desulphurisation.

Fuel Cells: Fuel cells, devices that convert fuel directly into electricity without first burning it to produce heat, are now beginning to enter CHP markets. Offering high thermodynamic efficiency, quiet operation, zero or near-zero pollutant emissions and low maintenance requirements, they will often be economically viable even in small-scale (100 kWe or less) CHP installations sited unobtrusively close to end-users, e.g., in residential and commercial buildings. The technology will also facilitate decentralised rural electrification.

Wind Power: A wind power industry was launched in the early 1980s, largely as a result of government incentives to stimulate its development. Costs have fallen dramatically. In the US, the cost of electricity from wind in areas with good wind resources is about the same as for electricity generated from coal. Globally, installed capacity continues to rise rapidly - from 3,100 MWe in 1993 to 4,800 MWe in 1995. While deployed initially in industrialised countries wind power is now growing rapidly in some developing countries (e.g., wind capacity in India reached 650 MWe in early 1996). While there are sometimes institutional barriers to its deployment in some areas (and some concerns about visual intrusion), wind power is technologically ready to be deployed as a major option for providing electricity.

wind power is technologically ready to be deployed as a major option for providing electricity

Biomass: Biomass is used as fuel for steam turbine-based CHP generation in the forest-product and agricultural industries of several countries. The biomass used as fuel consists mainly of the residues of the primary products of these industries. There is also a growing trend to co-firing coal-fired power plants with supplemental biomass inputs. In developing countries, there is large scope for efficiency improvements in the use of biomass for energy in industry and growing interest in introducing modern steam-turbine CHP technology (e.g., in the cane sugar industry).

An advanced technology that could make it possible for electricity derived from plantation biomass to compete with coal in power generation is the biomass integrated gasifier/combined cycle (BIG/CC). In addition to plantation biomass, less costly biomass residues can be used. Although BIG/CC technology is not as advanced as coal integrated gasifier/combined cycle (CIG/CC) technology, several demonstration projects are under way. Catching up might not take long because: 1) much of what has been learned in developing the CIG/CC is readily transferable to BIG/CC technology; 2) biomass is in some ways a more promising feedstock than coal for gasification (e.g., it contains very little sulphur and is much more reactive than coal); and 3) BIG/CC would facilitate decentralised rural electrification and industrialisation and thereby promote rural development (a potentially powerful market driver). Moreover, the modest scale of BIG/CC power plants relative to conventional fossil fuel and nuclear plants facilitate financing and cost-cutting as a result of “learning-by-doing.”

advanced technology in bioenergy would facilitate decentralised rural electrification and thereby promote rural development

Large scale biomass development also poses challenges to biodiversity, land availability, water resources and local pollution which need to be carefully addressed.

Photovoltaic Power: Worldwide sales of photovoltaic (PV) modules have increased from 35 peak megawatts/year (35 MWp/year) in 1988, to 83 MWp/year in 1995, with production expected to be 91-93 MWp/year in 1996. So far, most applications have been for a variety of consumer electronic and other niche markets, but both stand-alone and grid-connected electric-power applications are becoming increasingly important applications of PV technology.

PV technology is now cost-effective in small, stand alone and some grid-connected applications

PV technology is being successfully deployed in small-scale, stand-alone power applications remote from utility grids. Decentralised rural-electric applications, largely for domestic lighting, refrigeration and educational purposes, make it possible to serve modest household lighting and other rural electric needs while avoiding the economic inefficiencies of bringing centralised power supplies to these customers in remote areas. However, stand-alone PV systems have to compete in biomass-rich regions with biomass-based community-scale electricity generation serving households.

PV technology is now also cost-effective in some high-value, grid-connected applications where PV units are sited near users.

Central station PV power plants, which offer opportunities for bringing costs down quickly, are currently being planned in Hawaii and India.

Solar Thermal Electric Power: High-temperature solar thermal-electric technologies use mirrors or lenses to concentrate the sun’s rays onto a receiver where the solar heat is transferred to a working fluid that drives a conventional electric power-conversion system. This technology is rapidly becoming cost-effective, first in hybrid power plants integrating solar thermal and fossil-fuel fired power generation.

Some 354 MW_e of solar thermal capacity based on the use of parabolic trough collectors, supplemented by gas-fired auxiliary boilers, was built in California from 1984-91, during which time the unit capital cost was reduced by half. The company that built the plants went bankrupt in 1991, when government commercialisation incentives were suddenly withdrawn. Plans are now underway to revive the technology with hybrid solar thermal/gas turbine-steam turbine combined cycle technologies as a transitional strategy for advancing solar technology while fossil fuel prices are low.

Power Systems: Large-scale adoption of renewable electric technologies will require that they be connected to electric utility grids. Intermittent solar and wind power plants can be managed by a combination of new load-management techniques (e.g., using a time-varying electricity price to induce load shifting); backing up the intermittent renewables with an appropriate mix of dispatchable generating capacity; using interconnecting grid systems for transferring electricity over large distances to cope with some of the daily variations of wind and solar energy; and energy storage (mechanical, electrochemical, thermal or other).

Hydropower plants allow prompt regulation and can back up intermittent energy generators, as can some types of thermal power plants. The ideal thermal complements to intermittent renewable energy plants on grid systems are plants characterised by low unit capital cost (so they can be operated cost-effectively at low capacity factor) and fast response times (so they can adjust to rapid changes in intermittent supply output). Natural gas-fired gas turbines and combined cycles satisfy these criteria, but fossil and nuclear steam-electric plants do not. Thus, natural gas and renewable electric systems are complementary supply strategies, while nuclear and intermittent renewables are competitors where there is high grid-penetration level.

Electric-Drive Vehicles for Transportation: Electric-drive vehicles offer both the potential for dramatic reductions in air pollutant emissions and marked improvements in fuel economy. The common characteristic of these technologies is that they employ electric motors to drive the wheels and extract energy from the car’s motion via “regenerative braking” when the vehicle slows down.

alternative clean transport fuels are likely to be especially important in developing countries

Batery-powered electric vehicles are attractive options for short-range (e.g., commuter) applications. An option offering wider market potential is a hybrid electric drive vehicle that couples a small internal combustion engine and electric generator to provide “baseload electric power” with a small battery, ultracapacitor or flywheel, as a “peaking power” device. In automotive application, at least a two-fold gain in energy efficiency is feasible via the use of such hybrids.

Fuel cells are also attractive options for electric-drive vehicles. Current interest is focused on the proton exchange membrane fuel cells (PEMFCs). In mass production, vehicles powered by PEMFCs would have much lower costs and much longer ranges between refuelling than battery-powered electric vehicles. Potentially, the PEMFC can compete with the petroleum-fuelled internal combustion engine in automotive applications, while providing transport services at a two- to three-fold higher energy efficiency and emitting zero or near-zero local air pollution.

Before fuel cells are used in automobiles they will most likely be deployed in buses, trains and small utility vehicles such as “3-wheeler” taxis, common in many developing countries. In economies where new power stations would need to be built to provide extra capacity for high cost railway electrification, fuel-cell locomotives provide an attractive option.

Clean Fuels for Transportation: There is growing interest in alternative transportation fuels because of difficulties of meeting air quality goals with petroleum-derived fuels and the longer term need for alternatives to oil in transportation (perhaps before the end of the first quarter of the next century). Alternative clean transport fuels are likely to be especially important in developing countries. This assessment is based on the difficulties of meeting air quality goals with tailpipe emission control technologies installed on petroleum-fired internal combustion engine vehicles in the densely populated megacities of the developing world.

Some of the alternatives that merit consideration are reformulated gasoline, compressed natural gas, alcohols (methanol and ethanol), synthetic middle distillates, dimethyl ether and hydrogen.

Efforts to produce biofuels for transport have focused on ethanol from maize, wheat, sugar cane and vegetable oils such as rape-seed oil. All these traditional biomass-derived transport fuels are uneconomic at present. However, there are good prospects for making sugar-cane-derived ethanol competitive at the present low world oil price if electricity is cogenerated from cane residues using BIG/CC technology along with ethanol from cane juice. In contrast, prospects are poor for making ethanol economically from grain.

Advanced biofuels derived from low-cost woody biomass could offer higher energy yields at lower cost and with lower environmental impacts than most traditional biofuels. The advanced biofuel that has received the most attention is ethanol derived from wood via enzymatic hydrolysis. Other options include methanol and hydrogen derived via thermochemical gasification of biomass. The potential for displacing gasoline used in internal combustion engine cars with biomass-derived fuels used in fuel cell cars is much higher than using wood-derived ethanol in internal combustion engine cars, as fuel cell cars are more energy-efficient.

advanced biofuels could offer higher energy yields at lower cost and with lower environmental impacts than most traditional biofuels

Hydrogen offers good prospects for simultaneously dealing with the multiple challenges facing the energy system in the 21st century. Hydrogen is a clean, versatile and easy-to-use energy carrier. It can be used safely if systems are designed to respect its unique physical and chemical properties, as is necessary in the use of any fuel. It can be derived from a variety of primary energy sources. Even if derived from fossil fuels, hydrogen used in fuel cell vehicles would emit significantly lower lifecycle CO₂ than gasoline internal combustion vehicles, because fuel cell vehicles are much more fuel-efficient.

Decarbonisation of Fuels and CO₂ Storage: It is feasible to remove CO₂ from fossil fuel power plant stack gases. This brute force approach reduces the conversion efficiency and increases the cost of electricity substantially. The less costly approach involves introducing technologies that give a high value to hydrogen (e.g., low-temperature fuel cells used for transport and distributed CHP applications). The reason is that hydrogen production from coal, oil and gas involves generating a stream of relatively pure CO₂ as a “free” byproduct (i.e., the cost of separating the CO₂ from the hydrogen is part of the production cost, and not an added expense). The potential for storing this CO underground at low cost in depleted oil and gas fields and deep acquifers is large.

3.4 Fuels and Stoves for Cooking

The most important energy service today in many developing countries is cooking. Traditional fuels - fuelwood, crop residues and dung - are the main fuels used for cooking in rural areas of these countries. In many urban areas, charcoal and coal are also used. More than half of the world’s 2 billion poor people depend on these crude polluting fuels for their cooking and other heating needs.

more than half of the world’s 2 billion poor people depend on these crude polluting biomass fuels for their cooking and other heating needs

Higher incomes, and reliable access to fuel supplies, enable people to switch to modern stoves and cleaner fuels such as kerosene, LPG and electricity. This transition can be widely observed around the world in various cultural traditions. These technologies are preferred for their convenience, comfort, cleanliness, ease of operation, speed, efficiency and other attributes. The efficiency, cost and performance of stoves generally increase as consumers shift progressively from wood stoves to charcoal, kerosene, LPG or gas, and electric stoves.

There can be a substantial reduction in both operating costs and energy use in going from traditional stoves using commercially purchased fuelwood to improved biomass, gas or kerosene stoves. There are also opportunities to substitute high-performance biomass stoves for traditional ones or to substitute liquid or gas (fossil- or biomass-based) stoves for biomass stoves. Local variations in stove and fuel costs, availability, convenience and other attributes, and in consumer perceptions of stove performance, will then determine consumer choice.

In rural areas, biomass is likely to be the fuel for cooking for many years to come. Alternatively, particularly in urban areas, liquid- or gas-fueled stoves offer the consumer greater convenience and performance at a reasonable cost.

From a national perspective, public policy can help shift consumers toward the more economically and environmentally promising cooking technologies. In particular, improved biomass stoves are likely the most cost-effective option for the near- to mid-term, but require significant additional work to improve their performance.

In the long term, the transition to high quality liquid and gas fuels for cooking is inexorable. With this transition, substantial amounts of labour now expended to gather biomass fuels in rural areas could be freed; the time and attention needed to cook using biomass fuels could be substantially reduced; and household, local and regional air pollution from smoky biomass (or coal) fires could be largely eliminated. The use of biomass-derived liquid or gaseous fuels (e.g., ethanol, biogas, producer gas) for cooking and other advanced options are particularly relevant.

4.1 Global Energy Scenarios

Models of a sustainable energy future have been developed based on consumption and production assumptions and technology pathways that are feasible given international commitment to sustainable development. In recent years, various global energy scenarios have been developed to help understand better the long-term global energy future under alternative conditions. Two of the several global scenarios discussed in the main text of this report, the Ecologically-Driven Scenarios developed in a joint World Energy Council/International Institute for Advanced Systems Analysis report, and the energy-efficient variants of the Low CO₂ -Emitting Energy Systems (LESS Constructions) developed in the Second Assessment Report of Working Group II of the IPCC, indicate how the global energy economy might evolve over the period 1990-2100 if energy options generally supportive of sustainable development objectives are emphasised.

models of a sustainable energy future have been developed that are feasible given international commitment to sustainable development

These options include the more efficient use of energy, innovative technologies for reducing environmental impacts of fossil fuel use and renewable energy sources. Both sets of scenarios also include nuclear-intensive variants (in which the nuclear power industry is revived and nuclear capacity expands approximately 10-fold, 1990-2100) and variants in which nuclear power does not grow. Both scenarios assume public policies that promote the efficient use of energy, environmental values in the energy system, and energy innovation (by supporting research and development and by providing commercialisation incentives to help launch new technologies in the market). Both also emphasise international cooperation and a high rate of technology transfer to and energy innovation in developing countries. Both assume that existing petroleum resources will be fully exploited.

The single most important attribute of these energy futures is efficient energy use (although technical limits for energy efficiency improvement are not approached). By 2020-2025, per capita commercial energy use rates for developing countries are only 1.4 to 1.5 times 1990 values; the corresponding ratio for industrialised countries and economies in transition is 0.8. Improved energy efficiency can lead to lower costs for energy services, reduced environmental impacts from energy supplies, reduced dependence on foreign exchange requirements for energy imports and flexibility in choosing energy supplies.

These energy futures do not require or foresee an early end to the fossil fuel era, and fossil fuel resource exhaustion is not a major concern for the 21st century. However, due to the rising global demand for fluid fuels and constraints on conventional oil and natural gas resources, fluid fuel substitutes for conventional oil and natural gas will be needed. These could be non-conventional oil and natural gas resources, synthetic fuels derived from coal or biomass, or some combination of all of these options.

As more than half of the identified reserves of conventional oil are concentrated in the Middle East, this region is expected to account for an increasing proportion of global production of conventional oil in these projections. However, the output of the Middle East is expected to decline in absolute terms over the longer term as conventional oil supplies are drawn down. It can be expected that this growing dependency on oil from the Middle East would be tempered by a growing shift in the oil/gas mix toward natural gas, as reflected in all major global energy projections. While the longer term outlook is for growth in the world trade in energy, the competition among alternative energy carriers and regional fuel suppliers is likely to foster relative fuel price stability and increased energy supply security. However, natural gas resources are also relatively strongly concentrated in the Middle East and the former Soviet Union.

The energy futures referred to would be characterised by far cleaner fossil fuel conversion technologies than those widely used today due to the strong emphasis given to environmental concerns in energy policy. Both sets of scenarios also illustrate what is plausibly achievable through technological innovation to stabilise greenhouse gas concentrations in the atmosphere at a level likely to preclude dangerous human-related interference in the climate system. They would both lead to reductions in global CO₂ emissions from 6.0 billion tonnes of coal (GtC) in 1990 to 2 GtC in 2100. Moreover, cumulative emissions, 1990-2100, in these scenarios are consistent with a stabilised atmospheric CO₂ concentration of less than 430 parts per million by volume (ppmv) or less. (The concentration in 1996 was about 360 ppmv.)

sustainable energy futures characterised by far cleaner fossil fuel conversion technologies and strong emphasis on environmental concerns in energy policy are possible

While nuclear power is stalled in many parts of the world, its revival as a major global option might be possible if genuinely acceptable responses could be found to concerns about reactor safety, radioactive-waste transport and disposal and nuclear weapons proliferation. A key consideration is the cost to society of reviving the nuclear option. One estimate of the investment needed to rebuild public confidence in nuclear fission is $30 to $50 billion - largely for developing and demonstrating two or three advanced, safe reactors, for developing technologies and strategies for the disposal of high-level radioactive waste, and for developing internationally-controlled nuclear fuel services. The last of these measures would significantly reduce (but not eliminate) the risk that nuclear materials would be diverted to nuclear weapons purposes. This is considerably more expensive than developing renewable energy. The World Energy Council has estimated that research, development and commercialisation of a number of solar technologies would require a global investment of the order of US$15-20 billion over the next 20 years.

advanced renewable energy technologies, especially bioenergy, offer the potential of providing energy in rural areas at a very competitive cost

The scenarios indicate that if low energy futures (e.g., with total global primary commercial energy demand increasing 1.9-to 2.5-fold in the next century) could be realised by more efficient energy use, human needs could plausibly be met with alternative clean energy sources that collectively could lead to deep reductions in CO emissions by the year 2100 without reviving the nuclear option.

rapid growth is expected to continue for both energy-producing and energy-intensive consuming activities in developing countries for decades to come

Both sets of scenarios indicate that the contribution from commercial renewable energy sources to total global commercial energy will grow over time from the 9 % contribution (mostly hydroelectric power) in 1990, to 10-30% in 2020-2025, and 27-54% in 2050. If renewable energy industries provide such levels of total energy by 2050, they would then be well-enough established to plausibly meet all energy requirements unmet by fossil fuels throughout the rest of the next century if, thereafter, fossil fuel use were to decline to the extent needed to stabilise the concentration of CO in the atmosphere below 450 ppmv.

4.2 Implications for the Developing World

Energy demand, supply and system opportunities, as well as the scenarios just presented, highlight the importance of new technology in achieving sustainable futures.

Historically, most energy technology development has taken place in industrialised countries where large, rapidly-growing markets created favourable theatres for innovation. This situation is now very different since growth in industrialised countries is slow for both energy production and energy-intensive activities. Instead, rapid growth is confined largely to services and knowledge-intensive activities, which tend to require very little materials and energy. The energy-intensive industries are either facing stagnation or only very slow growth in northern markets. To the extent that innovation is still taking place in the energy sectors of the industrialised countries, it is being driven largely by environmental concerns (e.g., as in the transport sector), albeit with a long way to go.

But rapid growth is expected to continue for both energy-producing and energy-intensive activities in developing countries for decades to come, and environmental concerns are likely to be even more intense in developing countries than they have been in industrialised countries. Consequently, the conditions for innovation relating to energy are likely to be far better in developing countries than in industrialised countries. The developing countries, have an historic opportunity to promote measures that will enable them to bypass the now obsolete patterns of the last two hundred years. Instead they can make use of and build on today’s technological know-how to shape a development path that is sustainable.

Chapter 3 shows that a wide range of technologies needed for sustainable development are either commercially available or could be commercialised relatively quickly if there were a strong market pull for such technologies and a sustained R&D effort.

It is desirable to shape technology transfer (e.g., via international industrial joint ventures) so as to conform to sustainable development objectives. For example, it would be desirable that energy-using technologies transferred perform at least as well as average energy-efficient technologies marketed in industrialised countries. Developing countries should be able to make use of these technologies that are commercially available in the industrialised countries (e.g., equipment for illumination and electric drives) provided they are appropriate to the conditions of developing countries and are less costly than the alternative of energy supply expansion, taking into account all costs, including externalities. In areas such as the basic materials processing industries, which are engines of growth in rapidly industrialising countries, but stagnating activities in the already industrialised world, it will sometimes be desirable to evolve advanced technologies with innovations shaped to match local needs (e.g., via international research and development joint ventures).

rapid growth provides the opportunity for developing countries to become market leaders in environmentally sound technologies

The new situation provides the opportunity for developing countries to become market leaders in environmentally-sound technologies. This is especially true for countries in the Sun-belt. The large rapidly-growing markets and lower wage rates at all levels of technical, scientific and engineering skills, make both manufacturing and product development in developing countries an attractive option for technology owners (e.g., via international commercial and R&D joint ventures, which could serve global markets). The growing emphasis on free trade by governments around the world will facilitate the exploitation of such opportunities. This is a significant window of opportunity. In a decade or two, the wage rate differential is likely to be much smaller, which could make it more difficult for developing countries to achieve technological leadership in manufacturing and product development.

In the longer term, some energy analyses project export of modern energy carriers produced from biomass plantations from regions with abundant productive land and water (e.g., parts of South America and Southern Africa).

Seizing these opportunities will be challenging, as there are obstacles to be overcome. A paramount problem is the difficulty of mobilising capital. The financial weakness of electric utilities in many developing countries, for example, is reflected in low or zero retained earnings, poor credit ratings in international capital markets, and a growing inability of their governments to provide necessary financing due to fiscal constraints. One manifestation is dependence on bilateral loans that tie importing countries to manufacturers in donor countries. Efforts to attract private capital lead to “technology/financing package deals” that restrict technological choice.

Two prerequisites for successful technology transfer and the building of leadership capacity for environmentally-sound energy technologies are the establishment of an appropriate legal and regulatory framework and the rational pricing of energy. A legal and regulatory framework that is fair to all parties, and that is created and maintained by governments, would help catalyse this industrial activity. Of course, the framework must also include elements that address social and environmental concerns so as to shape the technology transferred to conform to sustainable development objectives. Rational pricing of energy would enable investors to recover their investments with reasonable risks, which would go a long way towards overcoming financial weakness in the sector, and would simultaneously help build a strong, competitive market for technology imports, giving developing countries considerable market power to shape the course of technological change.

prerequisites for successful technology transfer for sustainable development are an appropriate legal and regulatory framework and the rational pricing of energy

4.3 Implications for Energy Exporting Economies

The distribution of conventional energy resources in the world is extremely uneven particularly in the case of oil and natural gas. This has led to major global trade in oil and natural gas which, in turn, has become a crucial component of the national economies of energy-exporting countries. What would be the impact on these economies of a more sustainable world energy system in which the emphasis would be more on efficient use of energy and new energy supplies, particularly renewable sources of energy?

industrialised countries are no longer the favourable theatre for innovation they used to be

The production of oil and natural gas is likely to peak some 30 to 40 years from now and slowly decline thereafter. Estimated recoverable conventional oil and natural gas resources (both identified reserves and estimated additional resources), and some non-conventional resources, are projected to be largely exhausted in the next century in both conventional and sustainable scenarios for global energy.

Exports from the energy-rich Middle East are projected to remain at current or higher levels than at present for most of the next century, long after the peaking of global production. However, the mix of exports is expected to shift over time toward natural gas and its products to reflect the relative magnitude of remaining oil and gas resources. Such a continuing major role for Middle East energy is envisioned even in the low CO₂-emitting energy supply systems described by the IPCC, which describe alternative technological paths for global energy that lead to a two-thirds reduction of annual global CO₂ emissions by 2100. A continuing major role for Middle East exports is consistent with achieving deep reductions in CO₂ emissions over the course of the next century. (In fact, burning all estimated remaining conventional oil and natural gas resources and no other fossil fuels would lead to stabilising the atmosphere at near the present CO₂ concentration.)

exports from the Middle East are projected to remain stable or increase throughout the next century

4.4.1 Energy and the Economy

A sustainable energy future is compatible with strong economic growth. In fact, pursuit of a sustainable energy path facilitates the realisation of sustainable socio-economic growth over the longer term.

a sustainable energy future is compatible with strong economic growth

Although the costs of energy services cannot be projected in any detail over long periods of time, the IPCC analysed the issue, both from a macro-economic point of view and from a bottom-up perspective, using projected costs based on engineering data. It concluded that one or more of the variants of the LESS Construction for the global energy system would be able to deliver energy services at costs that are approximately the same as projected costs for conventional energy systems.

Investment requirements: Investment in the energy sector accounts for more than a quarter of all fixed capital investment in the world economy. This is particularly a problem in developing countries, where capacity to finance investments is a major factor limiting growth.

sustainable energy development requires much lower capital investment and would liberate scarce capital resources for other uses

Pursuing sustainable energy systems would reduce investment needs globally. This is true even though renewable energy sources for electricity generation are typically more capital-intensive than conventional sources. This is because the overall increase in generating capacity necessary for growth would be much smaller in sustainable scenarios. At present, it requires less capital in all countries to save a given amount of energy (by employing more energy efficient technologies) than to expand the generating capacity by an equivalent amount.

Capital savings would also be realised in the electricity supply sector in sustainable energy futures. First, grid-connected combined heat and power systems located near users typically lead to savings of capital as well as fuel. Second, providing electricity via stand-alone renewable energy systems for applications such as lighting to households remote from utility grids, is less costly than extending central grids to these low-demand users. Third, installing distributed grid-connected power sources (e.g., photovoltaic and fuel cell systems) reduces investment needs by reducing distribution capacity requirements to meet peak loads.

Foreign exchange: In sustainable energy futures, there would be a diversification of energy supplies to the extent that oil would compete with biomass- and coal-derived fluid fuels (sometimes in conjunction with fuel decarbonisation and sequestration of the separated CO₂). These alternatives do not require as much foreign exchange as oil imports and would, thus, be advantageous for the many countries with balance of payment problems, releasing foreign exchange for other developmental needs.

4.4.2 Energy and Poverty

For people living in poverty, the first priority is the satisfaction of such basic human needs as access to jobs, health services, education, housing, water, sanitation, etc. Energy plays an important role in providing these needs. Low energy consumption is not a cause of poverty but the lack of energy has been shown to correlate closely with many poverty indicators. Addressing the problems of poverty requires addressing its many dimensions - defective or no education, unsatisfactory health care, inadequate or no sanitation, etc. Addressing these issues involves increasing the level of energy services.

energy service levels have been shown to correlate closely with many poverty indicators

Developing countries have the most to gain from a sustainable energy future. The populations of developing countries are the most vulnerable to the negative environmental effects of current energy development and would benefit the most in terms of social and economic development from a sustainable energy future.

new opportunities in addressing poverty and rural development have been created by technological developments

Technological developments are bringing a new set of opportunities to increase access to electricity. Decentralised, renewable energy sources at stand-alone or local grid scales, powering high-efficiency end-use energy devices for residential and productive uses, are capable of providing energy services at costs comparable to those in areas covered by a central grid, with higher levels of service and access. In many situations, the issue has become one of providing access to modern energy carriers rather than providing subsidies.

4.4.3 Creating Jobs

An estimated 1 billion people are unemployed or underemployed throughout the world according to the International Labour Organisation (ILO). Creating income-earning opportunities for these people is an essential pre-requisite for long-term sustainable development.

renewable energy (especially biomass) offers significant possibilities for rural job creation

Biomass energy in particular offers significant possibilities for job creation. A program to produce ethanol from sugar cane in Brazil, for example, helped create 700,000 jobs in rural areas. Advanced biomass power technologies offer the potential to bring low-cost electricity that could attract industry to rural areas. The number of jobs created by such industries would probably dwarf the number of jobs created simply by growing and processing biomass for energy. Such jobs help to reduce rural-to-urban migration and the increased tax base in rural areas would help create new, and improve existing, infrastructure. Little industry can be attracted to rural areas on the basis of today’s biomass energy technology. The large biomass supplies needed to support serious industry could be provided by dedicated energy farms or plantations, but the electricity generated from such sources will not be cost effective unless advanced conversion technologies are used.

4.4.4 Women

a sustainable energy development model would have a significant, positive impact for women

Changes to a sustainable energy development model would have a significant, positive impact for women in terms of labour, health, income generation and quality of life. Although energy is only one of the many factors determining gender equality, scenarios combining efficiency improvement and renewable sources do open new opportunities for women. For example, the emphasis on demand analysis and end-users should lead to: 1) a recognition of women’s non-market labour time as “human energy” (fuelwood collection, cooking, water carrying, food processing, rural transport), and to the relief of this burden as a legitimate objective of energy policy; and 2) the involvement of women end-users in the policy formulation and planning of biomass and modern household fuels, efficiency improvements, and stoves and appliances. Concern for environmental sustainability addresses women’s energy-related health concerns, such as smoke-related illness, etc.

Decentralised approaches open up opportunities for women entrepreneurs both in improving efficiency and using renewable sources in the many fuel-intensive energy enterprises. The challenge now is to expand the track record of women and their organisations as effective entrepreneurs into energy entrepreneurs. The role of the public sector is to create support systems that promote entrepreneur response and ensure access to technology and resources. There is a need to ensure that women’s concerns and needs are properly reflected in energy policy-making.

4.4.5 Rural Development

Technological developments in biomass utilisation, wind energy and PV have created new opportunities for rural development in addition to small-scale hydropower. Decentralised rural electrification (DRE) is a proven competitor to grid extension.

Decentralised generation and distribution of electricity creates more employment in rural areas than central generation. Furthermore, biomass production could be a major source of jobs and revenues for rural populations. Both energy crops from dedicated plantations and by-products/residues of other uses of agricultural products (bagasse from sugar, etc.) can be used as feedstocks. Advanced small-scale biomass energy technologies could generate baseload electricity cost-effectively and justify extending power lines to rural areas, with electrons flowing from the rural areas to the cities (thereby, generating rural income), confounding the conventional wisdom about the economics of extending power lines to rural areas.

decentralised sustainable energy can contribute significantly to improving the living conditions and incomes of rural populations

Decentralised sustainable energy can contribute significantly to improving the living conditions of rural populations by bringing energy services to outlying areas that cannot be quickly connected to electricity grids. Renewable energy sources are the only ones capable of assuring access of rural populations to essential energy-based services (health, education, etc.) in the near term. This is not only by itself extremely important, but, by reducing the exodus from rural regions also reduces some of the development problems of cities.

4.4.6 Urban Development

As was concluded at the Istanbul Habitat II Conference, it is likely that the bulk of population growth in developing countries will be concentrated in cities. This means that the mode of urban development will be one of the major factors impacting the growth of energy consumption. Energy policies are very closely linked with other aspects of urban development, in particular, land use and zoning, transport policy and energy performance of buildings. In the sustainable development scenarios, emphasis was given to conversion technologies (e.g., for transportation) that are characterised by a high degree of inherent cleanliness (e.g., fuel cell vehicles). The availability of such technologies would greatly improve the quality of life in urban areas.

Urbanisation also directly affects per capita energy use. Non-commercial energy plays a much smaller role in urban areas than in rural areas. So, when people move to cities the per capita consumption of commercial energy goes up sometimes to double or more while the total energy consumption goes down. Partly this reflects the low efficiency of energy use in many rural areas.

4.4.7 Energy and the Environment

it is impossible to consider the future of energy without considering local, national, regional and global environmental impacts

As compared to conventional energy projections, the scenarios referred to in Section 4.1 lead to much reduced local pollution, cleaner cities, less acidification and significantly reduced emissions of greenhouse gases. It is impossible to consider the future of energy without considering local, national, regional and global environmental impacts.

The expanded availability of various forms of direct solar energy will have wide-ranging environmental benefits.

Large-scale biomass energy development must be carried out in ways that are consistent with biodiversity and other environmental concerns. Restoring degraded lands that are suitable for growing biomass, to the extent that they could be used for biomass energy plantations, is a promising strategy whereby bioenergy development could substantially improve local environmental conditions.

4.4.8 Energy and Security

energy can be an instrument for sustainable development

As compared to conventional energy projections, the scenarios referred to in Section 4.1 would lead to a much more diversified and geographically distributed (and thus more global) energy system. Moreover, since a revival of nuclear power is not a necessary component of the energy supply system in a world where emphasis is given to the efficient use of energy and innovation in energy supply technologies, society has the option of not reviving the nuclear fission energy industry, thereby avoiding the nuclear weapons proliferation risks inherent in high levels of development of nuclear power.

4.5 Conclusions

It may be concluded that energy systems can be pursued that are not only compatible with, but are crucial levers for achieving social, economic, environmental and security goals, as expressed in Agenda 21. As such, energy can be an instrument for sustainable development. Such energy systems would be based on a much more efficient use of energy, an increased use of renewable energy sources (in particular modernised biomass, wind energy, and solar electric energy) and a new generation of technologies that make it possible to use both biomass energy and fossil fuels at high efficiency with low adverse impacts on the local, regional and global environments. At present, overall trends are not in this direction and attention must now be turned to an analysis of impediments to sustainable energy futures that are supportive of sustainable development.

5. Making It Happen: Energy for Sustainable Development

a fundamental change in energy systems is required: they must be oriented towards sustainable development

A fundamental change in energy systems is required to make them compatible with sustainable development. This change is required due to the social, economic, environmental and security issues discussed in Chapter 2 above.

The transition to sustainable energy systems will be shaped by current trends sweeping the world and operating through, or in conjunction with, strong constraints on traditional actors, and new opportunities. The major trends include globalisation, marketisation, popular participation in decision-making, the changing roles of government, restructuring (and corporatisation) of energy utilities, and the changing magnitude and mix of sources of external funding.

Most governments today work under increasingly austere fiscal conditions. This seriously affects their role as investors in energy and in R&D and as donors of Official Development Assistance (ODA).

In the mid-1990’s, annual investments in the energy supply sector world-wide are of the order of US$450 billion per year. With total annual energy investment requirements projected to increase to around US$ 1,000 billion dollars per year by 2020 (with two-thirds for electricity), mostly in developing countries, it is unlikely that traditional sources of capital will be sufficient. The limited levels of government investments and foreign aid imply that increasing amounts of private sector capital and foreign direct investment will be needed. This is an important driving force in many countries behind the restructuring of utilities towards corporatisation in order to access financial markets more efficiently.

ODA has declined or stagnated. The amount of available funding for ODA is decreasing, even as a number of non-traditional country claimants are emerging. In 1994, net total ODA financing amounted to US$67 billion compared with US$74 billion in 1986 (based on 1993 constant dollars). Flows of private capital to developing countries are increasing, from US$42 billion in 1990 to US$170 billion in 1995. In 1995, foreign direct investment (FDI) in developing countries reached US$100 billion. FDI is very unevenly distributed. The top 10 host developing countries attracted 76% of FDI in 1993-95, and China alone received approximately 40%. In sharp contrast, all of Africa attracted only 5%.

it is unlikely that traditional sources of capital will be sufficient to meet projected energy investment requirements

Thus, the important new constraints are the declining availability of traditional capital provided internally from governments and externally from ODA and drastic reductions in government spending due to cut-backs. Important new opportunities are offered by rapidly growing private-sector activities.

These trends give rise to a set of considerations that must be taken into account in formulating public policies to promote energy strategies supportive of sustainable development. Such a set of considerations would include:

· promoting access to modern energy for all;

· a need for indigenous capacity building;

· a focus on energy services (rather than energy consumption);

· systematic introduction of a mix of the next generation of cleaner fossil-fuel-using technologies, renewable sources, and efficiency improvements;

· the establishment and maintenance of a level playing field (elimination of permanent subsidies and reflection of external (social and environmental) costs in energy pricing);

· the promotion and safeguarding of competition;

· key roles for the private sector;

· roles for stake-holders (environmentalists, current and potential consumers, etc.) outside the private sector; and

· utilisation of policy instruments that are low-cost or no-cost to government treasuries.

High rates of innovation in the energy sector are needed to bring about a sustainable energy future. Fortunately, many promising technologies for reducing emissions, such as fuel cells and most renewable energy technologies, require relatively modest investments in R&D and commercial incentives. This is a reflection largely of the small scale and modularity of these technologies and the fact that they are generally clean and safe.

there are essential market and non-market barriers to sustainable energy which must be identified and specific policies designed to overcome them

A wide range of small-scale, modular technologies, including most renewable energy technologies and fuel cells have favorable prospects for cost reduction via “learning by doing.” This arises because for such technologies energy costs are well-characterised by declining functions of the cumulative volume of production. This technological characteristic implies that the major aim of public policy should be to promote the rapid exploitation of early market opportunities in order to hasten the broad competitiveness of these new technologies.

In this context, it is to be noted that over the last decade, public sector support for energy R&D in member states of the International Energy Agency (IEA) has declined by one-third in absolute terms, and by one-half as a percentage of GDP. Of this support for R&D, over 50% is allocated to nuclear energy. On average, IEA member governments spend less than 10% of their energy R&D expenditure on renewable energy technologies and less than 10% on energy efficiency improvements. R&D expenditures are also falling in the private sector. The declining trend in private sector investment in R&D seems likely to continue in the present market place. Unless the decline in R&D efforts is soon rectified, sustainable energy futures will be difficult to realise.

Box 2. Examples of Measures to Create Early Markets for New Technology · the Indian Renewable Energy Development Authority (IREDA) is a public bank that provides soft loans to developers of renewable energy projects; · the United States’ Public Utilities Regulatory Policy Act (PURPA) obliges utilities to buy at fair prices electricity generated by qualifying independent power producers and supplied to the grid; · the United Kingdom’s Non-fossil Fuel Obligation (NFFO) stipulates that producers have a minimum supply capacity in non-fossil-fuel based generation; · a proposed scheme being examined in the United States under which electricity suppliers are required to provide a minimum percentage of total sales from renewable sources either via generation or via the purchase of renewable energy credits (RECs) from other generators who can provide renewable energy supplies at lower cost; and · temporary subsidies to lower consumer prices for new energy technologies.

Box 3. Examples of Measures that Would Raise Funds for Purposes Relevant to Sustainable Energy (e.g. Research and Development) · California legislation imposes a surcharge or System Benefits Charge (SBC) on all electricity to raise funds for these purposes; · taxes on externalities to support research on the development, demonstration and commercialisation of new energy technologies (for example a carbon tax of $1 US per tonne of carbon would raise, at the global level of carbon dioxide emissions, revenues amounting to $6 billion per year. While a tax of this magnitude would have a near negligible impact on consumer energy prices - e.g., it would increase the retail energy price by about 0.35% in the U.S. - the revenues would be adequate to support a near doubling of global public-sector support for energy R&D expenditures, if these revenues were devoted entirely to energy R&D).

However well-crafted the generic energy strategies, they will not succeed unless the barriers they face are identified and specific policies designed to overcome them.

There is a sub-set of market barriers, including:

· Subsidies to conventional energy (open and hidden): World-wide energy subsidies in the mid-1990s amount to US$250-$300 billion per year, approximately 1% of world gross domestic product, and more than half of the total annual investments in the energy sector. Most of these subsidies are directed to reducing energy prices paid by consumers and to enhancing the economic appeal of fossil fuels and nuclear energy. In 1992, subsidies in developing countries amounted to approximately US$50 billion, comparable to total ODA from all sources. These subsidies constitute a barrier to new, sustainable energy options.

· Market prices that do not reflect environmental damage: When market conditions do not fully take into account external costs, the striking environmental advantages of the new and cleaner energy options are not rewarded adequately in the marketplace. Such environmental costs include air pollution affecting human health, land degradation, acidification of soils and waters, and climate change. Against this background, some countries have adopted energy taxes as well as taxes on certain emissions (e.g., sulphur). Some governments also use emission standards that must not be exceeded (e.g., for sulphur and nitrogen oxides and particulates) to reflect some of the externalities not taken into account in market prices. However, much remains to be done to adequately implement the “polluter pays” principle agreed upon at the Rio Conference.

· Access to information: Customers often have very limited information on the energy performance of buildings and equipment, thereby effectively eliminating considerations of energy efficiency in decision-making.

· First cost sensitivity: Sustainable energy options are often initially expensive for the consumer. This implies a barrier that can, however, be overcome if credit for borrowing capital is available (and the life-cycle cost is lower than that of the alternatives).

· Split incentives: The common “landlord-tenant” problem, whereby the landlord has no incentive to invest in energy efficiency because it is the tenant who pays the fuel bills.

· Indifference to energy costs’. Energy costs are often a small fraction of total costs, leading to limited attention to alternative energy options.

Another sub-set of barriers consists of non-market barriers, including:

· The supply-biased paradigm: Producers and distributors of energy carriers tend to be so focused on the supply of their “products” they tend to devote little attention minimizing the cost of energy services that their products can provide, and thus to improving efficiency. When increased sales of energy lead to enhanced profits energy efficiency “takes a back seat,” even if it would be beneficial to consumers or to society.

· Vested interests: These interests, which exist both in the private and public sector, benefit from business-as-usual approaches and practices and, therefore, resist change and seek to belittle the opportunities which are emerging.

· Institutional obstacles: These obstacles include the monopoly position of utilities and the lack of appropriate fora for interaction between relevant stake-holders.

· Declining R&D expenditures

There are encouraging examples of energy policies consistent with major global trends that are designed to overcome market and non-market barriers to the advancement of sustainable development objectives. The examples in Boxes 2-5 represent a small selection of what can be considered.

environmental advantages of newer and cleaner energy options are often not rewarded in the marketplace

Concerted efforts are needed at the international level between multilateral institutions, private sector investors, government, civil society and the energy industry to promote a sustainable energy path to ensure that energy becomes an instrument for sustainable human development.

Internationally, no one organisation is responsible for energy. Within the UN System there are numerous agencies that support diverse activities in both conventional and renewable energy. The World Energy Council, representing world energy industries, has called on various occasions for new partnerships between government, the private sector and consumers to facilitate the changes required to move the world to a path of sustainable development. Many other NGOs, primarily motivated by environmental and social concerns, have advanced similar propositions.

Box 4. Examples of Measures to Advance More Efficient Use of Energy · utility demand side management programs (e.g., the Illuminex program in Mexico, where the utility sells compact fluorescent light bulbs providing consumer credits as needed). Utilities in many other countries have similar programmes; · transformation of the market through government-stimulated procurement of efficient end-use devices (e.g., the Swedish Energy Agency NUTEK’s scheme to bring into the market more energy-efficient technologies); · the encouragement of energy service companies (ESCOs) that invest in energy efficiency and deliver energy services (rather than energy per se) to their customers; · Ghana’s Ministry of Energy has contracted ESCOs to identify energy-efficiency opportunities in the industrial sector, so that the industries involved would then implement with their own financial resources or with support from a government-established revolving fund; · the Building Measurement and Verification Protocol to measure and evaluate energy efficiency improvements, especially in buildings.

Box 5. Examples of Innovative Institutional Ideas · a proposal to stimulate large scale development of renewable energy resources by using renewable energy resource development concessions similar to the non-renewable energy resource development that has proved to be so successful historically in developing oil and natural gas resources; · providing consumer credits for sustainable energy solutions in developing countries.

a public sector-led reorientation to promote and adopt sustainable energy is essential to meet the commitments of the global conferences

The ability to move towards a sustainable energy future depends on building coalitions around common development, economic, technological and energy service interests that are part of a sustainable approach to energy. No new international institutions need be established. Rather, a framework through which sustainable energy strategies are promoted and interested parties convened, could be developed to address common interests. A mechanism that encourages better dialogue between governments, the private sector and NGOs on the mobilisation of investment funds, technology transfer, management and training is needed.

In contrast to the past, most investments in the future in energy systems are likely to be in developing countries. It is of considerable financial and environmental interest to developing countries that new technological opportunities become available to them. If they were to have these opportunities, they would be able to leapfrog to the new generation of cleaner energy technologies, without going through the same unsustainable path that the industrialised countries have followed.

This sets the stage for development cooperation. It can contribute to implementing sustainable energy futures and thereby work toward poverty reduction, job creation, the advancement of women and protection of the environment. Key elements in this regard will be human capacity building, the formulation of legal and institutional frameworks supportive of these developments, the demonstration of key new technologies, and national action programmes for sustainable energy.

The international community has dealt with numerous aspects of social, economic and sustainable development through the UN global conferences of the 1990s. They have identified targets and goals and concluded international agreements, platforms of action, declarations and resolutions adopting these commitments. Energy issues must be squarely dealt with if these commitments are to be fulfilled, and the leadership must come from governments. Within an appropriate framework, the private sector, energy companies, investors and civil society can all contribute and support each other to meet the goals of sustainable development. A public sector-led reorientation to promote and adopt sustainable energy is essential to meet the commitments of the global conferences.

Energy can become an instrument for sustainable development. The point is, while the future may be difficult, a continuation of present trends cannot be sustained.

Glossary of Abbreviations

Organisations and official bodies
BPPS	Bureau for Policy and Programme Support of UNDP, New York
DPCSD	Department for Policy Coordination and Sustainable Development, the Secretariat of the UN Commission on Sustainable Development
EAP	Energy and Atmosphere Programme of UNDP, New York
FCCC	Framework Convention on Climate Change
IEI	International Energy Initiative
ILO	International Labour Organisation
IPCC	Intergovernmental Panel on Climate Change
IREDA	Indian Renewable Energy Development Authority
NGO	Non-Governmental Organisation
SEI	Stockholm Environment Institute
UNCED	United Nations Conference on Environment and Development
UNDP	United Nations Development Programme
WEC	World Energy Council
WHO	World Health Organisation
Technical terms
BIG/CC	Biomass-integrated Gasifier/Combined Cycle
CHP	Combined Heat and Power
CIG/CC	Coal-integrated Gasifier/Combined Cycle
CO2	Carbon Dioxide
GtC	Giga tonne of coal
kg	Kilogram
kWe	Kilowatt of electricity
kWh	Kilowatt hours of electricity
LNG	Liquified Natural Gas
MWe	Megawatt of electricity
NOx	Nitrogen Oxides
PEMFC	Proton Exchange Membrane Fuel Cells
ppmv	parts per million by volume
PV	Photovoltaic
Other terms:
DRE	Decentralised Rural Electrification
ESCO	Energy Service Company
GDP	Gross Domestic Product
NFFO	UK Non-Fossil Fuel Obligation
ODA	Official Development Assistance
PURPA	US Public Utilities Regulatory Policy Act
R&D	Research and Development
RECs	Renewable Energy Credits
SBC	System Benefit Charge

Energy and Atmosphere Programme
Sustainable Energy and Environment Division
United Nations Development Programme
One United Nations Plaza
New York, NY 10017