World Economic Forum Annual Meeting 2012

  • Ending Energy Poverty

    Friday 27th January 2012 - 2:45pm - 3:45pm

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  • Friday 27 January

    This session was on the record and open to reporting press.

    How can access to affordable and sustainable energy unlock development potentials across all segments of society?

    Dimensions to be addressed:

    - Increasing the development potential of energy access for all
    - Accelerating private sector investment
    - Fostering public-private partnerships

    Key Points

    • Energy poverty is being recognized as the worst poverty of all.
    • Without access to energy, there can be no development.
    • The private sector must invest in sustainable energy projects and governments must make sustainable energy a priority.
    • Private sector engagement – and investment – will require new models.

    Synopsis

    Energy poverty is one of the most important but least discussed issues. It is condemning billions of people to darkness and to missed opportunities for education and prosperity. One in five people lacks access to electricity and 3 billion rely on wood, coal or charcoal for cooking. Energy poverty is not just about the lack of energy, it cuts across – and undermines – all aspects of development.

    To turn on the lights in households around the world, successful examples of clean energy and energy efficient technology must be scaled up. This will require innovation that can spread through the developing world, where energy demand is burgeoning. With innovation come opportunities for development – and for business.

    According to

    Ban Ki-moon

    , Secretary-General, United Nations, New York, reducing energy poverty will require the “massive mobilization of all partners”. He called on the private sector to boost investment in sustainable energy projects and infrastructure, and for governments to make sustainable energy a priority.

    Describing the UN’s Sustainable Energy for All Initiative and Action Plan, Ban Ki-moon said he expects the “full range of actors” to make their commitments in June at the Rio+20 conference. By 2030, there should be universal access to energy and a doubling of the rate of energy efficiency. The use of renewables in the global energy mix should be at least 30%, compared with 16-17% today.

    “Sustainable energy is central to everything [the UN does] and everything [the UN] wants to achieve. By providing sustainable energy for all we can revitalize economic growth, protect this planet Earth and the environment, and spread the benefits of development more equitably,” he said. Clean, affordable energy resources must be made available to developing and least developed countries. At the same time, Ban warned, “We cannot build a green economy on the backs of the poorest and most vulnerable people.”

    Recalling his childhood in post-war South Korea, where he studied by lamplight, Ban said electricity transformed his life. “I want every girl and boy around the world to have access to decent electricity and energy,” he affirmed.

    The delivery of affordable, reliable and sustainable energy to citizens is one of the greatest challenges of the 21st century, but it can never be met without the involvement of the private sector. However, private sector engagement – and investment – will require new models.

    Diezani K.

    Alison-Madueke,

    Minister of Petroleum Resources of Nigeria, said, “We have to be extremely creative to create the right enabling environment, legislation and policies to be sure we can work with the private sector in a different way. We are looking at completely new models, particularly those of us who are hydrocarbon-rich.”

    An important lesson learned in Nigeria is that subsidies should not be ended abruptly. Referring to the violence that swept her country in January as riots erupted over the slashing of gasoline subsidies, Alison-Madueke said that “trying to [get rid of subsidies] in one fell swoop” does not work. “What we have learned is that you must establish trust and transparency with the polity.”

    It is critical to “get the relationship right” between the public and private sector, said

    Erik Solheim

    , Minister of the Environment and International Development of Norway. “There is an enormous abundance of possibilities. The Washington Consensus told us market forces would solve infrastructure problems, but the investment needs were so big and so complex that [it was] impossible ... We lost 20 years. Now we understand there must be a combination of the public and private sector, where the private sector does the infrastructure.”

    Solheim stressed the importance of giving everyone access to energy, which should be regarded as a global human right. He is optimistic this can be achieved at Rio+20. “Establishing the right will not solve the problem, but just as with the Millennium Development Goals, it will have a huge impact on thinking,” he said. Solheim also pointed out that the “biggest global mistake” is subsidizing fossil fuels. “Many nations are spending more on subsidies than they are on healthcare or education,” he said.

    In terms of mobilizing resources, there should be a mix of public and private funds. Solheim suggested that Official Development Assistance (ODA) funding could be leveraged to take out risk premiums, which could then encourage the private sector to invest.

    Gérard Mestrallet

    , Chairman and Chief Executive Officer, GDF SUEZ, France, stressed the importance of clear roles and responsibilities. “The public institution draws up the framework and the private sector executes. The public-private partnership has to be very, very clear. We need a clear framework ... we need to be clear about the responsibilities of the public partner and of the private sector,” he emphasized.

    GDF SUEZ has community projects around the world. A project in Casablanca, Morocco, delivers power to the slums where for each group of 20 houses one representative collects payments for the collective meter. “We are more correctly paid in the slums of Casablanca than we are in the Champs-Élysées [in Paris],” Mestrallet said.

    A good model can be found in Brazil’s Light for All Programme, launched in 2003 by then-President Lula. The goal was to bring electricity to more than 10 million rural people. According to

    José Sergio Gabrielli de Azevedo

    , Chief Executive Officer, Petroleo Brasileiro Petrobras, Brazil, the programme is a huge success, with 14 million people (2.8 million families) now accessing the national grid.

    “We have strong regulation and forced our utilities to use part of their profits [on the project],” he recalled. “Government funding was concentrated in the [last] mile of the distribution grid ... we involved families and communities. We used multiple sources of finance.” Importantly, the programme was incremental in terms of cost and there was pre-existing infrastructure (the national grid) to build on.

    Delivering energy to Brazil’s poor has had a huge impact on business. As people turned on the lights, they started purchasing household appliances, televisions, sound systems and transformers. “We created a big economic movement towards the poorest consumers of energy. Now big department stores are moving to these areas and giving credit so people can purchase these items,” said Gabrielli de Azevedo.

    India ranks as the world’s fifth largest wind market and has one of the most competitive policy regimes on renewables. In addition to bringing electricity to the poor, wind energy has socioeconomic benefits because projects are usually located in rural areas. Under the Indian government’s small and medium-sized enterprise policy, businesses and industry can set up wind farms. Not only do they benefit from the energy, but people are deciding not to migrate to urban areas. Instead, they are being given skills and are finding jobs.

    According to

    Tulsi R. Tanti

    , Chairman and Managing Director, Suzlon Energy, India; Renewable Energy Community Leader 2012, “Enormous wind resources are available. Wind is becoming competitive ... the scale has brought down the cost. A top priority is that energy security can be secured by wind energy. But the biggest constraints are the lack of a policy framework and infrastructure. If you address these areas, people can get energy fast.”

    Disclosures

    This summary was written by Dianna Rienstra. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum.

    Copyright 2012 World Economic Forum

    This material may be copied, photocopied, duplicated and shared, provided that it is clearly attributed to the World Economic Forum. This material may not be used for commercial purposes.

    Keywords: World Economic Forum Annual Meeting 2012, Davos, Klaus Schwab, Great Transformations, New Models, economics, sustainability and resource models, ensuring inclusive growth and development, shaping the regional agenda: Africa, energy poverty, sustainable energy, sustainable energy for all, renewable energy, subsidies, wind energy, socio-economic development, public-private partnerships

    Contributors

    Diezani K.

    Alison-Madueke

    Minister of Petroleum Resources of Nigeria

    José Sergio Gabrielli de Azevedo

    , Chief Executive Officer, Petroleo Brasileiro Petrobras, Brazil

    Ban Ki-moon

    , Secretary-General, United Nations, New York

    Gérard Mestrallet

    , Chairman and Chief Executive Officer, GDF SUEZ, France

    Erik Solheim

    , Minister of the Environment and International Development of Norway

    Tulsi R. Tanti

    , Chairman and Managing Director, Suzlon Energy, India; Renewable Energy Community Leader 2012

    Moderated by

    Thomas L. Friedman

    , Columnist, Foreign Affairs, The New York Times, USA

     

     

Speakers

  • Ban Ki-moon Ban Ki-moon
    Secretary-General, United Nations, New York

    1970, BA in International Relations, Seoul National University; 1985, Master's in Public Administrat...

  • Tulsi Tanti Tulsi Tanti
    Chairman, Suzlon Energy, India

    Chairman, Suzlon Group; has grown the group to be the fifth largest wind turbine manufacturer in the...

  • Gérard Mestrallet Gérard Mestrallet
    Chairman and Chief Executive Officer, GDF SUEZ, France

    Graduate: Ecole Polytechnique; Ecole de l'Aviation Civile; Institute d'Etudes Politiques, Toulouse; ...

  • Diezani K. Alison-Madueke Diezani K. Alison-Madueke
    Minister of Petroleum Resources of Nigeria; President of OPEC

    Bachelor's in Architecture, Howard University, USA; MBA, Cambridge University, UK. Worked in the Uni...

  • Jos Gabrielli de Azevedo Jos Gabrielli de Azevedo
    Secretary of Planning of Bahia

    Bachelor's and Master's in Economics, Federal University of Bahia; 1987, PhD in Economics, Boston Un...

  • Erik Solheim Erik Solheim
    Chair, Development Assistance Committee (DAC), Organisation for Economic Co-operation and Development (OECD), France

    1980, undergraduate degree in History and Sociology, University of Oslo. Political posts held: 1977-...

Moderated by

  • Thomas L. Friedman Thomas L. Friedman
    Columnist, Foreign Affairs, The New York Times, USA

    1975, degree (Hons) in Mediterranean Studies, Brandeis University; Marshall Scholarship, St Antony's...

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