4 Sustainable Energy Sources in Developing
Countries
| (30564)
8857/09
SEC(09) 534
| Commission Staff Working Paper: Access to Sustainable Energy Sources at the Local Level in Developing Countries
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| Legal base | — |
| Document originated | 17 April 2009
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| Deposited in Parliament | 29 April 2009
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| Department | International Development
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| Basis of consideration | EM of 28 May 2009
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| Previous Committee Report | None; but see (26101) 14040/04: HC 38-iii (2004-05), chapter 14 (12 January 2005)
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| To be discussed in Council | To be determined
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
4.1 In 2005 we considered Commission Communication 14040/04, on
the future development of the EU Energy Initiative and the modalities
for the establishment of an Energy Facility for African, Caribbean
and Pacific (ACP) countries. It noted that energy is essential
for a wide range of services, such as lighting, heating, cooking,
transport, agriculture, industrial production and modem communications.
Lack of access to reliable and affordable energy in developing
countries is a barrier to the economic and social development
of the poor, affecting most development objectives. The EU Energy
Initiative for Poverty Eradication and Sustainable Development
(EUEI) was launched at the 2002 World Summit on Sustainable Development
(WSSD),[12] to provide
energy services for the benefit of the poor, and contribute to
the achievement of the UN Millennium Development Goals.[13]
Africa was seen as an urgent priority due to very low access rates,
while small-island countries were particularly sensitive to energy
import costs.
4.2 The EUEI hosted a conference in Nairobi, Kenya
in November 2003 attended by government representatives from some
40 countries from sub-Saharan Africa. In his helpful Explanatory
Memorandum of 20 November 2004, the then Secretary of State for
International Development (Mr Hilary Benn) said that:
"the conference recommended that priorities
for the EUEI should include rural energy, electrification, improving
access to energy for households and national and regional sector
strategies and policies. The Conclusions of the April 2004 General
Affairs Council (8568/04) confirmed a need for adequate financing
for the Initiative and recognised that the Commission and Member
States need to be more involved in responding to the priorities
expressed at the Conference. The Council requested the Commission
take the lead in the follow-up to the Conference."
4.3 He summarised the Communication as follows:
"The Communication provides information on the
objectives of the proposed Energy Facility, how it will operate,
the activities it would support, and the intended management and
funding arrangements. The main focus of the Facility will be to
increase access to modern energy services in rural areas in Africa,
although the distribution of funds between ACP regions will follow
the principles of the Cotonou Agreement. Three main types of activity
are envisaged:
"Delivery of Energy Services: Joint financing
of investment projects, leveraging funds from other sources, including
Member States, other donors, International Financial Institutions
(IFIs) and the private sector.
"Creating an Enabling Environment: Assistance
to countries to: develop or Implement national energy policies
and strategies for the implementation and management of energy
programmes; and to improve monitoring and evaluation capacity.
This could include the institutional, legal and regulatory framework
for the energy sector.
"Facilitating Future Large-Scale Investment
Programmes: Finance for preparatory activities for investment
into cross-border interconnections, grid extensions and rural
distribution. This will prepare ACP countries for financing by
IFIs, World Bank and the private sector, and will reflect African
Union and New Partnership and African Development (NEPAD)[14]
priorities. This will be aimed at leveraging significant additional
capital investment in energy infrastructure from other sources.
"The Delivery of Energy Services is expected
to take the largest share of the Facility, with no more than 20%
being devoted to the other two main activities.
"The Commission will manage the Energy Facility,
using external specialists where necessary. Existing decision-making
processes between the EU and the ACP institutions will be applied."
4.4 The then Secretary of State went on to say that
the UK had made a commitment to improving access to energy through
the EUEI, which was reflected in the then DTI's Energy White Paper
(February 2003) and in the FCO's Energy Strategy (October 2004);
improving access to energy would need adequate resources to effectively
follow up on the outcome of the 2003 Nairobi conference and 2002
WSSD commitments. The proposed source of funding was to be the
remaining funds from the conditional €l billion (£700
million) of the 9th European Development Fund (EDF).
The EU Council had decided in March 2004 to establish the ACP-EU
Water Facility, with an initial allocation of €250 million
(£173.9 million) drawn from the conditional funds. The EU
Council would then decide by March 2005, in the light of the mid-term
reviews of Country Strategies and on the basis of a performance
review of the 9th EDF, whether to allocate a further
€250 million (£173.9 million) to the Water Facility
and use the remaining €500 million (£338 million) for
purposes to be agreed. The EU Energy Facility was likely to be
just one of several competing demands for the remaining conditional
funds. The UK, together with other Member States, did not want
to pre-judge the outcome of the performance review of the 9th
EDF. Should the Council decide to release some or all of the remaining
conditional funds, then the then Secretary of State would consider
this proposal. He did not expect there to be any substantive debate
of the Energy Facility before this process was concluded. The
ACP States would need to be consulted and agree on the proposed
use of the funds.
4.5 At that same meeting, the then Committee considered
a separate Commission Communication, on decisions and expenditure
in 2004 under the Ninth European Development Fund, which was examined
in chapter 18 of that Report, looking ahead to the performance
review to which the Secretary of State refers. The then Committee
looked forward to hearing from him on the outcome and on any consequential
proposals. Like him, it had no wish to prejudice the outcome.
That said, the then Committee noted that there was clearly a certain
momentum in this particular proposal. Given the widespread interest
in development issues and the role that Africa was set to have
during the upcoming UK Chairmanship of the Group of Eight and,
in the second half of the year, Presidency of the EU, they considered
it appropriate not only appropriate to clear the Communication
but also to draw it to the attention of the House.[15]
The Commission Staff Working Document
4.6 The Commission Staff Working Document rehearses
much of the same analysis as in the previous Communication. It
sees the current global energy challenges as essentially three-fold:
— ensuring
energy security;
— reducing greenhouse gas emissions to
avoid dangerous climate change;
— increasing access to energy in developing
countries to promote economic growth and improve livelihoods.
4.7 With regard to access to modern energy services
in developing countries, the Commission notes that 1.6 billion
people in the LDCs still lack access to electricity and 2.5 billion
world-wide use traditional biomass for cooking. The particular
focus is on Africa, as the continent lagging most behind and providing
the greatest challenges. The paper illustrates the link with some
of the MDGs thus:
| Energy Services and the MDGs
| |
| MDG 1 Extreme poverty and hunger
| Energy inputs such as electricity and fuels are essential to generate jobs, industrial activities, transportation, commerce, micro-enterprises and agriculture outputs. Most staple foods must be processed, conserved and cooked, requiring heat from various fuels.
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| MDG 2 Primary education
| To attract teachers to rural areas electricity is needed for homes and schools. After dusk study requires illumination. Many children, especially girls, do not attend primary schools in order to carry wood and water to meet family subsistence needs.
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| MDG 3 Gender equality
| Lack of access to modern fuels and electricity contributes to gender inequality. Women are responsible for most household cooking and water boiling activities. This takes time away from other productive activities as well as from educational and social participation. Access to modern fuels eases women's domestic burden and allows them to pursue educational, economic and other opportunities.
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| MDG 4 Child mortality
| Diseases caused by unboiled water, and respiratory illness caused by the effects of indoor air pollution from traditional fuels and stoves, directly contribute to infant and child disease and mortality.
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| MDG 5 Maternal health
| Women are disproportionately affected by indoor air pollution and water- and food-borne illnesses. Lack of electricity in health clinics, illumination for night time deliveries, and the daily drudgery and physical burden of fuel collection and transport all contribute to poor maternal health conditions, especially in rural areas.
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| MDG 6 Combat
HIV/AIDS
| Electricity for communication such as radio and television can spread important public health information to combat deadly diseases. Health care facilities, doctors and nurses, all require electricity and the services that it provides (illumination, refrigeration, sterilization, etc) to deliver effective health services.
|
4.8 The Commission sets out a general approach in
which access to sustainable and affordable energy services, and
not only the provision of energy technologies or infrastructure,
should be "in the focus of development cooperation",
and where improving energy efficiency "should be given proper
attention as a cost-efficient way of providing additional energy
services within given resource constraints and without negative
environmental impact." The different characteristics of rural,
urban and peri-urban areas in terms of population density, energy
demand and distance "are factors that must be considered
on a case by case basis in the design of energy access programmes."
A main problem, in many developing countries, is the unsustainable
use of traditional cooking practises (mainly charcoal, but also
fuel wood, used in urban areas) Expanding national electricity
networks is the basic model for increased access in national programmes;
but decentralised off-grid and mini grid solutions are vital,
both to ensure equity and to help extend the grid.
4.9 Against this background and analysis, the Commission
calls for concerted effort within the EU to step up action on
energy access and development issues, with focused EU attention
on:
— supporting
local solutions and engaging local actors, which "must be
given an increasing role in EU development cooperation";
— promoting decentralised solutions based
on renewable energies, which "must be a key component in
EU development cooperation";
— improving energy efficiency, which "should
be mainstreamed in all EU energy development cooperation work";
and
— setting up the appropriate frameworks
and financing models, where EU development cooperation should
"focus more on engaging with local authorities and other
local bodies in energy development" and must "strive
to attract international, national and local capital and engage
the private sector".
4.10 Current work at EU level is reviewed, beginning
with the EU Energy Initiative (EUEI). This currently includes:
— COOPENER:
the first EUEI instrument, which focussed on policy support and
capacity building on sustainable energy services for poverty reduction;
— the Africa-EU Partnership on Energy:
launched at the EU-Africa Summit in 2007 as a forum for high-level
dialogue, and currently producing a road map, which will identify
action to integrate energy markets, create the conditions to attract
investments, increase cooperation in renewable energy, mobilise
increased financing, capacity development, technical assistance
and technology transfer.
— National Indicative Programmes under
the 10th EDF;
— the Infrastructure Trust Fund for Africa
providing support for regional projects on interconnection, power
generation and power trade; and
— the ACP-EU Energy Facility: targeting
increased access to energy services in rural and peri-urban areas;
the first Energy Facility, launched in 2006 and operated mainly
through call for proposals, has supported 74 projects across Africa
reaching out to 6.7 million beneficiaries. The new ACP-EU energy
facility, "with a focus on renewable energy, will be the
key instrument to address the challenge of access to energy".
The Government's view
4.11 In his Explanatory Memorandum of 28 May 2009,
the Minister of State at the Department for International Development
(Mr Gareth Thomas) says that:
—
the Commission will provide additional resources under the 10th
EDF Intra ACP indicative programme to launch this second Energy
Facility and to replenish the Infrastructure Trust Fund,
— also provide coordination and support
for the Africa-EU Partnership on Energy and launch a number of
targeted initiatives on climate change; and that
— coordination within the framework of
the EU Energy Initiative will be continued.
He notes that this proposed second Energy Facility,
with €200 million/£179 million, will:
"support innovative projects that aim to increase
access to modern energy services in rural, isolated and peri-urban
areas in ACP countries. The facility will focus on renewable energy,
work with decentralised actors and the local private sector, and
concentrate on local financing gaps and capacity constraints.
It will be anchored in national and regional strategic frameworks
and within clearly defined strategies and priorities set by the
ACP partner countries."
and says that "all work is prepared in close
cooperation with EU Member States, and facilities are open for
co-financing by Member States."
4.12 The Minister continues as follows:
"DFID does not have a bilateral energy access
programme. Instead we provide core funding for a number of energy
initiatives, including the Global Village Energy Partnership (GVEP)
and the Energy Sector Management Assistance Program (ESMAP), which
is an internal World Bank think-tank and capacity building programme.
We are also providing €800 million (£715 million) of
capital funding to the multilateral Climate Investment Funds (CIFs),
which will be administered by the World Bank, and will help fund
low carbon energy programmes and projects in a range of middle
and low income countries, alongside investments in forestry and
adaptation.
"As a result, the paper
does not have any direct implications for DFID policy. DFID officials
have provided input on the policy content, and we are content
that it reflects DFID's emphasis on low carbon and climate resilient
development. It also aligns with our view on the need for renewable
energy projects and technologies to facilitate the productive
use of energy to better support sustainable livelihoods and local
economic development.
"EU programmes on energy
in developing countries represent a significant percentage of
overall energy sector activity, so it will be important for DFID
to remain engaged to ensure that EU activity supports our multilateral
efforts.
"The amount of increased
funding is an estimate and is subject to revision under the ACP
Working Group. It is currently being proposed that funding to
the EU-Africa Infrastructure Trust Fund will increase to at least
€200 million (£179 million) out of the intra ACP envelope
(one of the funding streams within the EDF) and this is likely
to be presented at the EDF Committee immediately after summer.
Indeed, the Commission is aiming to increase this amount for the
TF further and this additional amount will have to come from Member
States.
"DFID is considering making
an additional bilateral contribution to the TF, in addition to
the €10 million (£8.9 million) already committed. This
has yet to be finalised."
4.13 Finally, the Minister notes that Conclusions
on this topic were adopted by Development Ministers at the General
Affairs and External Relations Council on 18 May 2009, and that
it is proposed to launch the Energy Facility under the Czech EU
Presidency.
4.14 The Council says that its Conclusions[16]
are "aimed at addressing a key energy challenge: helping
developing countries to have access to modern energy services
in order to ensure basic human needs, accelerate economic growth
and improve the livelihoods of their people" and note that
"Access to sustainable energy is also closely linked to two
other energy challenges, i.e. energy security for all and mitigating
climate change."
Conclusion
4.15 Although the document raises no questions,
we are drawing it to the attention of the House because of the
widespread interest in the issues that it seeks to address.
4.16 For the same reason, we are also drawing
it to the attention of the International Development Committee.
4.17 We are surprised that the Minister makes
no mention of the previous Communication on this topic, since
it would have provided an opportunity to provide the House with
an assessment of what has been achieved so far, beyond a reference
to the first Energy Facility having supported 76 projects and
reached 6.7 million people. The then Secretary of State referred
to the goal of improving monitoring and evaluation capacity; but
there is no indication that this has happened. It would have been
helpful to have had an indication of what sort of projects and
in what ways people had been "reached"; comparing the
present document with the predecessor Communication, the implication
is that programmes have failed to make much of an impact on rural
areas. Ditto "leveraging significant additional capital investment
in energy infrastructure from other sources", which is important,
given that the Commission says the EU must "strive to attract
international, national and local capital and engage the private
sector". Does the Minister agree that improving energy efficiency
"should be mainstreamed in all EU energy development cooperation
work"?
4.18 We are also confused over the proposed level
of funding. The Minister says that the new €200 million Energy
Facility is to be launched before the end of June, but suggests
that it will be funded from the €200 million Infrastructure
Trust Fund, which presumably will have other calls on its resources
and whose precise funding level will not be settled before the
end of the Presidency under which the new Energy Facility is to
be launched.
4.19 We are left with the impression that, beyond
wanting "DFID to remain engaged to ensure that EU activity
supports our multilateral efforts", the Minister does not
see a great deal in the Commission's proposals. We should be grateful
for the Minister's comments, and in the meantime shall retain
the document under scrutiny.
12 The World Summit on Sustainable Development, held
in Johannesburg on 26 August-4 September 2002, which resulted
in a wide range of commitments by the US, the EU and other members
of the international community on Water and Sanitation, Energy,
Health, Agriculture, Biodiversity and Ecosystem Management and
Trade and Economic Issues. Back
13
UN millennium development goals to be achieved by 2015 - the eradication
of extreme poverty and hunger, achievement of universal primary
education, promotion of gender equality and female empowerment,
reduction of child mortality, improvement of maternal health,
combat of HIV/Aids, malaria and other diseases, environmental
sustainability and a global partnership for development. Back
14
The New Partnership for Africa's Development (NEPAD) arises from
a mandate given to the five initiating Heads of State (Algeria,
Egypt, Nigeria, Senegal, South Africa) by the Organisation of
African Unity (OAU) in July 2001 to develop an integrated socio-economic
development framework for Africa, spearheaded by African leaders
and supported by the G8 economies, that will address the current
challenges facing the continent. Back
15
See headnote: (26101) 14040/04: HC 38-iii (2004-05), chapter 14
(12 January 2005). Back
16
Which are set out in a separate document, available at http://register.consilium.europa.eu/pdf/en/09/st09/st09909.en09.pdf. Back
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