By Arnaud Renard
The International Monetary Fund (IMF), and World Bank held their annual spring meetings in Washington DC last week. The issues facing emerging economies figured front and centre—even if much of the outside commentary focused on the fate of global trade. Of those issues, the question of how to power development in countries including India, has become a source of contention for many of the ministers, technocrats, and civil society leaders, who attended the meetings.
While both institutions try to hold fast to a cosy, renewables-focused perspective, many of the countries they work with have other ideas. The participants seemingly managed to skirt the subject in their Washington meetings, but, the debate of whether to support, and fund fossil fuel projects, continues to rage worldwide.
Renewable energy vs coal-powered energy
The World Bank decided to implement a policy denying support to coal energy projects, except under “rare circumstances” in 2013, and did the same for oil and gas last December. Word Bank President Jim Yong Kim has presented these moves as part of the institution’s commitment to the global fight against climate change. His critics, however, accuse him of putting artificial constraints on the parallel global fight against energy poverty, that still impacts 1.2 billion people. The overwhelming majority of those people, and families are located in Asia and Africa.
India, where approximately 300 million people are not connected to the distribution grid, is very much on the front lines of global electrification efforts. Prime Minister Narendra Modi has already spent a considerable amount of time, money, and energy, trying to get those people connected. His most recent “Saubhagya scheme” is a Rs 16 billion ($2.5 billion) plan to electrify all households in India by the end of this year, and bring light to 40 million families.
Every day that they remain without electricity, these families and communities remain deprived of access to modern healthcare, innovations in education, including ones as basic as the ability to study at night, and other critical facets of life in the developed world. Modi’s previous effort to electrify villages relied on off-grid solar panels, and was obliged to set a very low bar for itself. According to the government, rural villages are accounted as “electrified”, so long as just one-tenth of homes, schools, healthcare facilities, and public buildings have power.
According to the government, rural villages are accounted as “electrified”, so long as just one-tenth of homes, schools, healthcare facilities, and public buildings have power. Credit: Flickr Commons/Thomas KohlerInternational clean coal coalition
The experience with off-grid solar energy helps explain why India’s chief economic advisor Arvind Subramanian, put forward the idea of “a green and clean clean coal coalition”, to complement the India-led International Solar Alliance last year. Subramanian argued that such an alliance “will serve the cause of climate change and India’s development needs.”
Although India’s top economist may not have shifted the World Bank’s thinking, however, he seems to have convinced another influential audience in Washington. In the months since Subramanian made the remarks, US President Donald Trump, and his advisors, have set to work forming what a former Trump aide, George David Banks, refers to as a “Clean Fossil Alliance”.
US Energy Secretary Rick Perry is a central player in the Trump administration’s clean fossil efforts. As the American government’s top official dealing with energy issues, he has transformed his position into that of an ambassador, and an advocate for the US coal, oil, and natural gas sectors, which stand at the centre of Trump’s energy priorities. Perry visited India earlier this month to promote US liquefied natural gas (LNG) exports, and also promote the work that American companies could do in building Indian distribution networks. One key point of discussion for both sides involved “clean coal” technologies such as carbon capture and storage (CCS), which are currently advancing in both countries.
In the days before his trip, Perry made it clear to members of the US Senate, that the Trump administration sees countries like India as a global market for carbon capture, and other clean coal technologies developed in the US. He made a very valid point. For as much as the Modi government promotes renewable energy initiatives such as the ISA, India is projected to rely on its base load coal power capacity for several more decades, at least. As the International Energy Agency (IEA) reported last December, coal power generation is estimated to rise nearly 4% annually, through 2022.
These energy trends make deploying CCS and other emissions-mitigating technologies a matter of urgency. But, the technology has yet to be deployed in a way corresponding to the need. According to one new report from researchers at the University of Edinburgh, the current rate of construction for CCS projects is 100 times too slow to keep the climate targets set by the Paris Accord, within reach.
Alongside the US and India, developed countries including Japan and Australia, are also coming together with Subramanian, as well as others in the developing world, to challenge the World Bank’s established wisdom on energy and the environment. The Association of Southeast Asian Nations (ASEAN), for their part, have repeatedly emphasised their support for a range of clean coal technologies, including CCS, as well as high efficiency low emissions (HELE) coal energy.
The ASEAN countries collectively represent the world’s fifth-largest economy, and third largest market, with more than 630 million people. But, 65 million of them still lack access to electricity. The ASEAN energy demand is expected to expand by nearly two-thirds between now and 2040. According to the IEA’s estimates, coal will supply nearly 40% of that regional energy growth.
Countries like the US, India, and the members of ASEAN, may all bring their own interests and motivations to the “Global Fossil Alliance”. But, they ultimately share one goal—allowing emerging economies to leverage their fossil fuel supplies to alleviate energy poverty as quickly as possible.
Instead of platitudes, and a single-track focus on renewable energy, leaders in those emerging markets want robust international support for technologies that capture, and otherwise mitigate emissions. In the view of the Trump administration, and its energy allies, institutions like the World Bank would be well placed to promote such technologies, if they can be persuaded to change their political calculus.
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