Low Carbon Development in South Asia - Leapfrogging to a Green Future

South Asia - the development Challenge (1)

• Countries fall in lower middle income (Bhutan, India, Pakistan, and Srilanka), LDCs (Bangladesh and Nepal) and lower income group (Afghanistan, Myanmar).(lower middle income country - per GDP less than USD 4000; low income country - per capita income below USD 1000)

• Region accounts for 1.7 billion population, of which about 1.25 is in India.• South Asia is the poorest region in the world. • 51% of the world’s poor live in South Asia (compared to 29% in Sub-

Saharan Africa), as per Multi-dimensional Poverty Index (MPI). • The study also found there are more poor people in eight Indian states

than in the 26 poorest African countries. • The HDI index of South Asia is 0.558 - low human development and

medium human development group. • HDI index of south Asia is just above that for sub-Saharan Africa.

GHG emissions in South AsiaCountry GHG emissions

million tCO2eYear

Bangladesh 118 2005

Bhutan negative emissions

2000

India 1,728 2007

Pakistan 308 2008

Nepal+ 3

Srilanka+ 12 2005

Total 2,169

• India is highest emitter (contributes around 5% to global emissions), due to its large population

• Per Capita emissions in India were 1.44 tCO2e in 2010. For South Asia it is 1.3 tCO2e.

Source of emissions

• Energy sector is the key source of emissions - 79.4% of total emissions in 2005.

• It is also fastest source of emission growth - 98% growth in period 1990 - 2005.

• South Asia contributed 4.4 % of total global energy related emission in 2005.

• Given the low stage of development in South Asia and energy as key driver of growth, emissions in south Asia are expected to grow.

• Thus addressing energy needs through sustainable and low GHG sources is key to addressing the sustainable development and climate change challenge.

Energy Mix in South Asia

• Fossil fuels is the main source of commercial energy, except Bhutan• South Asia's commercial energy mix in 2003 was: 44 percent coal; 35

percent petroleum; 13 percent natural gas; 6 percent hydroelectricity, 1 percent nuclear and 0.3 percent “other.”

Energy Challenge

• South Asia has high energy dependence, most of its petroleum and petroleum products are imported.

• ADB study highlighted that use of coal in South Asia excluding India, will grow from 2% to 27.6% in 2030, as coal is the main indigenous source in Pakistan and Bangladesh.

Energy challenge (2)

• Energy is key to development– as a source of growth in industry, service and agriculture sector;

which is important to provide jobs and incomes to the population.– as source for productive use in rural and poor areas to enable income

generating opportunities.– as a source of meeting household energy needs for decent living

standards, especially for energy poor.• Energy poverty is high in South Asia:

– Bangladesh - 58% rural households;– India - 57% rural household; and, – Pakistan - 47 - 66% of total households.

• Access to affordable clean commercial energy is key challenge in south Asia.

Opportunities for Low Carbon growth• Energy efficiency and conservation: – Residential and commercial buildings, through improved end-use

equipment, architectural design, building practices, and construction materials;

– Industry, through improved equipment, production processes, material efficiency, and re-use of waste heat; and

– Passenger and goods transportation, through improved vehicle technologies, smart urban design, and optimized value chains .

• Low-carbon electricity: Decarbonization of electricity generation through replacement of existing fossil-fuel-based generation with renewable energy (e.g. hydro, wind, solar, and geothermal),

• Fuel Switching: Switching end-use energy supplies from highly carbon-intensive fossil fuels

Energy Efficiency2007 2008 2009 2010 2011

Bangladesh 2192.57 2253.5 2313.69 2242.68 2154.22India 6241.61 6292.6 6206.21 5837.8 5860.36Nepal 2508.77 2403.48 2573.69 2646.14Sri Lanka 1748.02 1648.44 1605.46 1511.55Pakistan 4863.45 4780.52 4660.61 4575.51 4472.38World 7714.65 7527.01 7455.76 7460.59 7451.72

• Table above shows the Energy intensity (energy to produce one unit of GDP in PPP terms)

• South Asia does better than the world, and it is less energy intensive compared to China (7328) and USA (10317).

• But still a significant potential exists for energy efficiency in all sectors of economy, and EE is profitable as well as addresses the issue of energy security.

Renewable Energy• Solar energy is an abundant source of energy in south Asia:

– Bhutan - 58 GW estimated potential– Nepal - 2.1 GW estimate potential– Pakistan - 1600 GW estimated potential

• Region has significant potential of hydro electricity: – Total economic potential 153 GW– Total theoretical potential in Bhutan, Nepal and India - 264 GW.– Pakistan - 60 GW.– The key challenge is of environmental impacts of large hydro projects.

• Wind - Except India no reliable data available on the potential.– India estimated potential - 48 GW.– Bangladesh - 4.6 GW.– Pakistan - 122 GW.

• Biofuel potential too is significant in south Asia, the challenge is to ensure that biofuel is not grown at the expense of food security.

Initiatives in South Asia• All the governments have been taking actions in accordance with their

capacities in addressing climate change.• Adaptation in the region is the top priority of all the governments, given the

vulnerability to climate change is high. • India -

– voluntarily goal to reduce the emissions intensity of its gross domestic product (GDP) by 20–25 percent from 2005 levels by 2020.

– Backed by 4 National Action Plan on Climate Change (NAPCC)on mitigation - RE power, energy efficiency in Industry, EE of appliances, Public transport systems

• Bangladesh - Bangladesh Climate Change Strategy and Action Plan (BCCSAP) – EE lights programme, decentralized solar energy programme, 5 % RE by 2015

• Pakistan - adopted climate change policy in 2012– Environmentally safe hydropower generation and solar, wind, geothermal and bio-

energy; waste to energy; – Consider introducing carbon tax on fossil fuels. – Energy efficiency of energy generation through waste heat recovery, coal bed methane

capture, and combined cycle power generation. • All countries focusing on RE and EE.

Challenges to Low Carbon Transition• Technological Barriers

– Technology development and wide dissemination key to low carbon transition.

– Not just technologies in niche markets but technology across all sectors.

– Huge gap between the current state of RE and EE technologies and what they are expected to deliver.

– Technology transfer is critical to the proliferation of renewable energy in developing Asia, including• Development of a local manufacturing base and the associated

supply chains; • systems for maintenance and marketing; • a labor force that can build, use, and maintain the technology; and, • in many cases, the adaptation of technology to local conditions.

Challenges to Low Carbon Transition

• Finance – IEA estimates USD 48 billion a year just to meet the cost of delivering an

‘Energy for All’ – Investment required for providing 100% electrification to all in India alone

would cost USD 135 billion during 2010-2030, and another 107 USD billion for rest of developing Asia.

– Additional investment for clean cooking energy USD 25bn during 2010-2030 in developing Asia.

– IEA estimates USD 530 billion additional investment for mitigating climate change.

– World Bank estimates USD 475 billion annual investment in developing countries.

– . In the case of India, estimated investments in the power sector around $13 trillion over 2011–2051.

• Incremental investment required to shift to low carbon development is significant, way beyond present capacities of countries in South Asia.

Challenges to Low Carbon Transition

• Financing– Though some RE (wind) are near viable, other technology

viable (Solar), and other still at development stage– High initial capital investment requirements is a key challenge

to RE– General lack of financing and absence of proper financing

mechanisms for clean technology development in the region. – Mainstream financial institutions in South Asia have limited

understanding of and expertise on renewable energy and energy efficiency projects and are not yet prepared to finance them.

– .

Way Forward• Phasing out Coal

– Energy is key to development, especially industrial development, which is important for countries to provide infrastructure for development and jobs.

– RE not mature enough to provide continuous, stable and affordable energy for all energy needs (households, industry, service, agriculture, etc.).

– But countries need a strategy and plan to identify phasing out coal and fossil fuels.• The strategy should focus on EE in the short run to reduce the growth in

demand. • RE like biomass and biodiesel use should be accelerated. But a key challenge in

this strategy is to ensure that efforts to increase biodiesel doesn't result in adversely affecting food security.

• Regional cooperation to maximize the use of hydro potential, including environmentally safe large hydro projects.

• Use of other RE sources, especially solar and wind in the region, to shave of to maximum technically possible potential in operating stable grids.

Way Forward (2)• Policy

– Appropriate policy environment is prerequisite for a paradigm shift toward a sustainable energy future. Setting goals and targets at highest policy level provides the necessary thrust and signal to markets, thus enabling a sustained change. Such strategic goals help integrate the sustainable energy focus within planning of sectoral and provincial plans.

– It is important that countries set goal in terms of GHG emissions for long term and use that as basis to identify in context of its sustainable development goals, what steps it would need to achieve the goal. Establishing the goal and pathways also helps identify what is feasible for countries on their own and support it would need to achieve these goals.

– A national dialogue for developing long term goal for decarbonization– Integrating climate change into development planning and

implementation and reflected in long term energy policies and development planning processes.

– Clearly outline for short term plans the financial and technology support needed.

Way Forward (3)• Finance

– Countries do need significant new investment in the development and deployment of clean energy technologies.

– Capacities and policy framework to include mainstream financing institutions (i.e., commercial banks), government institutions established for the promotion of such technologies, NGOs/private organizations, and international financial mechanisms.

– Establishing financial entities to promote low carbon transition. Some examples of public agencies in South Asia that can provide financing for renewable energy projects are the Indian Renewable Energy Development Agency Ltd., Nepal’s Alternative Energy Promotion Center, and Bangladesh’s Infrastructure Development Company Limited.

– Ensuring progress on mobilizing finance is tracking progress of integrating climate finance reading in the financing sector.

Way Forward (4)• Regional cooperation provides a major opportunity for South Asian countries to

achieve energy security through large-scale development of clean energy resources. Cooperation within the Greater Mekong Subregion in Southeast Asia has been estimated to potentially reduce energy costs by nearly 20%, for a saving of $200 billion during 2005–2025 (ADB 2012).

• Intraregional energy trade is limited and expanding this cooperation can help countries significantly in achieving their development goals and also leap frogging to low carbon growth. For instance, only 28% (about 43,078 MW) of the region’s estimated 152,580-MW total economic hydropower potential have been installed (ADB 2013). Nepal, Bhutan, and India have so far installed and exploited only 1.5%, 5%, and 46% of their respective total economic hydropower potentials.

• Regional cooperation could be strengthened – Sharing of manpower and technology know-how, – Technology training programs, – Sharing of environmental monitoring and information (especially those relating to

renewable energy resources), – Sharing renewable energy resources (trade)

• The most important initiative could be a regional renewable fund.