1. Energy Sector Development and Climate Mitigation Ajay Mathur SenergyGlobal New Delhi, India

2. SBSTA-18 Bonn, June 19, 2004 Overview Energy sector development focuses on enhancing access, economic productivity, energy security, and environment quality There are a wide range of interventions in use which lower the emissions trajectory while helping achieve these goals; they compete with high-GHG emitting interventions International cooperation can promote and prioritize these mitigation options within energy sector development; prioritization would depend on the appropriateness of the option to a country ’ s current level of development

3. SBSTA-18 Bonn, June 19, 2004 Goals of Energy Development access to clean energy services 1.6 billion people do not consume any electricity, and very little kerosene or LPG Household energy consumption is 212 kgoe/cap (compared to 651 kgoe/cap in industrialized countries); about 25% comes from biomass used traditionally quality of the local environment Indoor air pollution kills 2 million women and children prematurely Only 15% of cities in developing countries have acceptable urban air quality Energy sector development focuses on enhancing:

4. SBSTA-18 Bonn, June 19, 2004 Goals of Energy Development economic productivity Non-household energy intensity in developing countries is 0.36 kgoe/$- GDP (compared to 0.19 kgoe/$-GDP in industrialized countries) Competitiveness and opportunity costs of supply expansion drive energy efficiency initiatives security of energy supply Energy imports are a large fraction of exports Volatility in international prices leads to macroeconomic instability Energy sector development focuses on enhancing:

5. SBSTA-18 Bonn, June 19, 2004 Emissions Trajectory Reduction could be a Co-Benefit Emissions increases will occur due to: Transition from traditional biomass energy to fossil fuels in the household sector; and Energy needs associated with the growth in the economic sectors - manufacturing, services and transport More than half of the infrastructure for the generation and use of energy in developing countries is yet to be built Prioritizing interventions that promote clean energy technologies would lead to lower emissions trajectories These energy needs – and climate mitigation objectives - can be met through, for example: Promotion of modern biomass technologies Facilitating energy efficiency Enhancing the share of renewables in the energy mix

6. SBSTA-18 Bonn, June 19, 2004 Promotion of modern biomass technologies Rural household and commercial energy needs can be met by modern biomass technologies rather than fossil fuels: this transition contributes heavily to emission increases Initiatives in several Asian and African countries Technology adaptation, market development, and financing risks are high Adoption driven by enhancements in productivity and in indoor air quality

7. SBSTA-18 Bonn, June 19, 2004 Facilitating energy efficiency New investments in power, industry, transport and building infrastructure can be substantially more efficient than existing stock; economic growth is powering a rapid increase in these sectors, and associated emissions Almost all countries exhibit declining energy intensity trends for the economic sectors; most countries have some initiatives to promote energy efficiency in these sectors Technology integration, support, and financing risks are high Adoption is driven by quality and productivity increases

8. SBSTA-18 Bonn, June 19, 2004 Enhancing the share of renewables in the energy mix Some renewables could effectively augment commercial energy supply, e.g., wind and small hydro A few countries have aggressive programs to promote electricity from renewables; many countries have demonstration programs Grid integration risks are high; cost reduction is scale dependent Adoption is driven by national goals and remunerative tariffs

9. SBSTA-18 Bonn, June 19, 2004 Assess Risks & Prioritize opportunities Separate out the use of energy in households and the economic sectors Energy use per capita in households will rise; however it can be partially delinked from emissions growth Energy use in the economic sectors will rise; however the intensity of use is declining and the decline can be accelerated There is a diversity of options that can meet energy-sector goals and lower the emissions trajectory depending on the risks that can be addressed at the current level of development Penetration of clean technologies, especially in the household sector Lowering energy intensity of economic activities Creation of demand for clean energy International cooperation – through risk sharing - can promote and prioritize mitigation options within energy sector development GEF and CDM both provide risk sharing at the project level