By Srinivas Krishnaswamy, Vasudha Foundation, India
The World Bank’s current energy strategy and the review of its energy sector lending strategy within the context of climate change concerns demonstrate a skewed conception of energy access that must be addressed.
The term “energy access” has a wide range of interpretations, which in turn have a bearing on the “implementation of energy access”. More often than not, “energy access” and “electricity supply” are treated as synonyms, and therefore a mere electric connection to a light bulb in a household is often interpreted as “energising households”.
India is a perfect example of where electricity and Bank support for energy fall short of creating access for those most in need. The top 20 per cent of income earners consume 53 per cent of the electricity generated, while the bottom 40 per cent consume a mere 13 per cent. This reality is often quoted by policy makers in justifying a massive and rapid increase in electricity generation capacity through building more and more coal-fired power plants and large dams.
However, all the recent additional coal power plants and dams have done very little, if anything, to address inequitable energy access, as is evident from the electricity consumption figures. In the last two decades, India has more than doubled its electricity capacity. Of the 90,000 MW of capacity added, close to 50,000 MW have been funded either directly by the Bank or partially by the IFIs channeled through Indian financial institutions. In the same period, only around 12,000 villages were electrified, energising roughly a couple of million rural households. Approximately 100,000 villages are yet to be electrified, with over 44 million households being denied access to energy. In comparison, 95 per cent of urban households now have access.
Even in areas which are deemed “electrified”, the quantity and quality of electricity supply is pathetic, with so-called electrified villages having power for not more than 4 to 5 hours a day. Energy access needs to go beyond electricity and light bulbs to address both social development (access to drinking water, sanitation, modern education) and economic development (livelihood options, market access). Broadly, energy supplies should ensure access that is universal, reliable and equitable – which in the case of India, involves bridging the gap between urban and rural energy consumption, and last but not least, affordable and appropriate access.
A recent review of 26 World Bank funded fossil fuel projects by NGO Oil Change International demonstrates that none of them clearly identify access for the poor as a direct target. The report also says that no coal or oil projects resulted in improved energy access for the poor. For example, the International Finance Corporation (IFC), a member of the World Bank Group, provided nearly $450 million dollars in 2008 to build the 4,000 MW Tata Mundra coal based power project in Gujarat, one of the world’s largest sources of greenhouse gas emissions. However, the Bank did not classify the project as an “energy access” project and there is no plan to track how much electricity will reach under-served regions and households.
One of the main barriers to energy access, particularly in remote villages in India, is the high cost of decentralised renewable energy options. The Bank should lead the way in funding low-carbon energy generation, even if the technologies involved are costlier than traditional options. The key objective should be equitable energy access. The Bank should also help to harmonise the lending policies of all international development finance institutions in ways which will support investments in low-carbon energy.
The Bank’s review of its energy lending strategy comes at a time when very little progress has been made on a future climate change regime under the aegis of the UNFCCC. Developing countries worry about receiving the required sustainable investments for low-carbon technologies while ensuring that the burden of high incremental costs is not passed on to their consumers. The Bank has a crucial role to play in mitigating the early jitters of international and domestic investors in renewable energy and energy efficiency in developing countries.