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What is Green and Inclusive Growth? :: Jordan Schwartz
1. What is Green and
Inclusive Growth?
Caribbean Growth Forum
June 18, 2012
2. CONTENTS
• Sustainable development and green
growth
• Urban challenges in LAC – an example
of inclusive green growth challenges
• Inclusive green growth in practice
• The green energy challenges Caribbean
3. A BAD ENVIRONMENT
IS COSTLY
Cost of Environmental Degradation
(% of GDP equivalent)
Average
Source: Country Environmental Analyses, World Bank
3
4. GREEN GROWTH IS…
… economic growth that is
environmentally sustainable.
•
Not a new paradigm, but aims to operationalize sustainable
development
•
An approach for countries to achieve robust growth without
locking themselves into unsustainable patterns
•
Not inherently inclusive, hence the need for specific policies to
ensure the poor benefit
5. GREEN GROWTH IS…
1. Clean
2. Efficient
3. Resilient
But it also has to be Inclusive
7. Since Rio, Latin America and Caribbean
has served as the world’s laboratory for
inclusive green growth
• From Payments for Environmental Services to high
production agriculture…
• From community-driven slum upgrading to the world’s
most extensive use of Bus Rapid Transit…
• From the first regional catastrophic risk insurance facility
to the lowest carbon energy matrix of the developing
world.
But how do we mainstream?
20. ENERGY
Key Objectives for Green and Inclusive Growth
Clean
Energy
Efficient
Resilient
Resilient
Inclusive
A low carbon
com posit ion
of
t echnology
and f uel m ix
in generat ion
capacit y.
Increased
ef f iciency in
product ion,
supply and
use of
energy.
Increased
syst em
resilience,
f or inst ance
t hrough
int er connect ion.
Provide
universal
access at
af f ordable
prices.
21.
Average annual growth of 3.6 percent throughout 2028
Doubling of demand between 2009 and 2028
Individual country growth rates vary between 2.4 and
7.9 percent per year
Peak demand will grow in
* Dominican Republic from 2,300 MW in 2009
to 4,400 MW in 2028
* Jamaica from 680 MW to 1,500 MW
21
22. Country
Antigua and Barbuda
Barbados
Dominica
Dominican Republic
Grenada
Haiti
Jamaica
Diesel
X
X
X
X
X
X
X
Martinique
St. Kitts
Nevis
St. Lucia
St. Vincent and the
Grenadines
Trinidad and Tobago
X
X
X
X
X
Heavy
Fuel Oil
X
X
Natural
Gas
X
X
Coal
Other
X
Bagasse
Hydro
20% Hydro
X
X
X
Bagasse,
Wind
X
X
Geotherm
X
X
24. Energy Affordability -
Cost Savings by
moving from Base Case to Integrated Approach
through 2028
Integrated
Scenario
Interconnection /
Renewables
Scenario
Fossil Fuel
Scenario
US$4.4 Billion
US$2.6 Billion
US$2.5 Billion
Base Case
Scenario
24
25. Green Energy - Investment Requirements
(Million US$)
Integrated Scenario
Antigua and Barbuda
107
Barbados
140
Dominica
818
Dominican Republic
6,200
Grenada
194
Haiti
360
Jamaica
1,937
St. Kitts
2
Nevis
1,913
St. Lucia
61
St. Vincent and the Grenadines
195
TOTAL
11,926
Production Cost Savings
14,500
14
26. INCLUSIVE POLICIES
- INCLUDE SMARTER SUBSIDIES AND
TRANSFERS
Average distribution of energy consumption
subsidy benefits across 20 countries
Richer 20% population
43% of benefits
Poorer 20% population
7% of benefits
26
27. Looking Forward
Caribbean countries face huge challenges to meet
growing energy demand and diversify energy mix
Relying on diesel and HFO is the most costly solution
No silver bullet but requires a combination of fossil
fuels and renewables to meet future demand
Pipeline gas, LNG, geothermal, wind should play a
much more prominent role in future generation mix
The speed of renewables development will influence
future demand for fossil fuel requirements
27
28. Looking Forward
Integrating power systems, building submarine cable
connections and sub-regional power markets are
win-win solutions
Investment requirements are large but production
costs saving are huge
A variety of private, public and IFI support will be
necessary
Requires countries to improve legal, regulatory and
institutional framework and cross-country
cooperation
28
Editor's Notes
Sprawl means… high cost of urban services spread over long distances.High commuting times and distances, emissions, stress and environmental health impacts“Path dependency” or “Lock in”: Once that footprint is down, it is hard to reverse.
Sprawl means… high cost of urban services spread over long distances.High commuting times and distances, emissions, stress and environmental health impacts“Path dependency” or “Lock in”: Once that footprint is down, it is hard to reverse.
Brazilian cities show that the smaller, fastest growing cities are also those with most sprawl.This is where pricing, incentives and behaviors need to change before lock-in sets in.
LAC already has the highest rates of automobile ownership outside of the OECD…
Make physical capital more resilient to depreciation/destruction
Mexico, subsidies for energy used in irrigation amounting to nearly [1] percent of GDP are causing excess ground water withdrawals and the depletion of key aquifers. India suffers from the same problem, in addition to spending some 2 percent of GDP on a fertilizer subsidy excessively weighted in favor of nitrogen that is causing serious pollution problems. But fixing this is not easy…. Complex political economy means feasibility needs to be balanced against costs For example cost of meeting water gap in India in 2030 is either 6 bn or 40 bn depending on whether you do it by land reform (cheap but politically difficult) or by desalination (expensive but easier).
The issue also is aspiration of the emerging middle class towards an unsustainable model of living…. How to convince individuals that large houses in the suburbs and individual car commute in a large car is not a right nor a desirable standard of success…By the way these are Suburban homes in Shenyang, Liaoning Province in NE China. (National Geograhic: http://ngm.nationalgeographic.com/2008/05/china/aerials/img/8-suburb-homes-714.jpg). Not in California
Antigua and Barbuda: combination of wind (other renewables) and coal – savings US$20 millionBarbados: Introduce natural gas and combine with wind (other renewables) – savings US$900 million Dominica: no alternatively fossil fuel solutions – geothermal export – savings US$600 millionDominican Republic: coal/LNG and wind (other renewables) – savings US$700 millionGrenada: coal and wind (other renewables) – savings US$50 million
The main reason often invoked for keeping subsidies is that it will hurt the poor most…This data shows that subsidies are not targeted well.Urban services, such as water and sanitation, are even harder to target than electricity subsidies. The bottom quintile in LAC’s urban population does not have sanitation access and ¾’s of that bottom quintile do not have HH connections for water supply. Very few water utilities cover their own Operating & Maintenance Costs, Depreciation of Assets, let alone new investment costs. That means that government transfers to most of LAC’s water utilities are regressive! But an important point: often the poor cannot switch away from harmful behavior for lack of resources – well targeted subsidies and programs are needed. Replacing fuel subsidies with better targeted safety nets helps the poor; simply removing subsidies does not. But, Ojo! IMF report also estimates that a fairly well run social safety net, with 15% running cost and 20 % leakage to non poor costs $1.50 to transfer $1 to the poor…. From an IMF review of 20 countries in Africa, Asia, the Middle East and Latin America.Based on Arze del Granadom, davidCoady and Robert Gillingham “ The unequal benefits of fuel subsidies: a review of evidence for developing countries” IMF WP/10/02 table 5 and p13.
