Lesotho’s First Utility-Scale Solar Project Gets Support from SEFA

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The African Development Bank (AfDB)-managed Sustainable Energy Fund for Africa (SEFA) approved a US$ 695,500 grant to NEO I SPV Pty Ltd., a subsidiary of OnePower Lesotho Pty Ltd., to support the preparation of a bankable business case for the development of the winning project of the 2016 Lesotho 20 MW solar PV tender, foreseen to become the first utility-scale solar PV project in Lesotho.
The power will feed into the national grid in Mafeteng Province.
The Project will contribute to a strategic phase-out of costly power imports from Mozambique and to reducing reliance on imported coal-generated power from South Africa, thereby promoting independence of power supply, achieving substantial savings in the national budget and abating regional CO2 emissions.
Project will further support rural development by stabilizing the grid in Mafeteng Province.

“The Bank will support the structuring of the Project and lead it to bankability. Our ambition is to turn it into a reference solar PV project for the SADC Region.” stated Ousseynou Nakoulima, AfDB’s Director for Renewable Energy and Energy Efficiency. SEFA support is instrumental in leading the project to financial closure by funding technical and financial services, environmental and social impact assessment, lenders’ due diligence and risk allocation. In addition, the AfDB’s Africa Climate Technology Centre (ACTC) will cover the costs for legal services and project implementation support.

The Project will contribute about 13% to Lesotho’s maximum system demand of around 150 MW. By substituting 20 MW of costly imported power from Mozambique, it will decrease power retail prices in Lesotho. It will also entail greenhouse gas emission substitution effects as a result of reducing imports of thermally generated power from RSA.

The Project is aligned with the Bank’s 10-Year Strategy focusing on inclusive/green growth through the delivery of energy access, the Bank’s Energy Policy and the New Deal on Energy for Africa. On national level, the Project is aligned with Lesotho National Electrification Master Plan (NEMP), the Lesotho Electricity Authority Act No.12 of 2002 and its National Rural Electrification Program (NREP) as well as with the Government of Lesotho Vision 2020 and its 5th Pillar “Poverty Reduction through Energy Access.”
About the Sustainable Energy Fund for Africa (SEFA)

Launched in 2012, SEFA is a US $95-million multi-donor facility funded by the governments of Denmark, the United Kingdom, the United States and Italy. It supports the sustainable energy agenda in Africa through grants to facilitate the preparation of medium-scale renewable energy generation and energy efficiency projects; equity investments to bridge the financing gap for small- and medium-scale renewable energy generation projects; and support to the public sector to improve the enabling environment for private investments in sustainable energy. SEFA is hosted by the Renewable Energy Department of the AfDB.

Agriculture, energy, roads get $600 million World Bank boost

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THE World Bank has set aside US$600 million for Zambia to invest in agriculture, energy, rural roads and budget support over the next three years.

Minister of Finance Felix Mutati said the World Bank has committed itself to increasing its support to Zambia under the International Development Association (IDA).
Mr Mutati said this yesterday after meeting Bank executive director for Zambia, Andrew Bvumbe, who is in the country for consultations.
“I am happy that the World Bank executive director has come into Zambia at the time when the economy has begun to stabilise and macro fundamentals are cheerful.
“We have received commitment from the Bank for increased resources and about US$150 million will be in the form of budget support,” he said.
Mr Mutati said from the US$600 million, the agriculture sector will receive US$255 million to support irrigation and agribusiness while US$280 million will be invested in the energy sector.
He said under the IDA programme, the bank will further dedicate an additional US$200 million for improving rural roads to support agriculture.
The minister said Government has agreed with the World Bank to utilise the resources to transform critical sectors to address poverty, job creation and inclusive growth.
Mr Mutati said Zambia is ready to host the IDA meeting in November this year.
And Mr Bvumbe welcomed Government’s focus on prioritising development in agriculture, rural road development and energy which are key to creating jobs and enhancing economic development.
He commended Government for addressing macroeconomic fundamentals as evidenced by low inflation and the local currency which is showing signs of stability.
Mr Bvumbe further applauded Government on the progressive discussions with the International Monetary Fund (IMF) which are expected to be concluded soon.
“We are happy with how the discussions with the IMF are moving. On the policy level we are converging with the Fund and this is important for us to move forward. We are looking forward to the conclusion of these discussions between Zambia and the Fund.
“Broadly speaking, I am delighted to be here, happy with the updates I got from the minister on the economic front and macro fundamentals that are good. We have a good foundation to move forward and make a difference in the lives of ordinary Zambians,” he said.

Chad’s first large-scale PV project receives financial support from AfDB

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Chad’s first large-scale PV project receives financial support from AfDB

 

The African Development Bank (AfDB) has announced that it will finance a 32 MW solar project planned for development in N’Djamena, Chad’s capital.

The AfDB said that financing includes funds for the improvement of the interconnection line between Chad and Cameroon and the rehabilitation of the generation assets of the country’s power utility National Electricity Company (SNE). The amount of the financial support, however, remained undisclosed.

The Starsol plant is backed by a consortium that includes solar project developer NewSolar Invest, engineering group CIEC Monaco, and infrastructure and renewable energy project financier Arborescence Capital.

The Sustainable Energy Fund for Africa (SEFA), which is managed by the AfDB, has granted finance costs related to technical assistance for the completion of the plant design and grid study, as well as advisors for legal and financial structuring of the project.

The solar plant will provide reliable power to address power shortages hampering economic growth in the country, according to the AfDB.

Implementation of the project will increase installed capacity by 45%, and generate around 64-gigawatt hours of electricity per year: enough to power nearly 17,000 households in the N’Djamena area.

The Chad government is looking to increase development of renewable energy in the country, where less than 2% of the population has access to reliable electricity. Most of the power in the country is generated by privately owned diesel generators, putting the price of electricity in the country at a high XAF 345 ($0.57) per kilowatt hour.

The project is aligned with the AfDB Climate Change Action Plan 2011-2015 and Energy Policy as well as the bank’s Strategy 2013-2022, which focuses on inclusive and green growth in Africa.

 

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Transforming the energy future of SADC

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The Southern Africa Development Community (SADC) region is endowed with abundant natural energy resources both renewable and non-renewable that are available to propel its economic development. Contrastingly, the region is by far-and-large energy insecure with more than 50% of the population without access to clean and affordable energy while electricity supply is neither adequate nor stable.

Addressing the energy future of the SADC region will, therefore, require a holistic approach that embraces different stakeholders and at the same time is open to innovative business models, if the noble objectives the Sustainable Development Goals (SDG) are to be attained.

The energy scenario

All urban areas and other significant load centres in most SADC Member States (MS) are connected to grid electricity, largely derived from thermal power plants (powered by coal, gas, nuclear (only in South Africa)) and hydropower, as outlined in Figure 1 below, for Southern African Power Pool (SAPP) MS. Recent developments in South Africa through the reverse auction programme has brought on grid significant solar and wind power.

Figure 1: SAPP Generation Mix in 2015

• Source: Adapted from SAPP reports and other sources

The continental countries are interconnected through high voltage transmission lines except for Angola, Malawi and Tanzania. This means that interconnected countries can trade in electric energy through bilateral contracts and the Day Ahead Market, thus providing immense benefits to the region through security of supply and dispatch of least-cost power stations, amongst others.

The rural/off-grid areas are the least developed in all countries with electricity access as low as seven (7%) percent in some countries.  The rural inhabitants rely on solid biomass, and paraffin and wax candles for thermal and lighting needs thus putting them at high risk of indoor air pollution.  Additionally, there are also serious socio-economic and environmental ramifications from the use of such energy sources. The challenges that come with provision of clean and affordable energy sources in rural areas are largely to do with the economic activities in these areas that unfortunately cannot support a return on investment of energy provision with the current energy supply models – which are centred on extension of distribution power lines.

The Sustainable Development Goal # 7 is specific on energy access, renewable energy and energy efficiency with the following indicators:

By 2030, ensure universal access to affordable, reliable and modern energy services;

By 2030, increase substantially the share of renewable energy (RE) in the global energy mix;

By 2030, double the global rate of improvement in energy efficiency (EE);

Equally important are indicators on international cooperation on access to cleaner energy technologies.

The Energy supply challenges

Provision of grid electricity is insecure across the supply chain from generation, transmission to distribution. As highlighted above, generation is largely thermal and hydropower based, both of which have drawbacks of their own.  Coal is a finite resource that pollutes the environment during extraction and conversion to final energy for use in homes and industries. The majority of thermal power plants are over 30 years old hence they are inefficient and suffer from frequent breakdowns. Hydropower is clean and affordable but recent drought spells have exposed our vulnerability to nature. Hydropower power stations along the river basins of Zambezi, Shire, Kafue, Great Usutu, Ruacana and many others elsewhere were operating well below their rated capacities for the greater part of 2015 and 2016 due to low water levels.  Scientists have predicted a drier scenario in the coming years due to climate change thus increasing the risk of our reliance on hydropower.

Transmission infrastructure is not adequate and neither is it resilient enough to transport the generated or demanded power. Power outages are reported on regular basis along the critical transmission corridors that link the northern and southern parts of the SAPP MS.  Distribution is the weakest link in the power supply chain due to very high technical and non-technical losses ranging from 15 to 30%.

An equally problematic area on the demand-side of the energy supply chain is the inefficiency in consumption of power in homes and industry. Studies indicate that energy intensity (often used as a proxy indicator of the energy efficiency of a nation’s economy, measuring the amount of energy (in megajoules) required to produce one US dollar of GDP) is very high in Southern Africa compared to the global average

• Source: Derived from The World Bank (http://data.worldbank.org/indicator/EG.EGY.PRIM.PP.KD)

Energy is a key input to production and the high inefficiencies due to lack of awareness and use of inefficient devices render SADC’s products uncompetitive on the market. To a certain extent, awareness of this barrier is now there as pointed out in the SADC Industrialisation Strategy and Roadmap (2015-2063) which acknowledges that its goal is hampered by inadequate and poor infrastructure (which includes energy) amongst other constraints.

The Way-forward

The SADC region needs to radicalise its planning and actions to meet the SDGs goals. The population is growing at approximately 1% per annum and GDP is averaging a suppressed 4% per annum and these parameters are putting pressure on the existing infrastructure.  Proper energy planning, execution and innovation are therefore critical. A combination of energy efficiency practices and renewable energy technologies should be prioritised in the energy mix going forward so as to address both energy access and energy security. The intermittency of solar and wind is often sited as a barrier to its dispatch but this notion is not entirely true for an integrated market like SAPP as well as the increasingly cost competitive storage devices that include pumped hydro, both stationary and mobile batteries, etc.  Smart technology is making the integration of renewables and energy efficiency much easier.

Roof top solar, solar thermal technologies, solar home systems, bio-digesters, etc. are still at embryonic stage in all SADC countries but have a huge potential to address the energy challenges.

The solutions sound much easier than done, but this is not possible without an enabling policy and regulatory environment that is translated into sound planning and execution.  Integrated resource planning (IRPs) is increasingly being adopted by energy planners in the region. The skills of our planners need to be upped so that they don’t necessarily adopt the IRP blueprints wholesomely but adapt these to factor-in local conditions that require equal importance to be given to issues such as energy access.  SADC needs skills that will integrate sustainable energy in various regional strategies such as those for industrialisation, agriculture, gender, climate change amongst many others.

With meticulous planning and creating a record of efficient project implementation at both public and private sector level, financing should be the least of barriers to a sustainable energy future for SADC. The bottom line is that there is no silver bullet to our energy challenges except that we all need to work together and contribute to a democratised energy system.

• About other:

Kudakwashe (Kuda) Ndhlukula is the Executive Director of the SADC Centre for Renewable Energy and Energy Efficiency (SACREEE), based in Namibia, whose mandate is to promote market based adoption of renewable energy and energy efficiency technologies, practices and services contributing to the sustainable development agenda of the SADC region.

UNIDO, GEF validate renewable energy investment strategy

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The United Nations Industrial Development Organization (UNIDO) and Global Environmental Facility (GEF) yesterday validated the renewable energy investment strategy to mitigate the impact of climate change. This is the 6th replenishment cycle to implement a project in climate change focal area.

The project seeks to personalise the sustainable energy for all (SE4ALL) action agenda, which was designed to establish a national platform to foster dialogue on energy related nexus issues. It is also to promote the use of energy efficient appliances and also the quality assurance and enhancing capacities for market players and enablers.

Speaking at the opening ceremony held at the Kairaba Beach Hotel, Alois Mhlanga of UNIDO, said it was a great privilege for them to be the partner of choice of the government of The Gambia, through the Ministry of Petroleum and Energy and other stakeholders to deliver several projects promoting the use and integration of RE in productive sectors supported by GEF.

He explained that the validation was part of efforts under the UNIDO/GEF 4 project entitled ‘promoting renewable energy based mini grids for productive uses in rural areas’ to promote the scaling up of investment in renewable energy in The Gambia. According to him, this was the last activities for the UNIDO/GEF 4 project, which has been highly successful.

He stated that the achievements of the GEF 4 project are testimony of the fact that when commitment, leadership and funding are available, projects that have a real impact across the country are possible.  Mr Mhlanga remarked that the renewable energy investment strategy for The Gambia builds on extensive analysis to identify the sectors with the highest market potential and livelihood of private sector investments as well as promising funding sources for the RE projects.

He expressed appreciation to the Ministry of Power and Energy for their leadership and support on the project and to ECREEE for developing the draft strategy. On his part, Omar Bah, a representative from the National Environment Agency (NEA), said the main objective of the workshop was to gain support and commitment of the stakeholders in The Gambia on the adoption of renewable energy strategies.

He remarked that NEA in collaboration with stakeholders has over the years been implementing GEF funded projects in the area of renewable energy, climate change biodiversity and land degradation. “Renewable energy resources appear to be the one of the most efficient and effective solutions,” he opined.

He acknowledged the support of national and international partners in the spirit of cooperation and commitment for working with The Gambia government in trying to meet their obligation towards mitigating effects of highly polluting energy sources such as the use of Heavy Fuel Oils (HFOs) in power generation.

Also speaking on the occasion, Momodou O. Njie, permanent secretary at the Ministry of Energy, said the availability of adequate, reliable, affordable and sustainable supply of energy in modern energy services was crucial for the socioeconomic development of the country.

He said the government over the years has been exploring ways and means to reduce the country’s high dependency on petroleum products for power generation. He assured UNIDO/GEF and ECREEE of collaboration at all times and thanked them for the valuable support they have been giving to The Gambia.

“We assure them of The Gambia support and collaboration at all times and hope we continue to work together to tackle the challenges of access to modern energy services and climate change,” he added.

Africa Energy Forum, World Bank Investments Seek to Improve Energy Access

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According to the UN Secretary General’s Report on Progress towards the SDGs, progress in every area of sustainable energy falls short of what is needed to achieve energy access for all and to meet targets for renewable energy and energy efficiency. Recent events and energy infrastructure investments announced by the World Bank show that efforts are underway to accelerate implementation of SDG 7 (affordable and clean energy).

According to UN Secretary General’s Report on Progress towards the SDGs, 1.06 billion people, predominantly rural dwellers, still function without electricity. Half of those people live in sub-Saharan Africa. The report indicates that access to clean fuels for cooking only increased by 0.9% between 2012 and 2014. On increasing the share of renewables in the energy mix, the report underlines that the challenge is to “increase the share of renewable energy in the heat and transport sectors, which together account for 80% of global energy consumption.” [UN Secretary General Report on Progress towards the SDGs]

Recent developments in Africa, Asia and the Pacific have sought to accelerate implementation of SDG 7.

Africa Energy Forum

One such initiative is the yearly Africa Energy Forum, a global investment meeting for Africa’s power, energy, infrastructure and industrial sectors. The 2017 edition of the Forum was held from 7-9 June in Copenhagen, Denmark. Attended by more than 2000 participants representing governments, utilities, regulators, power developers, financial institutions, technology providers, consultants, law firms and large energy consumers, the event aimed to support the creation of partnerships and the identification of opportunities for investment by international donors and the private sector.

During the Africa Energy Forum, the World Bank launched a report titled ‘Linking Up: Public Private Partnerships in Power Transmission in Africa.’

During the Conference, the African Legal Support Facility (ASLF) and the African Development Bank (AfDB) held a brainstorming session with organizations active in energy development, including the Development Bank of South Africa (DBSA), the Renewable Energy and Energy Efficiency Partnership (REEP), the US Trade and Development Agency (USTDA), the Sustainable Infrastructure Foundation and ElectriFI. The participating organizations committed to: collaborate in raising between US$500 and 800 million in funding for development projects addressing issues within their intersecting mandates; create an informal network; and meet regularly to develop harmonized calls for proposals and conduct joint advocacy initiatives.

USTDA also announced a partnership with Standard Microgrid, a company providing components for micro-utility networks, to deploy distributed solar power services in Zambia. [Africa Energy Forum Press Release] [Africa Energy Forum Website][AfDB Press Release Forum Opening, 8 June] [AfDB Press Release Brainstorming Session, 19 June]

Also during the Africa Energy Forum, the World Bank launched a report titled ‘Linking Up: Public Private Partnerships in Power Transmission in Africa,’ which explores how models of private sector-led investments in energy transmission infrastructure observed in other regions could be applied in sub-Saharan Africa. The publication outlines Africa’s needs for transmission investment and approaches to financing, including private finance. It reviews case studies of successful private finance in other countries, including Brazil, Chile, India, Peru and the Philippines, and provides recommendations how these approaches can be adapted to specific local conditions in African countries. The report underlines that Africa is lagging behind other regions regarding transmission investment, and calls on governments to adopt policies that are supportive of a private sector financing strategy. [World Bank Press Release, 6 June] [Report Abstract] [Linking Up: Public Private Partnerships in Power Transmission in Africa]

 

Nigeria seeks $5bn loan from World Bank

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The Federal Government is seeking a loan of $5bn from the World Bank Group to boost power availability in Nigeria, investigation has shown.

The World Bank had in April stated that a powerful delegation from Nigeria was in Washington DC to discuss assistance for the nation’s power sector, but did not disclose the details of the talks.

However, investigation by our correspondent showed that the Federal Government was actually seeking a loan of $5bn to be channelled into the power sector in order to boost electricity availability in the country.

Present at the April 25, 2017 meeting in Washington DC were the Minister for Power, Works and Housing, Mr. Babatunde Fashola; Minister of Finance, Mrs. Kemi Adeosun; Chairman, Senate Committee on Power, Steel and Metallurgy, Senator Enyinnaya Abaribe; and Chairman, House of Representatives Committee on Power, Mr. Dan Asuquo.

At the end of the meeting, the World Bank Group had said that it would deploy a full range of instruments to mobilise investments to resolve Nigeria’s energy crisis.

The Director of Operations at the Multilateral Investment Guarantee Agency, an arm of the World Bank Group, Sarvesh Suri, said a full range of instruments would be deployed to help the government mobilise investments directly from the private sector and through private sector guarantees.

According to the Debt Management Office, out of Nigeria’s external debt of $13.81bn as of March 31, 2017, the World Bank Group had a portfolio of $6.93bn.

This means that the World Bank holds more than 50 per cent of the country’s external debt portfolio.

Should the loan being sought by the Federal Government be approved, Nigeria’s indebtedness to the World Bank would rise to about $11bn, excluding other smaller loans that have been approved after the March 31 accounting date.

The bank had in 2014 announced $1.19bn guarantees meant to lift the nation’s electricity sector.

The Board of Executive Directors of three arms of the World Bank approved the package of loans and guarantees supporting a series of energy projects to help boost independent power generation and ease crippling energy shortages in Nigeria.

It said the projects were critical elements of the World Bank Group Energy Business Plan for Nigeria.

The World Bank, International Finance Corporation and Multilateral Investment Guarantee Agency’s World Bank partial risk guarantees approved included $245m for the 459 Megawatt Azura Edo Power Plant near Benin City, Edo State; and $150m for the 533MW Qua Iboe plant in Ibeno, Akwa Ibom State. Both plants are gas-fired.

The Boards of the IFC and MIGA approved loans and hedging instruments worth $135m and guarantees of up to $659m for the Azura Edo project.

The IBRD guarantees included forward-looking mitigation and risk-sharing arrangements designed to augment the country’s power sector reforms, while building market confidence and setting industry benchmarks.

The IFC investment and MIGA’s guarantee for the Azura Edo power plant were to support a trailblazing project at the centre of Nigeria’s power sector programme, while setting a replicable model for future power projects.

The bank said addressing energy needs in Nigeria required investment from the public and private sectors, adding that working with the World Bank Group could help catalyse significant private investment in an environment that best assured successful delivery of increased power supply.

Sustainable Heating and Burning Wood

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It is more important than ever to understand the environmental impacts of heating a home. We simply can’t continue to consume energy at the same rate as before. To safeguard the future, we need to better understand the environmental impact of what we are doing.

 In the United Kingdom, they have recently launched an initiative called Ecodesign. This is a directive, which is set to come into force in 2022. This means all wood burning stoves from 2022 need to be Ecodesign compliant.

Ecodesign is a way of reducing the pollution a stove produces. In comparison to an open fire, the differences are huge. An open fire will have an efficiency of around 25%. This means 75% of heat produced is wasted. An eco-design stove has an efficiency of 90%. This means only 10% of the heat a fire produced is wasted.

Ecodesign means a cleaner, greener environment – it also means lower heating costs for the owner of the stove, as they need to burn less heat when compared to a less efficient stove, or open fire.

Having a high efficiency stove, whether it be an ecodesign or just a standard high efficiency stove is one thing. However, it is vital you burn the right sort of wood. Below is a list of wood people burn on stoves.

Best Types of Wood:

 Ash – Ash is thought to be one of the best woods for a fire. This wood makes a steady flame and a good heat. Unusually – ash can be burnt when green, but like with most wood burns at it’s very best when it is dry.

Oak – It is a popular wood for furniture but also it makes great firewood. It burns slowly and makes a smaller flame. It burns best when seasoned for over two years or more.

Beech – Similar to ash, this wood burns well. Although it does not burn that well when green due to it’s higher water content.

Yew – Slow burn and produces an impressive, intense heat. Burning yew also makes a pleasant scent.

Hawthorn – This type of wood has a slower rate of burn, and a has a good output of heat.

Mountain Ash– Mountain Ash has a very good heat output and does burn slowly. Mountain Ash is also known as Rowan.

Thorn – Thorn produces little smoke – ideal wood where excessive smoke could be a problem. It also is considered an excellent wood as it has a slow burn and produces a good level of overall heat.

But what about the less desirable wood?

The less desirable wood should be avoided – it can produce a low heat output, cause excessive smoke and potentially congest a flue or chimney, which in turn can increase the chances of a chimney fire and/or carbon monoxide poisoning.

Alder – Chestnut – Firs – Eucalyptus – Holly – Laburnum – Spruce.

 

Five Ways to Address Fossil Fuel Subsidies through the WTO and International Trade Agreements

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Can the international trade system be a catalyst for reforming fossil fuel subsidies (FFS) to help relieve the burden on the public purse, reduce local and global air pollution, improve energy security and tackle climate change?

This was the theme of a recent workshop set at the World Trade Organization (WTO) in Geneva and organised by Climate Strategies, the Stockholm Environment Institute and the International Institute for Sustainable Development. The event forms part of a broader conversation on how the international trading system can be made compatible with the UN Sustainable Development Goals (SDGs) and the goals of the Paris Agreement on climate change.

Fossil Fuel Subsidy Reform in Context

  • Annual expenditure on fossil fuel subsidies has been estimated at US$320 billion for consumers in developing and emerging countries in 2015, and at US$100 billion for fossil fuel production worldwide.
  • Fossil fuel subsidy reform can free up significant funds towards meeting the SDGs.
  • Encouraging examples from India and Indonesia show that today’s low oil prices form an opportunity to redirect public spending on oil, coal and gas towards development priorities such as education, health, infrastructure and access to clean and reliable energy.
  • Reform is also vital piece of the climate change puzzle, with the potential to cut greenhouse gas emissions by more than 10% by 2020.
  • By complementing and strengthening ongoing reform efforts, the international trading system can be a key enabler of the 2030 Agenda.
  • Reform should adequately address the needs and concerns of developing countries, including those related to energy access.

 

Participants found there is significant scope for the WTO and international trade agreements to complement and strengthen reform efforts already being supported under a range of international forums, including the 2030 Agenda for Sustainable Development, the G20 and APEC (the Asia-Pacific Economic Cooperation).

Fossil Fuel Subsidies and the WTO: “A Missed Opportunity”

Owing to its wide membership, its central role in disciplining trade-distorting subsidies across economic sectors, and its well-established dispute settlement system, the WTO is well-equipped to take the FFS reform agenda forward.

To date, however, the Organization’s involvement on FFS has been limited. In notable contrast with the various disputes against renewable energy subsidies that have been launched at the WTO over the past decade, no FFS have been disputed thus far. In part this is because many WTO Members do not fully notify their FFS, whether because of a lack of data and understanding of energy subsidies and their trade effects, current shortfalls in the Agreement on Subsidies and Countervailing Measures’ (ASCM) notification questionnaire or a lack of mechanisms to enforce notification. In the absence of case law and targeted research, there is also a lack of legal clarity on the extent to which different types of FFS can be disciplined by the ASCM to begin with.

And yet addressing this topic falls squarely within the Organization’s mandate. FFS can have a range of distorting impacts on trade and investment, including by affecting the rate and timing of development of new fields or mines.

Moreover, the WTO was established with a view to ensuring economic progress is achieved in accordance with the objective of sustainable development, and the SDGs explicitly identify trade as a critically important means of implementation. As such, trade should be viewed as an enabler for achieving the SDGs and targets, including the objective of reducing FFS set out under SDG 12.

Although parallels should not be overstated, it is also worth noting the WTO’s continued engagement on reducing environmentally harmful fisheries subsidies as part of the Doha Round. Observing the discrepancy in how the two subsidies were treated in the WTO, the former Director-General Pascal Lamy characterised the absence of FFS from the WTO’s agenda as a “missed opportunity”.

What Can Be Done?

During the Geneva workshop, participants identified multiple avenues to address FFS within the international trading system. While not purporting to be exhaustive, the table below identifies five key categories of action available to WTO Members: 1) Promote capacity building and technical cooperation; 2) Enhance transparency; 3) Adopt subsidy reform pledges and ensure credible follow-up through reporting and review; 4) Clarify the interpretation of existing rules; and 5) Make changes to existing rules. Several concrete pathways to help realise these goals are also identified.

Table 1: Five Ways to Address Fossil Fuel Subsidies at the WTOTable 1: Five Ways to Address Fossil Fuel Subsidies at the WTO

It is important to note that these pathways are not mutually exclusive, and many are likely to be particularly effective if adopted together. A pledge, report and review system, for instance, would benefit from parallel efforts to improve transparency.

All approaches would necessarily be led by WTO Members. They range from those that are purely voluntary to those that are binding, and embedded in the WTO’s dispute settlement mechanism. This provides scope for gradual enhancements of ambition.

In a similar vein, many approaches can either be taken forward plurilaterally (by a coalition of the willing) or multilaterally (involving all WTO Members). As illustrated by references to fossil fuel subsidy reduction in the EU-Singapore Free-Trade Agreement (which is awaiting formal approval), bilateral and regional trade agreements may form an effective platform to pioneer cooperative approaches on fossil fuel subsidy reform.

The workshop also made clear that any successful effort to address FFS through the international trade system will need to adequately address the special circumstances of developing countries. That might involve special and differential treatment provisions, including potential exemptions and carve-outs for development, energy access and other reasons.

With the WTO’s 11th biennial Ministerial Conference coming up in Buenos Aires in December this year, creative thinking, constructive debate, and further research on the various options on the table is needed to help ensure the promise of Paris and the SDGs is fulfilled.

About the authors

Peter Wooders is Group Director, Energy with IISD

Cleo Verkuijl is a Research Fellow with SEI

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In Kenya, micro grids are boosting access to electricity for rural communities

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In Kenya, businesses are looking to broaden access to energy by fusing micro grid technology with the significant uptake of mobile phone payment systems.

Margaret Mwangi runs a salon in Kenya. With her business not connected to Kenya’s main grid, she makes use of a local solar micro grid operated by smart metering technology business SteamaCo to get electricity.

SteamaCo says that it operates in nine countries, serving 3,000 homes and businesses, using mini grids as well as biogas digesters and solar irrigation pumps.

“I just have to use my phone, and go through M-Pesa (a mobile phone payment and money transfer system),” she told CNBC’s Sustainable Energy. “I put the amount that I want – as low as 50 shillings ($0.48), and onwards up to 1000 – depending for what I want to use.”

The town of Entesopia is now the site of an eight kilowatt solar micro grid, which provides electricity to roughly 65 households and businesses. The micro grid is helping to smooth the transition from expensive, polluting diesel generators to cleaner, solar powered grids.  SteamaCo’s Lumumba Lameck explained how the micro grid system works.

“Power is primarily generated by solar panels, it has an inverter which converts power from direct current to alternating current,” he said. “We have a battery bank that, during the day, when the sun is a lot, some of the energy is… stored for night time use by the customers,” he added.

“It has a system that allows the customers to pay as they go using their mobile devices, and… the providers like ourselves are able to monitor remotely without necessarily having anyone on the ground,” Lameck went on to add.

As well as helping businesses to trade for longer, the micro grid is also changing the lives of young people, including student Celestine Periperi. “We used to have a kerosene lamp at home, it… hurt my eyes and I couldn’t study after the sun went down,” she said.

“Now that we have the solar lamp I’m able to do my evening homework and I’m improving my grades at school.”

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