To close the energy poverty gap, we need ideas, investment…and natural gas. Todd Moss responds to Hannah Ryder

October 20, 2012 3 By admin

CGD’s Todd Moss responds to Hannah Ryder’s critique of his ‘let them burn fossil fuels’ line on energy povertyTodd-Moss_detail

Thanks to Hannah for raising some good questions about my proposal that the US agency OPIC partially exempt the world’s lowest-income, lowest-emitting countries from the greenhouse gas cap. I think we both agree that 1.3 billion people without access to electricity in the 21st Century is inexcusable. It’s a development problem that can and should be solved. We also agree that the past approach to power has been insufficient, and that to close the energy poverty gap we need new ideas and new technologies. Here’s where we disagree:

  • Greater investment is necessary if we want to close the energy poverty gap. The data on additional generation capacity and access do not, as she suggests, show that increases in the former have no relation to decreases in the latter. Rather those IEA graphs in an apples-to-apples (global-to-global) comparison show the opposite: a clear decline of roughly 25% between 1985-2000 in the total number of people without access to electricity. Yes, this decline is driven by East Asia, but this is also likely to be precisely where the bulk of the investment and capacity additions have occurred (IEA doesn’t provide ungated data on capacity addition disaggregated by region – I’d love to see that). More recent estimates (in World Energy Outlook 2011) show that the number of people without electricity has continued to decline by some 300 million in the past decade. In other words, is seems safe to assume that where massive investment takes place (e.g., China), millions of people are gaining access to power. Thus, the conclusion, including in the paper Hannah cites, is that even more investment is needed (they suggest 5x current levels). If this is the case, it seems odd that we would question whether capacity should really increase or, worse, hamstring our agencies tasked to boost this investment with environmental mandates that have nearly zero effect on global emissions targets.
  • Off grid renewable may be better, but it’s not realistic everywhere. Certain populations may benefit from new technologies and new models, such as off-grid renewable sources. We should absolutely leverage our policy tools to deploy these where we can. But the scale of the problem is such that sizeable populations will still require old-school on-grid power that is (at least based on current economics) probably going to come from fossil fuels. This is especially likely for underserved urban populations and heavy industrial projects. This World Bank paper reports that barely half of poor residents in Dakar and Nairobi have access to electricity. OIL & GAS Production Reaching the rest will come, not from some high-tech solar system, but from hooking up more homes to the grid and boosting generation capacity in big power plants. Ditto for the 97% of large firms in Nigeria that rely on (costly, inefficient, and polluting) diesel generators to provide nearly 2/3 of their power. Similarly, Ghana’s Valco aluminum smelter in the industrial port of Tema is running at 20% capacity for the sole reason of a shortage of low-cost power. Getting Valco to capacity, with all the jobs and spin-off industries that would accompany full production, is going to require new power investments in large-scale power.
  • Natural gas will be part of the solution. My proposal specifically excludes coal, but not natural gas. This distinction is partly political, but it’s mainly pragmatic: many of the same countries that have substantial energy poverty gaps also have natural gas reserves that could be transformed into domestic energy.  Just in Africa in the past few years, Kenya, Tanzania, Mozambique, Ghana, and Cote d’Ivoire have had major new gas finds. And Nigeria still flares much of its gas. Why should we stand in the way of these countries turning these resources into electricity and jobs for their people? We shouldn’t—especially when we have placed no such constraints on ourselves.