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Clean Technology for Developing Countries — Bright Road Ahead
March 2, 2009
I’d like to put last week’s move by the U.S. Congress to eliminate a proposed contribution to the Clean Technology Fund (CTF) in perspective. At the risk of reviving an overworked metaphor from late 20th Century discussions of the Internet: the move was rather like an unexpected pothole on the onramp to what promises to be a clean technology superhighway. Which is to say, despite this setback, I am increasingly optimistic that the U.S. will lead the way to a rich-world agreement with the developing world to cut greenhouse gas emissions. And a fund very much like the CTF will be central to that agreement.
Happily, the Obama administration shows every sign of rapid, aggressive action on carbon emissions mitigation. And climate change was very much on the agenda when Secretary of State Clinton recently met with China’s leaders. So we have every reason to hope for an end to the US/China impasse that has log-jammed progress toward a global agreement at Copenhagen. China itself has demonstrated a striking commitment to progress on renewable energy, which Matt Hoffman and I will document in a forthcoming blog.
It has also become clear to most actors that emissions cuts in the industrial world will only buy a few years for the global community. As Kevin Ummel and I have documented, the struggle to contain greenhouse gas emissions will be won or lost in the developing world. Global monitoring and market-based regulation of emissions would be desirable, but experience with conventional pollution regulation suggests that it will be a number of years before many developing countries can implement such an approach.
At the same time, as Kirk Hamilton of the World Bank has recently shown in a compelling economic analysis that has yet to be released, major developing-country emitters such as China and India will maximize their long-run economic interest by moving very soon on limitation of carbon emissions. The same is certainly true of the United States, European Union, Japan and Canada. Since carbon regulation in many developing countries will be difficult in the near future, it would be very desirable to pursue emissions reductions on another track (a complement to eventual global regulation, not a substitute), if one can be found.
Fortunately, such a track is clearly available: clean technology investments, principally in the power sector and subsidized by the rich countries, that will accelerate learning and scale economies so that renewable energy technologies are pushed rapidly down the cost curve to become competitive with fossil fuels. Once this happens, the private sector can propel the clean energy revolution in developing countries. Kevin Ummel and I provide an illustration in our recent paper on solar thermal power in North Africa and the Middle East.
The good news is that, as far as I can tell (and I spend a lot of time talking to relevant policy people), all the major players agree that we need a multilateral clean technology investment program. So with that in mind, I offer this prediction with considerable confidence: sometime within the next two years, probably after Copenhagen, all the world’s major emitters will coalesce around a large investment fund that will cover the incremental cost of catalyzing rapid clean technology growth in the developing world. This fund will be multilateral, inspired by the recently-initiated Clean Technology Fund at the World Bank, and its governance will be shared among the major developed- and developing-country emitters. It will focus on clean technologies that hold the promise of large-scale emissions reductions, principally solar, wind and other renewables, but also including pilot applications of carbon capture and storage (CCS) for advanced coal-fired plants. If pilot CCS projects prove to be viable, safe and cost-competitive (all big if’s — we’ll see), CCS will probably play a major role alongside solar, wind, hydropower and other renewables in the coming decades.
The structure and venue of the ultimate clean technology fund remain unclear, and they are not likely to be finalized until after Copenhagen. The fund may evolve from the current CTF at the World Bank, if the Bank can demonstrate to potential donors that it is a reliable steward, while also winning the trust of fund recipients. It also remains to be seen whether the Bank’s staff, already hard-pressed by crucial development tasks, will be able to administer a post-Copenhagen clean technology fund whose annual investments may match or exceed the Bank’s current scale of operations.
But in any case, recent developments strongly indicate that a multilateral clean technology fund will play a major role in promoting carbon emissions mitigation during the coming decades. All parties support the concept, and they are actually quite close to a consensus on operating principles. For my small part, I continue to endorse a properly-designed clean technology fund with great enthusiasm. In fact, I view it as critical for our common future.
In summary, the road ahead looks pretty sunny at this point. And that’s fortunate, since we have no time to lose.
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3 Responses to “Clean Technology for Developing Countries — Bright Road Ahead”
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March 3rd, 2009 at 3:29 pm
Do you think the problem with renewable power is lack of funding? I don’t.
Lack of progress in solar and wind power has more to do with the laws of physics. The low power density of wind and solar coupled with their intermittency makes them weak competitors with coal, natural gas and nuclear power plants.
Research into wind and solar power has not paid off. In 1974 I made my first investment as a high-school senior, putting $500 into a wind power startup that promised a future of low-cost electricity. It failed to live up to its promise. Later investments in wind and solar have met the same fate. The technology advances, but slowly. Lack of money does not seem to be the problem. Physics does.
The same is true for the much-touted hydrogen economy. Most of us now think that physics make hydrogen unable to compete with other energy carriers. Billions more in investment will not change the underlying physics.
Nuclear power does have good physics behind it. Of course, nuclear power has its problems. And they are big ones. But spending money to work on those problems should help make a difference. Standard, smaller designs and cost-cutting would make a big difference. As would focusing on the big problem of dealing with nuclear waste.
Practical experience bears this out. Denmark and Germany have spent a huge amount in building wind (in Denmark) and wind and solar (in Germany) power plants. France has invested its money in nuclear power.
France now has the cheapest electricity in Europe, and the lowest per-person carbon footprint from electricity generation. Denmark has the highest of both — highest cost and highest carbon.
Neither Denmark nor Germany has been able to replace a single coal or gas power plant with wind or solar power. France has only a few coal power plants left (it closed its last coal mine in 2004), with nuclear plants giving nearly 80% of its electric power and hydropower much of the rest.
Which model could scale up to meet world power demands? Not Denmark’s wind power. Not Germany’s wind or solar power. Certainly France’s nuclear power. The main problem would be money. Not physics.
Care would need to be taken. Nuclear power is “clean” as to carbon, but “dirty” in toxic waste. Nuclear technology can be used for peaceful power, but also (although the technology is quite different) for war and terrorism. Those problems cannot be ignored. But they can, I think, be solved.
In the 1950s people had a sunny view of nuclear power. It was going to provide power too cheap to meter. Problems seemed minor. All that changed, though, and nuclear power has lost its luster.
But beware of too sunny a view of wind and solar power. A careful look might well show that nuclear power has the brighter future. Especially since there is no time to lose.
March 6th, 2009 at 3:46 pm
For people from developing countries like me, Dr. Wheeler’s entry certainly gives a lot of hope. And then, after reading the comment from Mr. Smithson, that amount of hope gets reduced a little. Just a little.
Anyways, I would like to ask something to both of you:
What can be done with toxic waste to minimize its impact to human health? Is it crazy to think about dumping it in outer space?
Regards.
April 6th, 2009 at 1:48 pm
DFID welcomes your optimism about the global future of clean technology, and I agree with you that the Clean Technology Fund (CTF) will inspire and provide lessons for a future agreement on cutting emissions.
There is one point of clarification to which I feel I must draw readers’ attention. The Clean Technology Fund (CTF) has sometimes been referred to as “the World Bank’s CTF” or “the World Bank-led CTF”. While the CTF is one of the Climate Investment Funds (CIFs) that are administered by the World Bank, the Bank administers the Funds on behalf of the donors who contribute to the CIFs and the recipient countries who receive funds from the CIFs. Donors and recipients have equal representation in the committees that manage the Funds. Around $6 billion has been pledged to the CIFs, and the UK has committed £800 million over the next three years.
The World Bank or multilateral development banks – such as the African and Asian Development Banks – will support recipient countries to develop and implement national and regional programmes.
More information about the CIFs is available on the World Bank’s CIFs website or DFID’s website.
Greg Briffa, Head of Low Carbon Development Team, UK Department for International Development