Energy Sector Development and Climate Mitigation

1. Energy Sector Development and Climate Mitigation Ajay MathurSenergyGlobalNew Delhi, India

2. Overview • Energy sector development focuses on enhancing access, economic productivity, energy security, and environment quality • There are a wide range of interventions in use which lower the emissions trajectory while helping achieve these goals; they compete with high-GHG emitting interventions • International cooperation can promote and prioritize these mitigation options within energy sector development; prioritization would depend on the appropriateness of the option to a country’s current level of development

3. Goals of Energy Development • access to clean energy services • 1.6 billion people do not consume any electricity, and very little kerosene or LPG • Household energy consumption is 212 kgoe/cap (compared to 651 kgoe/cap in industrialized countries); about 25% comes from biomass used traditionally • quality of the local environment • Indoor air pollution kills 2 million women and children prematurely • Only 15% of cities in developing countries have acceptable urban air quality Energy sector development focuses on enhancing:

4. Goals of Energy Development Energy sector development focuses on enhancing: • economic productivity • Non-household energy intensity in developing countries is 0.36 kgoe/$-GDP (compared to 0.19 kgoe/$-GDP in industrialized countries) • Competitiveness and opportunity costs of supply expansion drive energy efficiency initiatives • security of energy supply • Energy imports are a large fraction of exports • Volatility in international prices leads to macroeconomic instability

5. Emissions Trajectory Reduction could be a Co-Benefit • Emissions increases will occur due to: • Transition from traditional biomass energy to fossil fuels in the household sector; and • Energy needs associated with the growth in the economic sectors - manufacturing, services and transport • More than half of the infrastructure for the generation and use of energy in developing countries is yet to be built • Prioritizing interventions that promote clean energy technologies would lead to lower emissions trajectories • These energy needs – and climate mitigation objectives - can be met through, for example: • Promotion of modern biomass technologies • Facilitating energy efficiency • Enhancing the share of renewables in the energy mix

6. Promotion of modern biomass technologies • Rural household and commercial energy needs can be met by modern biomass technologies rather than fossil fuels: this transition contributes heavily to emission increases • Initiatives in several Asian and African countries • Technology adaptation, market development, and financing risks are high • Adoption driven by enhancements in productivity and in indoor air quality

7. Facilitating energy efficiency • New investments in power, industry, transport and building infrastructure can be substantially more efficient than existing stock; economic growth is powering a rapid increase in these sectors, and associated emissions • Almost all countries exhibit declining energy intensity trends for the economic sectors; most countries have some initiatives to promote energy efficiency in these sectors • Technology integration, support, and financing risks are high • Adoption is driven by quality and productivity increases

8. Enhancing the share of renewables in the energy mix • Some renewables could effectively augment commercial energy supply, e.g., wind and small hydro • A few countries have aggressive programs to promote electricity from renewables; many countries have demonstration programs • Grid integration risks are high; cost reduction is scale dependent • Adoption is driven by national goals and remunerative tariffs

9. Assess Risks & Prioritize opportunities • Separate out the use of energy in households and the economic sectors • Energy use per capita in households will rise; however it can be partially delinked from emissions growth • Energy use in the economic sectors will rise; however the intensity of use is declining and the decline can be accelerated • There is a diversity of options that can meet energy-sector goals and lower the emissions trajectory depending on the risks that can be addressed at the current level of development • Penetration of clean technologies, especially in the household sector • Lowering energy intensity of economic activities • Creation of demand for clean energy • International cooperation – through risk sharing - can promote and prioritize mitigation options within energy sector development • GEF and CDM both provide risk sharing at the project level