Peter is Director of the Land and Resource Rights (LRR) initiative. LRR seeks to strengthen land tenure and natural resource rights of rural people and communities by: 1) conducting research and...
Governance & Access
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.
This is part three of a four-part blog series, “Improving Electricity Governance,” which explores the key components involved in effective electricity governance. The series draws on the experiences of WRI’s Electricity Governance Initiative, documented in a new report, “Shining a Light on Electricity Governance.” Read more posts in this series.
Until recently, the Electricity Generating Authority of Thailand (EGAT) held a monopoly on Thailand’s power generation and transmission since the 1970s. While EGAT provided a relatively stable supply of electricity to consumers, it was unregulated, leading to inefficiencies in the sector, such as wrongly estimated fuel supply. Consumers experienced high prices, while new power projects moved forward with little public consultation, sparking social conflict and concerns over environmental impacts.
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.
This investment is consistent with a broader trend of major emerging economies like China, India, and Brazil becoming important sources of global overseas invest¬ments. WRI’s new working paper, China’s Overseas Investments in the Wind and Solar Industries: Trends and Drivers, helps to better understand China’s renewable energy investments overseas, as well as the policy and market forces that drive them.
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.
Investigating Access to Information in Uganda
The Access to Information in Africa project—a joint initiative with WRI and the Ghana Center for Democratic Development, Greenwatch Uganda, and Open Democracy Advice Centre of South Africa—evaluates transparency models and environmental accountability in Africa. The project’s research includes conducting a series of citizen requests for information in Ghana, Uganda, and South Africa.
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: