Developing countries will need about $531 billion of additional investments in clean energy technologies every year in order to limit global temperature rise to 2°C above pre-industrial levels, thus preventing climate change’s worst impacts. To attract investments on the scale required, developing country governments, with support from developed countries, must undertake “readiness” activities that will encourage public and private sector investors to put their money into climate-friendly projects.
WRI’s six-part blog series, Mobilizing Clean Energy Finance, highlights individual developing countries’ experiences in scaling up investments in clean energy and explores the role climate finance plays in addressing investment barriers. The cases draw on WRI’s recent report, Mobilizing Climate Investment.
The development of Indonesia’s geothermal energy sector—and the starts and stops along the way—provides an interesting case study on how to create readiness for low-carbon energy. By addressing barriers such as pricing distortions and resource-exploration risks, the country has begun to create a favorable climate for geothermal investment.
The History of Geothermal Power in Indonesia
Indonesia holds the world’s largest source of geothermal power, with an estimated potential of 27 GW. However, less than 5 percent of this potential has been developed to date. Indonesia began to explore its geothermal resource in the 1970s, with support from a number of developed country governments. The country made some progress in advancing geothermal development by the 1990s. However, development stalled during the Asian financial crisis in 1997-98 and was slow to recover.
In the early 2000s, a number of barriers limited investment in the sector, including a policy and regulatory framework that favored conventional, coal-fired energy over geothermal. Plus, the high cost and risk associated with geothermal exploration deterred potential investors and made it difficult to access financing from banks.
The Indonesian government took a number of steps to try to advance geothermal development and received support from a wide range of international partners, including multilateral development banks and developed country governments. In 2003, it passed a law to promote private sector investment in geothermal, establishing a target of 6,000MW installed capacity by 2020.
Rabayah Akhter, an intern with WRI's Electricity Governance Initiative, also contributed to this post.
When it comes to renewable energy, the Philippines is one of the world’s more ambitious countries. The country set out to triple its share of renewable energy by 2030 based on 2010 levels. The Philippines has one of Asia’s highest electricity rates, in part due to high costs of importing fossil fuels. Enhancing the country’s energy security and keeping power costs down have been the main drivers for setting renewable energy goals.
While the Philippines has demonstrated commitment to renewable energy, the process of achieving its goals has proven to be challenging. The World Wildlife Fund (WWF) in collaboration with WRI released a new report today, Meeting Renewable Energy Targets: Global Lessons From The Road To Implementation. The report documents the challenges and solutions to scaling up renewable energy in the Philippines and six other countries - China, India, Germany, Morocco, South Africa and Spain.
Successes and Delays
The Philippines’ experience--the strides and the delays--exemplifies the importance of good governance, including transparency, accountability, and participation. Without it, policies are unlikely to receive public acceptance or support. While it’s important to choose which policies to initiate in the energy sector, equally as important is fortifying the regulatory and institutional structures that back them.
Worldwide, one out of every five people lacks access to modern electricity. Affordability, quality of service, and social and environmental impacts pose great challenges in providing people with the power they need for lighting, cooking, and other activities. Good governance involving open and inclusive practices is essential to overcoming these pressing obstacles.
The situation worsened in 2003, when Prime Minister Thaksin Shinawatra set forth a plan to restructure Thailand’s electricity sector and privatize EGAT. Rather than improving Thailand’s electricity sector in the public interest, the plan for privatization was designed to increase capital for powerful stakeholders and upper management employees. It called to maintain EGAT’s unregulated monopoly in order to maximize profits, even at the expense of public needs and environmental vulnerabilities.
Thailand’s electricity sector seemed poised to worsen--until civil society groups stepped in.
Canada’s Prime Minister, Stephen Harper, took a significant step toward promoting transparency and reducing global poverty. He announced yesterday that Canada will implement mandatory reporting requirements for Canadian extractive companies operating both in-country and abroad.
This mandate will require Canadian extractive companies to publicly disclose the payments they make to foreign governments in exchange for permission to operate on their soil. This development will help promote transparency in the mining sector and, if implemented effectively, could help combat the “resource curse.”
Fighting the Resource Curse through Access to Information
Tackling the “resource curse” is a challenge of global proportions. The term applies to situations where, despite a country’s mineral or oil wealth, poverty is exacerbated in part by weak or corrupt institutions, government mismanagement of revenues, and a failure to re-invest into projects that benefit the public—such as infrastructure, education, and healthcare. Often, citizens of resource curse countries aren’t able to hold their governments accountable for this abuse of power because they lack information about their country’s revenues and expenditures (see Box).
It’s well-known that China ranks first in the world in attracting clean energy investment, receiving US$ 65.1 billion in 2012. But new analysis from WRI shows another side to this story: China is increasingly becoming a global force in international clean energy investment, too. In fact, the country has provided nearly $40 billion dollars to other countries’ solar and wind industries over the past decade.
China’s Overseas Wind and Solar Investments, By the Numbers
According to our research, Chinese companies have made at least 124 investments in solar and wind industries in 33 countries over the past decade (2002 – 2011), more than half of which were made in 2010 and 2011 (see Figure 1). Despite some gaps in the data that prevent us from generalizing about all of China’s wind and solar investments, we learned that:
Of the 54 investments for which financial data were available, the cumulative amount invested came to nearly US$40 billion.
China invested roughly US$10 billion in 16 wind projects and US$27.5 billion in 38 solar investments.
Of 53 investments with capacity data available, the cumulative installed capacity added was nearly 6,000 MW.
The majority of investments were in electricity generation. Several investments were made in manufacturing facilities and to establish sales and marketing offices.
Most of the investments were in developed countries. A huge amount went to the United States, as well as Germany, Italy, and Australia. A handful of developing countries—including South Africa, Pakistan, and Ethiopia—also attracted multiple investments.
The High-Level Panel on the Post-2015 Development Agenda provided a welcome injection of energy and ambition into the future of development with its final report released last week. While the details will be parsed over the coming months, the report’s recommendations were at once bold and practical. The Panel sees that the promise of a world free of extreme poverty is within reach, and achieving this vision requires that sustainability and equity should be at the core of the global development agenda.
While there have been many such calls to move the world onto a more sustainable and equitable development path, if the Panel’s proposals are to be truly acted upon, the results would be transformational.
With that in mind, let’s look at how the report stacks up against the four “issues to watch” that we highlighted last week:
1) Will sustainability be on the margins or at the center of the post-2015 agenda?
This was a clear winner, as the Panel recognized that environmental sustainability and poverty eradication are inextricably linked. The report identified sustainable development as one of five essential “transformational shifts.” Unlike the Millennium Development Goals (MDGs), which relegated the environment to just one of eight goals, the panel offered four goals--on energy, water, food, and natural resources--that directly connect human well-being with care for the planet.
Harriet Bibangambah, a Research Officer at Greenwatch Uganda, also contributed to this post.
Uganda is one of only 10 African countries with a national access to information (ATI) law. These types of laws are essential to human rights, providing citizens with legal access to the government-held information that directly impacts them—information on issues like mining permits, logging concessions, air quality data, and more. But as researchers are learning, ATI laws on the books do not necessarily guarantee freedom of information.
Uganda passed its Access to Information Act in 2005, releasing an implementation plan and ATI regulations in 2011. The regulations establish procedures for citizens to request government-held information and for the government to respond to citizen requests. WRI and Greenwatch, a Ugandan environmental law and advocacy organization set out in August 2011 to investigate how the law works.
UPDATE 5/30/13: The High Level Panel on the Post-2015 Development Agenda released its final report on May 30th. Read the full report on the Panel's website.
Following an extensive global consultation process, the High Level Panel on the Post-2015 Development Agenda will present its final report to UN Secretary General Ban Ki-moon this week. Led by the heads of state of Indonesia, Liberia, and the United Kingdom, the panel is charged with producing a bold yet practical vision for global development beyond 2015, when the current Millennium Development Goals (MDGs) are set to expire. While this is just the first round of what is sure to be a multi-year process, there has been no shortage of discussion about the Panel’s report and what it should say.
Here are four key issues that we will be looking at on May 31st:
1) Will sustainability be on the margins or at the center of the post-2015 agenda?
The MDGs focused primarily on poverty reduction and the social dimensions of human development, with one stand-alone (and largely ineffective) goal on environmental sustainability. There is growing recognition now that the twin challenges of environmental degradation and inequality are among the root causes of poverty, and thus are inextricably linked. The Panel has already acknowledged this in earlier pronouncements, but how and to what extent it takes a more integrated approach to environmental sustainability and equity issues will be a key test of the new poverty agenda. Will it propose another strengthened, stand-alone goal(s) on environmental sustainability, embed sustainability across a number of other goals, or put forth some combination of the two? How will environmental sustainability and poverty reduction be linked in the post-2015 agenda?
The Climate Investment Funds (CIFs), one of the world’s largest dedicated funding facilities for climate change mitigation/adaptation projects, have now been in operation for five years. It’s a good time to step back and evaluate what lessons we’re learning from these important sources of climate finance.
WRI recently did just that, inviting a group of representatives from countries accessing CIFs funding to speak at our offices. It became clear from the discussions that while some valuable progress has been made, there is still plenty of room for improvement. In particular, lending institutions involved with the CIFs could deploy climate finance more effectively by fostering a stronger sense of country ownership over mitigation/adaptation projects.
The Good News: Climate Investment Funds Are Contributing to Change on the Ground
We’re starting to see some countries make progress on implementing climate change mitigation and adaptation projects with funds from CIFs programs (see text box). Panelists at the WRI event highlighted a few examples:
Yet, in a new WRI analysis of 32 country proposals, we identify the need for stronger commitments and strategies to address land and forest tenure challenges. While most countries identify secure land tenure as critical to successful REDD+ programs, relatively few outline specific objectives or next steps to address weaknesses in land laws or their implementation. Lack of clear strategies to address land tenure challenges could significantly hinder efforts to reduce emissions from deforestation and forest degradation.
Electricity production is central to climate change as it accounts for 20 percent of global carbon dioxide emissions. Too often, electricity decisions are made through closed processes with little scrutiny.
WRI’s Electricity Governance Initiative (EGI) is a civil society partnership promoting better governance in the electricity sector. Transparent, accountable, and a participatory decision-making processes will, in time, produce better decisions. When Thailand was privatizing its power utility, a report by in-country partners using the WGI toolkit highlighted the lack of a strong regulatory body to balance the interests of the public against those of a private power utility. The Thai courts halted the privatization, referencing our analysis that the privatization did not prevent abuses of power.
Despite its small size, Ecuador is one of the world’s most biodiverse countries. Political instability, though, has led to weak environmental laws and few opportunities for citizens to participate in decisions about the management of the country’s rich natural resources. A new law now requires the government to consult citizens on environmental matters. It’s the result of a long process undertaken by WRI and Ecolex, a non-profit organization in Ecuador focused on sustainable development. Together we identified weaknesses in Ecuador’s laws regulating public access to environmental information, participation, and justice. This assessment was followed by multi-stakeholder workshops which led to the creation of draft legislation approved by the Ministry of Environment and signed into law by the president.
In 2007, the Interfaith Coalition on Corporate Responsibility, a group of 275 faith-based institutional investors with a combined market portfolio of more than $10 billion, filed a shareholder resolution requiring Newmont Mining Corporation to produce a report addressing community-based opposition to its operations around the world. Activists have criticized Newmont, one of the world’s largest gold miners, for environmental problems in indigenous communities. In an unprecedented move for a U.S. mining company, Newmont’s directors and shareholders approved the resolution. It’s the first step toward Newmont developing new procedures for involving local communities in determining how its development projects might affect their land or way of life. WRI worked with the Interfaith Coalition to help members better understand how the informed consent of a community affected by development projects makes good business sense and leads to more equitable, environmentally-friendly results.
For eight years, WRI and 160 partners in 40 countries have been working to open
up the channels of information on environmental decision-making. This effort –
The Access Initiative – is the largest global action network dedicated to ensuring
that people have the right and the ability to influence decisions about the natural
resources on which their communities depend.
How does it work? Coalitions of civil society groups assess the state of access to
information, public participation, and justice in their nation. Gaps in laws,
institutions, and practices are identified. The coalitions then engage their
government in a dialogue and develop campaigns to bring about reform.
It isn’t easy, especially in Southeast Asia where leaders have long kept
political control through information control. Eight years of work by
The Access Initiative, however, came to fruition recently when Indonesia
enacted a new Freedom of Information Act. The Access Initiative also
played a strong role in ensuring Thailand’s new constitution enshrines the
right of the public to have information about new development projects
that affect the environment and to participate in decisions concerning such
projects. Rights to remedies are provided when the government acts in
breach of these provisions.
Electricity production accounts for 40% of global CO2 emissions. Too
often, electricity decisions are made through closed processes with little
scrutiny. WRI’s Electricity Governance Initiative is a civil society partnership
working in India, Indonesia, Thailand, South Africa, and the Philippines – five
countries with rapidly growing emissions from power generation – to improve
public participation in the energy decisions that affect their lives.
The Electricity Governance Initiative has played an important role in
the development of Thailand’s new Energy Industry Act, provisions of
which include: promoting adequate energy services while maintaining
fairness for both consumers and businesses; protecting consumer
interests with regard to tariffs and service quality while increasing
competition and preventing abuses of power; and promoting
fairness and transparency in the provision of energy without
Poverty maps not only identify the distribution of poor
populations, but pinpoint places where development lags and
highlight the location and condition of infrastructure and natural
resource assets that are critical to poverty reduction programs.
WRI has helped design and support poverty mapping efforts in
Kenya and Uganda. Kenya has used the maps to distribute critical
budget resources to its Constituency Development Fund (CDF)
which has allocated a total of approximately US$475 million for
development and poverty reduction efforts. Before the maps, funds
were based on population rather than on need. That has
changed, with a greater share of funds going to formerly
neglected rural areas.
Poverty maps were also used by the Kenya Water and
Sanitation Program, a five-year, US$65.3 million
effort to ensure resources reached poor communities
with low access to safe water and sanitation.
In a nationwide referendum in early 2009, Bolivia overhauled its federal
constitution. Among its sweeping changes are new legal rights for citizens to take
part in public policy planning and to be consulted and informed on decisions
that may affect environmental quality and natural resource use. The constitution
also establishes the country’s first environmental and agricultural court, giving
citizens and communities a forum to air grievances.
These provisions are largely the result of work by WRI and PRODENA, one
of Bolivia’s oldest environmental advocacy organizations. “Using a toolkit WRI
developed, together we identified weaknesses in Bolivia’s proposed new
constitution regulating public access to environmental information, participation,
and justice,” explains Lalanath de Silva, director of WRI’s Access Initiative (TAI).
PRODENA is a member of TAI, the world’s largest network of civil society
organizations working to ensure that people have the right and ability to
influence decisions about the natural resources that sustain their communities.
Based on these assessments, and with WRI support, PRODENA advocated
tirelessly for the inclusion of such rights, which Bolivia’s government adopted
into the text of the constitution.
“It’s a great result,” continues de Silva, “the type we envisioned when we launched
The Access Initiative a decade ago.”
Forest loss and degradation are major contributors to global GHG emissions. Yet, the
issue has not played a significant role in international efforts to combat climate change.
This is changing, explains Smita Nakhooda, a senior associate in WRI’s Institutions
and Governance Program. “Several large-scale multinational initiatives have
emerged to help developing countries reduce emissions from deforestation and
forest degradation. REDD is the shorthand for this objective, which will likely be
part of any new global climate change agreement.”
Improving forest governance – the rules and practices that determine how decisions
about forest resources are made – will be critical to the success of REDD efforts.
How will governments balance the need to maintain forest cover and the need for
other land uses? How will they ensure that the rights of forest dependent
communities and indigenous peoples are respected?
WRI’s timely and sound analysis on forest governance has been pivotal in shaping
new REDD initiatives at the UN and World Bank. “The battle against climate
change cannot be won without protecting the world’s forests, and the communities
that depend on them for their livelihoods,” says Nakhooda. “WRI is committed to
ensuring REDD programs are as robust as possible.”
Principle 10’s guidelines are fundamental pillars of good environmental governance. They cover critical areas, including freedom of information laws, state of the environment reporting, emergency planning and response, project planning, and environmental harms. Adoption of the guidelines will have several significant impacts:
The decision clarifies minimum legal standards for implementation of Principle 10.
The decision requires UNEP’s Executive Director to assist countries in implementing programs and policies around access — and thus ensures that UNEP has a mandate to continue advancing the implementation of Principle 10 at the national level.
The GC’s formal adoption of the guidelines will be critical in strengthening the case that officials and civil society can make for open information systems and decision-making processes.
WRI’s Access Team and partners played a significant role in leading the push to convince GC members to formally adopt the guidelines, rather than simply “note” them. Staff wrote online articles informing access proponents of the opportunity, and WRI sent staff and international partners to three UNEP meetings. WRI Staff Member Carole Excell participated in the Nairobi Expert Meeting in November of 2009 and played an important role in helping revise the guidelines.
Perhaps most critically, WRI successfully helped influence the U.S. delegation to the GC through communications with the USEPA and the U.S. Department of State. To our knowledge, no other U.S.-based NGO pressed the delegation on the issue of adoption. Ultimately reversing its earlier position, the U.S. delegation pushed strongly for adoption of the guidelines and successfully persuaded holdout countries to move toward a consensus for adoption.
UNEP’s poverty and environment division thanked WRI for its help in reaching this critical milestone.
Historically, the world has talked about climate change primarily as an environmental issue. We focus on the amount of greenhouse gas emissions in the atmosphere, rising seas, climbing temperatures, and other hard data. While this narrative is important, it’s missing a critical component — people.
After all, communities everywhere will be affected by climate change’s impacts. Those in impoverished, developing nations will likely be hit hardest. That’s why it’s necessary to talk about climate change not just as an environmental issue, but also as an issue of climate justice focused on the way in which people, especially the most vulnerable, are being affected.