New inequalities and development policyCarbon, connections, capacity

Dr Arunabha Ghosh

UN Committee for Development PolicyOpen Session UN Headquarters, New York25 February 2020

© Council on Energy, Environment and Water, 2020

CEEW – Among Asia’s leading policy research institutions

Energy Access Renewables

Low‐Carbon Pathways

Technology, Finance & Trade

Industrial Sustainability &

Competitiveness

Risks & Adaptation

Power Sector

2|

CEEW Centre for Energy Finance

3|IMAGE: Business Standard

WHAT WILL THE PLANET DO TO US?

A tale in three charts

SOURCE: King et al (2015); Figure by Jeremy Shakun, data from Lu ̈thi et al., 2008 and Jouzel et al., 2007; Berkeley Earth (2019); NOAA (2019)

4|

Last 800,000 yearschanges in Antarctic air temperatures and atmospheric CO2 concentrations

Mean sea levels have risen 3.7 inches in 25 years; 8 inches since 1880

Average temperatures are 1 degree Celsius above pre‐industrial era

Not everyone’s vulnerability looks the same

IMAGE: istock; Down to Earth

5|

Carbon budget get consumed by the biggest polluters

6|

SOURCE: Carbon Tracker; CEEW analysis

‐40

‐20

0

20

40

60

80

100

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Gig

a‐To

nnes

of C

O2‐

eqGlobal GHG emission trajectories across scenarios

Current policy NDC 2 DegC 1.5 DegC

USA (79)

China(186)

EU (49)Japan

(15)

Significant decline in emissions required for moving from the NDC trajectories to the 2 DegC trajectory……

… and even more for achieving the 1.5 DegC targets

Based on their NDC trajectories, China, USA, EU and Japan will appropriate 49% of global carbon space between 2018 and 2030

Climate sceptics are also climate culprits

7|SOURCE: Financial Times (2019)

8|IMAGE: CEEW/ Jaun Rizvi

CLEAN ENERGY ACCESS FOR ALL?

118 million have moved out of absolute electricity poverty in 3 years(Past decade 350 million)

9|

64%

42%37%

84%74%

62%

Connected to the grid Grid as the primary source oflighting

Tier 1 or above

Prop

ortio

n of

rura

l hou

seho

lds

Access to electricity in six states

2015 2018

SOURCE: CEEW (2018)

But long way to go; only 20% of rural households in top two tiers

10|

63%

27%

7%3%

2015

38%

43%

14%

6%

2018

Tier 0 Tier 1 Tier 2 Tier 3

Evolution in Electricity Access

SOURCE: CEEW (2018)

Duration of supply has improved, but reliability remains a concern

11|

5%

21%

50%

30%

21%

40%

5%8%

52%

29%

22%

42%

0%

10%

20%

30%

40%

50%

60%

Capacity Duration Reliability Quality Legality Affordability

Prop

ortio

n of

rura

l hou

seho

lds

Bottlenecks in electricity access faced by Tier 1 households

2015 2018

SOURCE: CEEW (2018)

160 million have gained access to clean cooking energy in 3 years(Past decade, 700 million)

12|

Tier 078%

Tier 115%

Tier 25%

Tier 32%

2015 

Tier 044%

Tier 135%

Tier 215%

Tier 36%

2018

Tier 0 Tier 1 Tier 2 Tier 3

SOURCE: CEEW (2018)

LPG is the driver for all the change, but a long way to go

13|

LPG connection and its use as a primary fuel has increased two‐fold

22%14%

5%

58%

37%

19%

LPG use LPG as primary fuel LPG as only fuel

Prop

ortio

n of

rura

l hou

seho

lds

LPG adoption and use in rural areas of six major states

2015 2018

SOURCE: CEEW (2018)

Affordability remains the biggest challenge to adopt and use LPG

SOURCE: CEEW (2018)

14|

95%88%

72%

42%

92%87%

45%

28%

High connection cost High monthlyexpenses

LPG distributor notavailable in the

vicinity

Lack of Awareness

Prop

ortio

n of

hou

seho

lds n

ot

havi

ng a

n LP

G c

onne

ctio

n

Reasons for not having an LPG connection in 2015 and 2018

2015 2018

SOURCE: CEEW (2018)

15|

1/4thhave come our of absolute electricity poverty, but only 20% in top two tiers

1/3rdhave gained clean cooking energy access, but only 6% in top tier

Reliability and quality of supply remain the big concerns

Affordability of LPG and fuel stacking continue to be the biggest challenges

IMAGES: CEEW

Solar-powered paddle loom, Gondal, Gujarat

Energy-efficient dal mill, Wardha, Maharashtra

Solar-powered amber charkha, Gondal, Gujarat

Energy-efficient sugarcane juicer, Rajkot, Gujarat

Solar-powered refrigerator, Chitradurga, Karnataka Solar-powered flour mill, Jawhar, Maharashtra

Solar-powered milking machine, Chitradurga, Karnataka

Solar-powered sewing machine, Chitradurga, Karnataka

Clean energy access for livelihoods: a $50 billion opportunity

16|

SOURCE: CEEW (2020)

17|

Identify and on‐board enterprises with field‐tested

technology

Support commercial deployment (‘00—’000)

Capital support Technical assistance

Market & Policy assessment

Evidence generation Dissemination

Create sectoral momentum

Market & Policy advocacy

Key sector stakeholder engagements

Investors FinanciersPolicymakers

To understand what evidence do

stakeholders need to unlock support

To disseminate evidence and to

advocate for unlocking support

Powering Livelihoods: Clean energy access for productive uses

18|IMAGE: Abhishek Jain/ CEEW

CHEAPER FINANCE, EFFECTIVE TECHNOLOGY

Establishing the mismatch: Capital circulating in capital‐rich regions

19|

• In 2018, global energy investment stood at more than USD 1.8 trillion• Only a third of that, USD 620 billion, was invested in low carbon energy

• 15% of the world’s population, got 40% of the world’s energy investment in 2018 – in high‐income countries

• Energy consumption in developing countries has doubled in the last 15 years, and will growanother 30% in the next fifteen years

SOURCE: Chawla and Ghosh, 2019

94%

60% 61%81% 81%

67%

35% 45%62% 58%

4%

38% 32%

18% 14%21%

63% 46%32% 41%

0%

20%

40%

60%

80%

100%

120%

Perc

enta

ge S

hare

Asset Financing by Funding Origin (Domestic v/s Foreign)Domestic Foreign unknown

Understanding the mismatch: evidence from India  

20|SOURCE: Chawla et al, 2019

• Financing costs constitute 50‐65% of Indian RE tariffs

• PV module/wind turbine costs account for only around 20% of RE tariffs

• Interest rate spreads for lending to RE projects have declined by 75‐125 bps from 2014‐2018, tariffs from USD 9 cents to 4 cents/kWh

225200

150

0

50

100

150

200

250

300

2014 & 2015 2016 2017 & 2018

Bas

is p

oint

s

Interest rate spreads - solar PV and wind

Understanding the mismatch: perceived and real risks

21|SOURCE: CEEW‐CEF analysis

India

South Africa

Indonesia

• Offtake risk and power sector design • Curtailment risk• Forex risk

• Political and macroeconomic risk • Demand risk • Curtailment risk

• Demand risk • Policy and regulatory risk • Execution risk

Correcting the mismatch: Innovation and information

22|

SOURCE: CEEW, TWI, TCX (2017)

(In)effective tech partnerships

23|SOURCE: Ghosh, Vijayakumar, Ray (2015)

PartnershipKnowledge sharing and coordination

Research, development and demonstration

Technology transfer

Deployment mandates, 

standards and incentives

Forums for research and policies

Asia‐Pacific Partnership on Clean Development and Climate

X (Project implementation)

X

Climate Technology Initiative under the International Energy

Agency (Soft transfer)X

Economic Community of West African States Centre for

Renewable Energy and Energy Efficiency

X(Soft transfer)

Global Green Growth Institute X X X

International Renewable Energy Agency X

(Soft transfer)X

Renewable Energy Policy Network for the 21st Century X

(Soft transfer)X

Forums with a regional focusAsia‐Pacific Economic 

Cooperation Energy Ministerial X X XBaltic Sea Region Energy 

Cooperation X X

European Green Cities Network X(Demonstration)

X

Latin American Energy Organisation X X

Regional Centre for Renewable Energy and Energy Efficiency X

Renewable Energy Support Program for ASEAN X X X

US‐Asia Pacific Comprehensive Energy 

Partnership (Soft transfer)X

Forums for city‐level action

C40 X(Soft transfer)

X

Cities Development Initiative for Asia X X X

Local Governments for Sustainability X X X

Forums with specific focusCarbon Sequestration Leadership Forum X

(Soft transfer)X

Clean Technology Fund of the World Bank X X X

Climate and Clean Air Coalition X

(Soft transfer)

Climate Technology Centres and Networks (Soft transfer)

X

EC‐ASEAN COGEN Programme

X X (Demonstration)

Global Bio‐energy Partnership X

(Soft transfer)X

International Framework on Nuclear Energy Partnership X X

International Low Carbon Energy Technology Platform X X X

International Partnership for Energy Efficiency Cooperation X X

Renewable Energy and Energy Efficiency 

PartnershipX X

PartnershipKnowledge sharing and coordination

Research, development 

and demonstratio

n

Technology transfer

Deployment 

mandates, 

standards and 

incentives

Effective tech partnerships

24|SOURCE: Ghosh, Chaturvedi, Bhasin (2019); Biswas, Ganesan and Ghosh (2019)

Guiding principles

• Objectives matter• Prices matter• Pooling resources• Innovative finance• Risk and responsibility• Voice in governance

Alternative modalities

• Enterprise‐driven R&D for tech applications

• Innovation Fund for Low‐Carbon Tech

• G20 Platform for Horizon Tech

Transport• Electric Vehicles• Hybrid Vehicles• Hydrogen Vehicles

Buildings• Material

Electricity• Renewables• Nuclear• Storage• CCS

Industry• Electrification• CCS• Hydrogen

Geoengineering• Solar

Radiation Management

Locking into long‐term investments

Imperfect  policy decisions 

Dimensions of Uncertainties

REDUCE

AVOID

TECHNOLOGY COOPERATION

Speedand

Scale of Transformation

An Existing Paradigm for a 2o C

World

A New Paradigm for a 1.5o C World

Thank youceew.in | @CEEWIndia

25|