Contributed by Robert Lyman © 2017
Robert Lyman is an Ottawa energy policy consultant and former public servant of 27 years, prior to that he was a diplomat for 10 years.
The Global Warming Policy Foundation, a U.K.-based organization that is skeptical about the thesis that humans are causing catastrophic global warming, has just published a paper by Rupert Darwall entitled, The Anti-Development Bank – The World Bank’s Regressive Energy Policies. This article gives the highlights of that report.
Rupert Darwall is a strategy consultant and policy analyst, a corporate finance specialist and former special advisor to the U.K. Chancellor of the Exchequer. He is the author of several published works, including The Age of Global Warming: A History, in 2013.
Universal access to cheap, reliable electrical energy is a defining feature of modernity. In the west, it distinguished the 19th from the twentieth centuries. For the emerging economies today, this is equally true. Yet, there are 1.2 billion people without access to electricity and 2.8 billion people without modern cooking facilities, forced to rely for their energy needs on traditional biomass (i.e. wood and dried animal dung). The consequences of this are almost unimaginable for those who live in Canada or other modern economies:
- Household air pollution is estimated to kill 3.5 million people annually and to cause many more cases of respiratory, cardiovascular and other illnesses.
- Of the countries that have electricity, over forty experience at least 20 hours of electricity outages per month.
- Across sub-Saharan Africa, some 30 countries suffer from regular blackouts and brownouts, with associated economic losses estimated in some cases in excess of 5% of GDP.
- Many countries in sub-Saharan Africa face electricity costs from U.S. 20 cents to 50 cents per kilowatt-hour (kWh), compared to a global average closer to U.S. 10 cents per kWh. This raises the cost of goods and services, making enterprises uneconomic and forcing poor people to continue relying on traditional biomass.
This should constitute a compelling economic, social and moral case for the World Bank, the world’s principal financing institution promoting economic development in the less developed countries, to target its development funding to investment in the lowest-cost path to universal access to cheap, reliable electricity. For many of the countries of Asia and Africa, the cheapest, most accessible and secure source of electricity generation is by coal-fired generation plants. However, the World Bank will not fund coal plants, except in exceptional circumstances, where there are “no feasible alternatives to coal”. Instead, the World Bank gives priority to “green energy”, meaning wind and solar energy plants.
The World Bank’s Current Policy
In 2016, the World Bank adopted a Climate Change Action Plan that focused on “adding 20 Gigawatts (GW) of renewable energy by 2020 and to ‘green’ power grids to enable the addition of a further 10 GW of wind and solar”. Only three years, earlier, in 2013, the World Bank acknowledged the drawbacks of intermittent renewables when it stated:
“Ensuring supply adequacy with solar and wind power would require significant regional diversification and large-scale transmission network expansion to connect these sources, a challenge even in developed countries”.
In spite of its own analysis showing the cost disadvantages of renewable energy, the World Bank decided form a partnership with the then United Nations Secretary General Ban Ki-moon in the 2011 “Sustainable Energy For all Initiative (SE4ALL). This sets an arbitrary target of doubling renewables’ contribution to the global energy mix by 2030. The projected costs were enormous.
Prior to 2013, the World Bank advisory group on climate change recommended focusing on two goals: improving energy access and strengthening energy efficiency. Under the influence of Ban Ki-moon, a third goal was added: a massive increase in renewable energy, with at least half new generation capacity in Africa being renewable. Annual investments to achieve the three goals were calculated to be at least $600-$800 billion per year over the current level of investments, entailing a doubling or tripling of investment flows. The bulk of those investments are associated with energy efficiency and renewable energy.
Including the previously expected level of spending, achieving universal electricity access has a price tag of about $50 billion per year. Renewable energy costs $500 billion per year and there is a further $500 billion a year for energy efficiency. In fact, the costs are so high they are unlikely to be met. So, in effect, the goal of promoting renewable energy is crowding out the goal of universal access, sacrificing access for unrealistic green ideology.
“Forcing decarbonization on societies that have yet to carbonize means less development. Resources are not costless. More sustainability means less poverty reduction.”
“Intermittent sources of energy incur operating and cost penalties that are not reflected in plant-level cost comparisons. Their materials intensity conflicts with the UN’s sustainability mantra. Lastly, they create huge and as yet untackled disposal problems. All these present substantial challenges to rich nations in their rush to adopt wind and solar. Grid stability is compromised, costs and prices spiral and the full extent of the solar PV disposal problem is still emerging. For poorer nations still in the process of extending the benefits of the twentieth century to all their people, providing incentives to adopt wind and solar would present a development calamity.”
The new Administration in the United States is now seeking to rein in the World Bank so it focuses on its mission to alleviate world poverty. It wants countries to access and use fossil fuels more efficiently. To maximize development potential and poverty reduction, Rupert Darwall recommends that the World Bank’s shareholders go further and insist that the Bank withdraw from the anti-development SE4ALL initiative, abandon renewable energy targets and ensure than any renewable energy projects that it supports do not undermine the economics of electricity grids.
The text of Rupert Darwall’s report can be found here:
Dr. Madhav Khandekar comments on the use of coal to support the needs of a billion people who have no power, running water, or basic sanitation. Dr. Khandekar is a former research scientist for Environment Canada, a scientific advisor to Friends of Science Society and expert reviewer of past IPCC reports.
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