ENERGY SECTOR POLICY AFRICAN DEVELOPMENT BANK GROUP

ENERGY SECTOR POLICYENERGY SECTOR POLICY

AFRICAN DEVELOPMENT BANK GROUPAFRICAN DEVELOPMENT BANK GROUP

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African development bank group

ENERGY SECTOR POLICY ENERGY SECTOR POLICY Result of a broad consensusResult of a broad consensus


THE AFRICAN ENERGY CONTEXT: CHALLENGESTHE AFRICAN ENERGY CONTEXT: CHALLENGES

Inadequate access Inadequate access to modern energy services: 51% in to modern energy services: 51% in urban areas and 8% in rural areasurban areas and 8% in rural areas

High costHigh cost of producing electricityof producing electricity: : 2-3 times higher than 2-3 times higher than the global averagethe global average

Unreliable servicesUnreliable services: : 30 countries experience recurrent 30 countries experience recurrent interruption of servicesinterruption of services

Local and global Local and global environmental impactsenvironmental impacts

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THE AFRICAN ENERGY CONTEXT: CHALLENGESTHE AFRICAN ENERGY CONTEXT: CHALLENGES

Shortage of investments: significant financing required / Shortage of investments: significant financing required / USDUSD 23.8 billion annually for universal access by 203023.8 billion annually for universal access by 2030

Inadequate policy and regulatory frameworksInadequate policy and regulatory frameworks

Slow progress in renewable energy deploymentSlow progress in renewable energy deployment

Ineffective regional integrationIneffective regional integration

Weak capacity Weak capacity

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THE AFRICAN ENERGY CONTEXT: THE AFRICAN ENERGY CONTEXT: OPPORTUNITIESOPPORTUNITIES

A variety of renewable and fossil energy resourcesA variety of renewable and fossil energy resources

Increased national and regional level policy Increased national and regional level policy commitmentcommitment

climate-related financingclimate-related financing

Emerging financiers (Brazil, India, China, Gulf States)Emerging financiers (Brazil, India, China, Gulf States)

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AN IN-DEPTH AN IN-DEPTH CONSULTATIONCONSULTATION AND REVIEW AND REVIEW PROCESSPROCESS

External consultationsExternal consultations

2 regional consultation workshops2 regional consultation workshops60 – day online consultation60 – day online consultation

Internal consultationsInternal consultations

Inter-departmental working groupInter-departmental working group4 review sessions by the Boards of the Bank4 review sessions by the Boards of the Bank

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A DUAL OBJECTIVEA DUAL OBJECTIVE

Support RMCs:Support RMCs:

Increase access to Increase access to modernmodern, , affordableaffordable and and reliablereliable energy services energy services

Address Address local and global environmental concerns local and global environmental concerns

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THE POLICY: 9 OVERARCHING GUIDING THE POLICY: 9 OVERARCHING GUIDING PRINCIPLESPRINCIPLES

Ensuring energy security and increase access for allEnsuring energy security and increase access for all Moving towards a cleaner energy pathMoving towards a cleaner energy path Enhanced governance at the national Enhanced governance at the national Innovation to increase financial flows Innovation to increase financial flows Integrating aid effectiveness principlesIntegrating aid effectiveness principles Social and environmental responsibilitySocial and environmental responsibility Integrating responses to climate changeIntegrating responses to climate change Fostering knowledge transfer, research-development Fostering knowledge transfer, research-development

and innovationand innovation Mainstreaming gender dimensionMainstreaming gender dimension

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THE POLICY: DO’S AND DON’TSTHE POLICY: DO’S AND DON’TS

The Bank will invest in:The Bank will invest in:oRenewable energy Renewable energy oCoalCoalo Oil and gasOil and gas o Power transmission and distributionPower transmission and distributionoRegional cooperationRegional cooperationoSupply side and demand side energy efficiencySupply side and demand side energy efficiency

The Bank will not invest in:The Bank will not invest in:o Nuclear energyNuclear energyo Oil and gas explorationOil and gas exploration

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THE POLICY: DO’S THE POLICY: DO’S

Renewable energyRenewable energyo Hydropower, bioenergy, wind, solar, ocean and geothermal Hydropower, bioenergy, wind, solar, ocean and geothermal resourcesresourcesoPolicy and regulatory frameworks Policy and regulatory frameworks oHybrid systemsHybrid systemsoSupport for private sector investmentSupport for private sector investmentoR&D R&D

Oil and gas Oil and gas oProduction, processing, distribution and exportProduction, processing, distribution and exportoPower generation Power generation oGovernance of oil and gas resourcesGovernance of oil and gas resources

Power transmission and distributionPower transmission and distributionoat national and regional levelat national and regional level

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THE POLICY: DO’S THE POLICY: DO’S

Regional cooperation Regional cooperation oRegional infrastructure: power generation and Regional infrastructure: power generation and pipelines pipelines oCapacity buildingCapacity buildingoPolicy and regulatory frameworks Policy and regulatory frameworks oregional power pools regional power pools

Supply side and demand side energy efficiencySupply side and demand side energy efficiencyoIn production, transmission, distribution and end-use In production, transmission, distribution and end-use oPolicy dialoguePolicy dialogue

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THE POLICY: OPTIONS ASSESSMENTTHE POLICY: OPTIONS ASSESSMENT

To Strike a balance between access and sustainability To Strike a balance between access and sustainability objectives, Bank decisions to invest in a specific sub-objectives, Bank decisions to invest in a specific sub-sector will be based onsector will be based on:

1.1.A demand driven approach: RMCs/RECs circumstances, A demand driven approach: RMCs/RECs circumstances, resources endowments and prioritiesresources endowments and priorities

2.2.An options assessment taking into account (as An options assessment taking into account (as appropriate):appropriate):o energy profileenergy profileonational/regional adaptation and mitigation strategies national/regional adaptation and mitigation strategies o cost-benefit analysiscost-benefit analysiso social and environmental impactssocial and environmental impacts

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COAL-FIRED POWER PLANTSCOAL-FIRED POWER PLANTS

Framework for Bank support Framework for Bank support

Development impactDevelopment impact Transitioning towards green growthTransitioning towards green growth Environmental responsibilityEnvironmental responsibility TechnologyTechnology Offsetting measures Offsetting measures

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HYDROPOWERHYDROPOWER


SSocial & Environmental impacts /AfDB S&E safeguards ocial & Environmental impacts /AfDB S&E safeguards climate-change implications climate-change implications local and national needs for water and energy local and national needs for water and energy

developmentdevelopment Case of shared watersCase of shared waters

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LIQUID BIOFUELSLIQUID BIOFUELS


Food security and biodiversity Food security and biodiversity Integration into rural development plansIntegration into rural development plans COCO22 emissions emissions Impact on equality, poverty, land use and labor rights Impact on equality, poverty, land use and labor rights inclusive for smallholder farmersinclusive for smallholder farmers

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THE WAY FORWARDTHE WAY FORWARD

Preparation of the medium term Energy StrategiesPreparation of the medium term Energy Strategies

Preparation of the operational guidelines for coal, Preparation of the operational guidelines for coal, hydropower and biofuelshydropower and biofuels

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THE WAY FORWARDTHE WAY FORWARD

Is this Policy relevant to RMCs?Is this Policy relevant to RMCs?

Which issues/areas the implementation through the Which issues/areas the implementation through the Energy strategy should prioritize?Energy strategy should prioritize?

Guidelines for coal, hydropower and biofuel projects: Guidelines for coal, hydropower and biofuel projects: what matters to RMCs and which issues the AfDB what matters to RMCs and which issues the AfDB should pay attention to in the preparation of the should pay attention to in the preparation of the guidelines?guidelines?

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THANK YOU!THANK YOU!

Documents

ENERGY SECTOR POLICY AFRICAN DEVELOPMENT BANK GROUP