Dr. Kandeh Yumkella, UN Under-Secretary-General and former Director-General of the United Nations Development Organisation (UNIDO), has been tasked by UN Secretary-General Ban Ki-moon to spearhead one of the key priorities guiding his second five year term, that of delivering ‘Sustainable Energy For All’ (SE4All). In his capacity as the Secretary-General’s Special Representative and CEO of that initiative, Dr. Yumkella talks to Dominic Hale about how SE4All can positively impact Small Island Developing States (SIDS), in line with the programme’s three goals of achieving universal energy access, improving energy efficiency and increasing the use of renewable energy.
While aid and government money can help build capacity and create the right market conditions for investment, it’s the private sector who must be relied upon to front up the capital and technology to help deliver SE4All. You’ve talked in the past about this not being a charity but a business opportunity. However, in the case of SIDS have you found that they offer too low a potential future customer base to be interesting to private investors?
Some SIDS spend 20-30% on importing energy products just to power their economies. We believe that with the wind and sun protection they have – in a few cases hydro – that is value that can be captured by renewable energy entrepreneurs. One of our partners, the International Renewable Energy Agency (IRENA), has just launched an initiative, ‘Lighthouse’ to address the development of renewable energy markets just for SIDS. So, while we believe their small size creates problems in terms of economies of scale, they are already spending on energy products that which they really cannot afford, because it ties up their export revenue. So, there is already some degree of value to be captured by renewables.
With regard to securing that capital investment necessary to effect the changes, given their low credit ratings and tardy recovery from recession, do you envisage problems, or are the mechanisms in place to overcome those existing issues?
One instrument we are considering is aggregation. How do you aggregate renewable energy projects across a number of SIDS and securitise them, especially those that are close together in the Pacific and in the Caribbean?
You have financial institutions look at some of those projects, aggregate them and put them as a portfolio, rather than as single projects, because we believe that helps in dealing with some of the risk elements for projects for renewables in SIDS. Not easy to do, but I know some financial institutions are beginning to discuss that concept.
In terms of the long-term existing contractual agreements with, for example, diesel providers and utilities, do you see that being an issue in terms of preventing a shift to clean energy solutions?
That could be an obstacle, but let’s take an initiative we are calling ‘Wind for Prosperity’, for example, which is an initiative put together by the likes of Vestas, Masdar and the Carbon War Room. Part of the concept there is integrating renewable energy solutions with diesel technology as a viable economic model, because for some of those island countries, such an integration might make a 1MW or 5MW project more economically viable and deal with intermittency problems than just saying, “go completely wind”. But, you scale that wind technology down and integrate it with diesel, so we believe that is doable in some small island states.
We believe that in some cases you will need gradual transition and therefore integrating energy systems will be important.
So, ‘incremental change’ – you’re not opposed to that in principle? SE4All accepts that it’s an imprecise, imperfect process?
Yes, we believe that in some cases you will need that gradual transition and therefore integrating energy systems will be important. Renewables and gas, for example, in some locations, or two renewable energy technologies, or renewables and diesel until they can fully transition, the market has matured and prices have gone down enough so that stand alone renewable technology projects can work.
In terms of aid being used to build capacity and change policies, so as to leverage private finance for these initiatives, for SIDS such as Samoa and the Maldives, who’ve graduated from Least Developed Country (LDC) status, much of that assistance is no longer there. Do you advocate additional special assistance for SIDS based on vulnerability, as opposed to exclusively using per capita income to address this?
I believe they need continued assistance, by way of supporting them to ensure resilience to the negative impacts of climate change – particularly extreme weather events. I think it would be wrong to say that just because their income level has reached a certain level, we pull back, because we do know that for some of those countries, and particularly for island communities, all it takes is one hurricane to undo infrastructure they’ve probably built over ten to fifteen years, and then their revenues go back into restoration, but they can’t invest in additional growth. They need support for climate proofing their infrastructure – they need support for climate resilience in general in their economies.
As to reconciling that with other UN bodies’ criteria, is there integration – for example, with the other institutions within the UN to advance that – or would you accept that there is some disagreement as to the merits of incorporating vulnerability into the criteria?
What I can say is that based on messages I heard from UN agencies, but also from key donor countries, the whole issue of resilience and vulnerability has returned to the top of the agenda, and of course emergency preparedness, because we do know that the frequency of extreme weather events is higher now. We do know that all it takes is one of those to reverse growth and development, so I believe there is a change in attitude within our development agencies now to say we must look at resilience, we must look at vulnerability issues much more than we did before, because the increased frequency of these extreme weather events is real.
You need energy to drive economic transformation.
Regarding the terms of the commitment that SIDS must provide in respect of SE4All to access the counsel, the financing and the capabilities provided by international partners to catalyse transition, what sort of commitments are they required to give?
Generally, the commitments we’ve asked countries including SIDS to give is that solid commitment to energy sector reform. Energy issues are sensitive in any country and so we need governments that will commit themselves to really look at deeper sector reforms to encourage the private sector, and to formulate stable long-term policies that will be predictable over time, and also to take the issues of climate-proofing investments into consideration. There are no quick fixes. We need that solid commitment. However, I think that their commitment has to be backed with some degree of certainty that if they do what we ask them to do, that financing is available to cover that incremental cost. For example, to ensure financing for climate-proofing investments, to ensure that there is technical assistance to help in their planning processes, that there is funding for capacity building to help them in formulating those policies that we are advocating, because in many cases they don’t have that capacity. Somebody has to support them to do these things.
Getting back to the incremental changes, with reference to gas and its lure of financing, infrastructure and cheaper commodity prices from suppliers, is there a danger that it could repeat the financial stranglehold of the past. Or, does it offer a short term solution to provide energy and save lives, that being the key goal in this instance?
For me, gas has always had a place in SE4All. Compared to other fossil fuels, it has low emissions. Five years ago we called it the transition fuel to the low carbon energy economy we want to see going into the future. To also ensure that base load we need. Additionally, when it comes to clean cooking fuels, gas is a primary source of fuel. It has to be considered as part of the key solutions, because we need to save lives. 4.3 million premature deaths every year due to household air pollution as a result of the use of charcoal firewood and kerosene. LPG (Liquified Petroleum Gas) can solve that problem for us overnight. We can make that number zero within a decade. So, it has to be part of the solution.
Would you accept that it’s easier to get some consistency with regulation in locations where there are unchangeable political conditions, where a new government won’t come in and start repealing legislation?
It’s about predictability of the policy – where the vision is clear, they’re going to do it and the population wants it. A good example is Cape Verde where the EU and others have invested well in energy systems, that can also be taken to another level. Also, if you look at the Caribbean there are examples where you can see a combination of renewables and gas, which can give them not only universal access, but improve energy efficiency tremendously too.
However, much more needs to be done, although I think that we have developed within sustainable energy, tools now to track that progress. The World Bank is our knowledge hub. We have twelve people focused entirely on tracking and monitoring. In other words, it is about keeping the initiative honest and keeping member states when they make commitments, honest, to see whether they are really approaching our three targets over time and also checking the investment flows. What is working? How come some countries are able to approach any one of these three targets, or combinations of them, successfully? What made it happen? What were the drivers? And in other cases, why it’s not working.
With this in mind, we have developed a tool called a global tracking framework. The database is developed, well funded, well oiled and 23 agencies are collaborating. Secondly, we have another instrument called ‘RISE’ – ‘Readiness for Investment in Sustainable Energy’, where we rank countries. The ranking always helps, because you can praise those that are moving up the rank and they can benchmark themselves in a way their citizens can see. For those that are always hogging the bottom, citizens can ask their government why they’re not moving up the ranking? Is it public policy barriers, is it something else?
In terms of the targets of SE4All, do you believe they are sufficient to save low-lying SIDS?
Well, there’s been enough analysis by the International Energy Agency, by the World Bank, by the International Institute for Applied Systems Analysis over the last five years to show that if, collectively, the world takes those three targets as a package – access, efficiency, renewables – as we at Sustainable Energy For All define them, it keeps us within a 2 degrees Celsius increase in global temperature. This has been proven in all kinds of simulation analyses by those institutions.
It means that Sustainable Energy For All is not just about helping poor countries, it is a compact with rich countries as well, because if OECD countries decide to double the annual rate of improvement of energy efficiency, they can lower emissions by 40% within two decades. That’s a lot of achievement. So, we are very confident that if the countries move aggressively on those Sustainable Energy For All targets, it creates innovation, it creates economic opportunity, new markets and of course it keeps us within 2 degrees.
Sustainable Energy For All is not just about helping poor countries, it is a compact with rich countries as well.
But, without seeing that immediate danger in front of them, the larger onshore states, the regional groupings, the economic blocs, do you see them being as compelled by this or running with it as you’d like, since it’s not in front of their eyes in the same way as it is for the likes of Kiribati, for example?
For sure, I would say we are not doing as much as we should do, not at the scale we want, not at the speed we want to move towards a really low carbon economy. Emissions increased in the last three years, so if we were doing enough that would not happen. However, we know that renewable energy accounted for 50% of new power generation projects in the last two years. That’s good, but it’s not good enough. Investments were between 200 – 240 billion. We believe we should do much more than that, but again, it’s a good start showing that it is possible to scale up and it is possible to speed up.
As regards you being at the helm and the driving force of this initiative, do you think it helps that you’re from a part of the world where lack of access to modern energy services traditionally has retarded economic growth, and limited life expectancy? Do you have to have a personal stake in it to emotionally commit and to truly see how fundamental energy is to dignity and hope?
I believe my origins have helped me a lot in a number of ways because for me it’s not theory, it is reality. I know the reality, so I’ve had to dedicate myself fully to driving this. Secondly, my origins have helped me make the advocacy because I have no vested interest in any big or small corporations. It is rather because of my experience of what lack of energy has meant. So, you combine that reality check with the lack of real vested interest in any technology, and it has really helped me build partnerships and coalitions, helped me bring together countries or entities that would not necessarily speak with each other, or that are competing. Thirdly, there is my experience having been a Minister of Trade and Industry in a very poor country (Sierra Leone), trying to create jobs for people. Also, my experience spending 17 years in an agency that was trying to promote industrial development. This gave me the opportunity to go to the likes of China, India, Norway, Denmark and Brazil and made it very vividly clear to me that indeed energy drives economies. So, I knew then that my advocacy for energy should not be energy for the sake of energy, but energy as an enabler of development, but even more importantly, energy as an enabler of sustainable development. You need energy to drive economic transformation. You need energy to run the hospitals, to get the clean water to a rapidly urbanising global population. You need energy for water desalination, and so on, so my background really helped me get the narrative right and gave me the passion to drive it, because energy is a politically sensitive issue in any country around the world.
My background really helped me get the narrative right and gave me the passion to drive it.
For those captains of industry or political leaders who have the resources to action that change, will they always struggle to see the long term merits of diverting resources away from vote winning initiatives or share price raising potential? Or, do you see them ready to embrace enlightened self-interest and deferred gratification, where rather than adopting a mercantilist approach, they see the merits of LDCs and SIDS creating wealth and sharing in that bounty of inclusive economic growth and globalisation?
I see the challenges of reconciling short term gains with a long term vision, because we are all encumbered by short-termism. The politicians are thinking of the next election cycle, so you are trying to preach a 30 year vision of a true transition to low carbon economies, but they’re focused on contesting elections in four years and want a quick fix that they can sell.
Yet,at the same time, we the citizens are also not willing to pay a little more today so that we create those renewable energy markets, so that we can have guarantees of cheaper sustainable energy maybe ten years down the road. So I see it in both ways – the leadership being scared to take those difficult long term decisions and the citizens not being ready to pay a little bit more now.
Is that something that’s surmountable?
I believe it is surmountable. I am an optimist. Because I see leaders like Angela Merkel wishing to challenge the orthodoxy and put the vision across for an energy revolution in Germany. I see leaders like the Prime Minister of Denmark and the leadership in Norway saying, look we are rich, we are well off, but we are driving renewable energy. It’s not just because we have it, it is because we know we can do it and because it is good for humanity and guess what, it is profitable for business too. They recognise that they have the means, the wherewithal and the knowledge system to begin to lead this transition.
Yet, I also see the same in some developing countries. I see the Kenyan leadership pushing renewable energy, I see the Brazilian leadership pushing electrification for all there, not as a climate initiative, but as a poverty reduction initiative. In South Africa, there have been huge electrification rates over the last five years pushed by the leadership, and now they are getting private investment in their renewable energy initiative. In Vietnam too, there is a government policy driving electrification. Of course, we must also give credit to China. China connected 400m people in ten years who did not have electricity before. Now, the newest one is Prime Minister Modi of India, who is pushing for 350m Indians currently without electricity to have it within five years.
So that will be part of the solution. When you see that new leadership coming on to the stage I say, “Voilà !” I have a critical mass of leaders that can create markets, and if these leaders I mention create renewable energy markets, it will become cheaper for everybody.
For more information, please visit www.se4all.org.