Low Carbon Energy & Developing Countries DFID Perspective & Research Priorities.
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Transcript of Low Carbon Energy & Developing Countries DFID Perspective & Research Priorities.
Low Carbon Energy & Developing CountriesDFID Perspective & Research Priorities
Scale of the challenge
Scale of the challenge
• Lack of reliable power is already a critical constraint to growth in many developing countries
• 1.3 billion poor people do not have access to electricity
• Over the next decade the world will be forced to reassess its reliance on cheap fossil fuels, with many countries facing increasingly stiff competition
• Another 3 billion middle class consumers by 2030
• Increasing interdependence of food production with fossil fuels can rapidly transmit price shocks
Opportunities and Risks
Opportunities and risks
• Reducing emissions is much cheaper than costs of climate impacts
• But energy use and GDP growth are highly correlated
• Opportunities: annual clean energy investment overtaking fossil fuels
• Risks: high carbon lock-in could threaten future growth
New opportunities: clean energy is now mainstream
Opportunities and risks
New opportunities: clean energy is now mainstream
Opportunities and risks
New risks: high carbon lock-in
Opportunities and risks
Focus on tackling market failures
Tackling market failures
• Private sector investment is crucial• But market failures and perverse incentives act as a
barrier• Public funding can be used to unlock opportunities,
lever investment, raise awareness and build regulatory capacity
Identifying market failures: low carbon development
People without access to electricity:
Africa = 587m
Asia = 799m
People relying on biomass for cooking:
Africa = 657m
Asia = 1,937m
Tackling market failures
Investment decisions: private ‘optimum’ is fossil fuels
Exploring market and government failures
Capital cost of plant
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High carbon emissionsMedium carbon
emissionsLow carbon emissions Zero carbon emissions
Lower carbon emissions but higher capital costs = barrier to deployment
Access to capital: real and perceived risks
Exploring market and government failures
• Uncertain or restrictive regulatory environment
• Business models are novel
• Technologies are poorly understood
• Servicing and maintenance concerns
• Supply chains undeveloped
• Lack of a (reliable) carbon price
Exploring market and government failures
Renewables$66bn Fossil Fuel
$409bn
Perverse incentives: Fossil Fuel subsidies create uneven playing field (2010)
Innovation: valleys of death
Exploring market and government failures
Source: Sagar A (2011)
Case study: Results-Based Financing for Renewables
20 Safaricom sites providing power to street lighting, schools, clinics & businesses
20 Safaricom sites providing power to street lighting, schools, clinics & businesses
Charging station for handsets
Charging station for handsets
Tackling market failures
Case study: LED lighting AMC
Tackling market failures
Case study: Green Africa Power (GAP)
Tackling market failures
Case study: Climate Public-Private Partnership (CP3)
Clean and renewable energy assets
Water treatment Land Use
Waste management
Transport
Energy efficiency
Tackling market failures
Case study: Energy Access Incubator
Tackling market failures
Focus on DFID’s energy research pipeline…
Opportunities for UK action
Research Priorities…?
…and how to best to fill the gaps
Looking to scale up from annual spend of < £1m to ~ £12m per year by 2013/14.
Initial framing of possible energy research priorities…
Energy System Map / Energy Chains
1. (Energy for) Productive Power / Wealth Creation
How to increase clean electrification in SSA
Resource mapping for renewables (esp SSA: wind, geothermal, small hydro, solar)
Futures - Impact on growth, etc. when hit energy resource limits Alternative Biofuels
Growth impact of releasing energy constraint
Efficient conversion
Decentralised power
Business models for market centresUse by informal sector
Economics of Low Carbon Development
Cost effectiveness cf. coal
Barriers to energy efficiency uptake
Impacts of changing price structure
Models to attract PS financing
Implications of Domestic fuel substitution from biofuels
CCS (prob not)
Cleaner coal?
Large hydro in SSA?
Clean energy lending in MDBs
Rise of China
Low carbon opportunities, jobs, etc.
Spacial analysis
2. (Energy for) Households / Domestic use
Specific clean energy product development (with PS)
Tackling market failures
Who gets connected – industry or poor?
Major barriers to increased use of modern energy services? (sysRQ)
Innovation models – what works at scale?
Willingness to pay
Evidence of development, health, etc. impact
Political economy analysis / drivers of change
Clean cook stoves initiative?
PISCES - Bioenergy
Cooking Biofuels
Going to scale
Charcoal policies – what works?
Linking supply side resource analysis with demand side energy service analysis
Evidence on AMC, challenge funds, etc.
Biobriquettes
Models from other sectors (e.g. mobile phones)
Understanding demand for off-grid
Service model linked to mobile masts
Affordable access for poorer people
Priorities
Windows of opportunity (getting on with it)
Other Strategic/Business Cases: Clean Energy Research
Low Carbon Energy Research - Focus
1. Low Carbon Energy for Growth & Wealth Creation
• Solid bank of evidence on what works and what doesn’t in driving increased access to clean energy, a critical constraint to growth for industry and households, especially in Africa. A package of research focussed on catalysing increased investments in clean energy for wealth creation, including energy for transport.
2. Scaling Household Access & Private Sector Innovation
• Package of research programmes that stimulate innovation (focussing on the upstream ideas/invention end of the innovation chain) and strengthen the evidence base of private sector-led models to deliver sustainable domestic access to low carbon energy, at scale.
3. Future Energy Questions
• Stimulate thinking on the future energy for development research agenda - to initiate debate, identify key areas for investigation and prioritise the related research questions. Including our understanding of the impacts and policy/technology options for developing countries in response to energy resource scarcity.
Inn
ova
tio
n
Mapping across to RED priorities…A
cces
s &
In
no
vati
on
……
..…
..…
.Gro
wth
& W
ealt
h C
reat
ion
Technologies
Policies
Build Capacity
Under. Context
EBCC
Inn
ova
tio
n
PISCES
M2M
Access to modern energy services
Bioenergy/biofuels
ESMAP
Low Carbon Energy for Growth & Wealth Creation
Bioenergy & Biofuels for Growth & Trade
• Biofuels/bioenergy reality check; doing first gen biofuels in a more sustainable way; potential muliti-win (food/fuel/fodder/fertiliser); and bioenergy policy/regulatory environment.
Low Carbon Energy for Wealth Creation (Access to Modern Energy Services)
• Focussed on research around off-grid, decentralised mini-grids, but also includes flexibility to pick up a few critical other priority energy research questions.
Scaling Household Energy Access & Private Sector Innovation
Clean cookstoves
• Consider building on evidence base after end of 18 months - if Global Alliance research elements have started well, we could support more critical research through this route..
Innovation
• Contribution to a low carbon innovation prize (focussing on the upstream ideas/invention end of innovation chain) a package of activities or international collaborative innovation facility.
Future Energy Questions
Stimulate thinking on future energy questions (including energy resource scarcity)
Clean Energy Research
DFID’s energy research pipeline…
Opportunities for UK action
1. Bioenergy & Biofuels for Growth & Trade
On bioenergy & biofuels…
• How to support a substantial package of research on biofuels and bioenergy for growth and trade, which genuinely informs the debate and avoids getting hijacked by either extreme?
• Overall balance/specific areas to focus for developing countries: e.g. doing first generation biofuels in a more sustainable way vs. third+ generation/algae/etc.; small-scale growers; local market vs export; choices & trade-offs; potential multi-win (food/fuel/fodder/fertiliser); bioenergy policy and regulatory environment; etc…
InputsCrops/Seeds
Land
Fertiliser/Pest./Energy
Climate
Trad Biomass & Forests
Grow it / Sell itLocal Livelihoods
Small/Large Scale
Local Markets
Jobs
Private Sector
Sell it / Use itTransport Fuels
Power
Heat
Other Products
Process it / Refine it
Refining Plant Oils (Biodiesel)
Fermenting Sugar & Starch
(Bioethanol)
Local scale
Move it / Trade itDirect uses of Biomass
Biofuels for
Local/Regional
Markets
Biofuels for
Export/Trade
Distribution
Infrastructure
Bioenergy/Biofuels System Map (for mapping research)
InputsCrops/Seeds
Land
Fertiliser/Pest./Energy
Climate
Trad Biomass & Forests
Grow it / Sell itLocal Livelihoods
Small/Large Scale
Local Markets
Jobs
Private Sector
Sell it / Use itTransport Fuels
Power
Heat
Other Products
Process it / Refine it
Refining Plant Oils (Biodiesel)
Fermenting Sugar & Starch
(Bioethanol)
Local scale
Move it / Trade itDirect uses of Biomass
Biofuels for
Local/Regional
Markets
Biofuels for
Export/Trade
Distribution
Infrastructure
Choices & Trade-offs / Sustainability (social, environmental, economic) & Impacts (incl. food, GHG, jobs, growth, etc ) …
Improving Efficiencies & Yields / Identifying Potential Resources …
Viewpoint? Export Market / Local Market / Energy Security / Future trends …
Institutions / Policies / Capacity / Who benefits …
Bioenergy/Biofuels System Map (for mapping research)C
ross
C
utt
ing
InputsCrops/Seeds
Land
Fertiliser/Pest./Energy
Climate
Trad Biomass & Forests
Grow it / Sell itLocal Livelihoods
Small/Large Scale
Local Markets
Jobs
Private Sector
Sell it / Use itTransport Fuels
Power
Heat
Other Products
Process it / Refine it
Refining Plant Oils (Biodiesel)
Fermenting Sugar & Starch
(Bioethanol)
Local scale
Move it / Trade itDirect uses of Biomass
Biofuels for
Local/Regional
Markets
Biofuels for
Export/Trade
Distribution
Infrastructure
~ $15 b ~ $ 90 b ~ $ 30 b
Value Chain Revenue Potential (WEF 2020)
Choices & Trade-offs / Sustainability (social, environmental, economic) & Impacts (incl. food, GHG, jobs, growth, etc ) …
Improving Efficiencies & Yields / Identifying Potential Resources …
Viewpoint? Export Market / Local Market / Energy Security / Future trends …
Institutions / Policies / Capacity / Who benefits …
Bioenergy/Biofuels System Map (for mapping research)C
ross
cu
ttin
g< Rich country focus
Poor country focus >
~ $ 10 b Transport Fuel ~ $ 80 b
Power + Heat ~ $ 65 b
Chemicals ~ $ 6 b
InputsCrops/Seeds
2nd & 3rd gen
Algae, etc..
Food + Fuel crops
Best suited local crops
Land
R
LUC + ILUC
Map resource potential
‘Marginal’ land?
Fertiliser/Pest./Energy
GHG balance
P
Climate
R
Trends/Resilience/Water
Trad Biomass & Forests
Forestry wastes
Deforestation
Firewood & Charcoal
Wastes (manure & crop)
Grow it / Sell itLocal Livelihoods
Diversification
Livelihood Assets
+
Livelihood Strategies
Small/Large Scale
R
P
P
Local Markets
R
P
Jobs
R
P
Private Sector
R
P
Sell it / Use itTransport Fuels
Vehicles: Biodiesel
Vehicles: Bioethanol
Aviation
Shipping
Blending
FF price shocks
P
Power
RR
P
Heat
Industrial heating
P
Domestic Cooking
Biogas
Other Products
Chemicals, etc.
P
Process it / Refine it
Refining Plant Oils (Biodiesel)
R
P
Fermenting Sugar & Starch
(Bioethanol)
Improving Effic.
P
Local scale
R
Local processing cap for bioD/bioE
Biogas digester
Move it / Trade itDirect uses of Biomass
Bulky biomass for power generation
Biomass for local markets
P
Biofuels for
Local/Regional
Markets
R
P
P
Biofuels for
Export/Trade
R
Exports
P
Distribution
Infrastructure
R
P
~ $15 b ~ $ 90 b ~ $ 30 b
Value Chain Revenue Potential (WEF 2020)
Choices & Trade-offs / Sustainability (social, environmental, economic) & Impacts (incl. food, GHG, jobs, growth, etc ) …
Improving Efficiencies & Yields / Identifying Potential Resources …
Viewpoint? Export Market / Local Market / Energy Security / Future trends …
Institutions / Policies / Capacity / Who benefits …
Bioenergy/Biofuels System Map (for mapping research)C
ross
C
utt
ing
< Rich country focus
Poor country focus >
~ $ 10 b Transport Fuel ~ $ 80 b
Power + Heat ~ $ 65 b
Chemicals ~ $ 6 b
DFID’s energy research pipeline…
Opportunities for UK action
2. Low Carbon Energy for Wealth Creation ‘Access to Modern Energy Services’
Low Carbon Energy for Wealth Creation ‘Access to Modern Energy Services’
Systematic Review: Barriers to increased use of modern energy services?
a) What are the major barriers?
b) Are interventions to overcome these effective?
- Economic
- Technical
- Political & Institutional
- Cultural & Social
Low Carbon Energy for Wealth Creation ‘Access to Modern Energy Services’
Households & Communities
Urban & National
On Solar…
• Major investors’ interest in large scale solar in developing countries - what research is needed to maximise the development impact from these investments?
• Implications of the falling cost of PV? How can Africa benefit; and do so quickly and at scale?
• What role could UK research play in a major UK ‘solar initiative’ for Africa?
DFID’s energy research pipeline…
Opportunities for UK action
3. Clean Cookstoves
DFID’s energy research pipeline…
Opportunities for UK action
4. Stimulating Innovation
What is climate technology innovation?
• DFID & Innovation (SoS, PSD, Innovation Hub, DPC, etc.)
–DPC (Nov 2011): “Successful innovation is the creation and implementation of new or improved processes, products, services, methods of delivery or other aspects of the business model that result in significant improvements in impact, outcomes, efficiency, effectiveness or quality.”
–SoS (Beyond Aid, Nov 2011): “…we’re spearheading innovation in clean energy and in developing the technology that will allow poorer countries to adapt to floods, droughts and other climatic events.”
What is climate technology innovation (2)?
Who is innovating out there? What?
–New, breakthrough technologies with global benefits;
–Develop and deploy new technologies for developing country needs (with no obvious need in developed countries);
–Local capacity to adapt and modify currently available technologies for local markets.
What is DFID’s response?
• Climate Innovation Centres:–India, Kenya, Ethiopia, Vietnam, South Africa, Ghana
• Global, collaborative R&D:–Linking developed and developing country private sector
and academics/researchers
• Innovation Prizes:–Do they work? VFM?
–@ Large scale (e.g. X Prize, Grand Challenges, etc.)
–@ Smaller scale: Incremental + local/national competitions
Innovation prizes
• Upstream R&D, idea generation…
• …through to deployment and diffusion of ideas.
• Country office experience: DFID-Caribbean
Innovation
Exploring market and government failures
Prizes Prizes
Research need: deployment models (social/ financial) RESEARCH CALLS
Research need: tech R&D
Flexible fund: to scale/support local innovation already happening - find and finance
RED Climate Technology & Innovation Support Package
a. Innovation prizes – to focus on both upstream idea / technology generation and downstream technology deployment.
b. Flexible innovation fund – to ‘find’ innovators (not via competitions/prizes, but through networks, interest groups) and fund interesting, risky ideas.
c. Research grants – for various specific research questions on innovation (both the development of new technologies and the deployment models for available technologies) to be addressed.
d. Humanitarian Response Technologies: Innovation Challenges – £5m to proactively catalyse innovative technologies for non food items (NFIs) in humanitarian responses (including WASH technologies).