Energetic challenges

Jim Adam

Connecting the 2 billion people who have no access to commercial energy is the most important energy challenge facing the world community. Women and children, primarily in developing countries, spend their days collecting wood or cow dung for fuel for cooking and heating their homes in very inefficient stoves: this both harms the environment and directly threatens the health of their families.

Outmoded boilers linked to central heating systems in most of the cities of Eastern Europe and the former Soviet Union pose another challenge. They are inefficient; they lack modern pollution control; and the end use of the heat is not metered, leading to more inefficiency and waste.

Both of these problems cry out to the world for investment. Investing in energy solutions in these countries can bring about significant and immediate local environmental improvements, achieve greatly improved energy efficiency, and substantially reduce greenhouse gas emissions. But, energy and environmental policy tends to direct investment towards industrial countries, even though it would have a greater impact on the environment – not to mention the human condition in general – in the developing countries and transition economies.

We need a new direction in energy policy. The World Energy Council has studied the needs and we believe a number of our proposed policy recommendations would lead towards greater investment in the countries where it is most needed.

The political risk of key energy project investments must be addressed both by the countries seeking outside investment and by the global community at large. The countries must create an investor-friendly climate, which includes the rule of law and recognizes private property rights. The global community can contribute by developing new political risk insurance schemes rewarding the countries that create this climate.

Energy must be priced to cover costs and ensure payment. In too many countries, blanket subsidies for energy benefit those most able to pay, while doing little for the poor. The subsidies encourage energy waste and inefficiency and put unnecessary pressure on government budgets, diverting spending which could be more effectively deployed elsewhere, or used to reduce borrowing. Energy programmes must be redesigned to target the poor precisely with subsistence amounts of energy, while the majority pay the full cost needed for a healthy energy industry.

The world community should foster financing partnerships linked to environmental goals – emission trading systems, which would allow countries and companies to divert investment in pollution control and greenhouse gas reduction measures from industrial economies to developing and transition ones, where much more could be accomplished with the same amount of money.

Finally, affordable energy should be assured for the poor as a complementary measure to eliminating subsidies. Again, what is needed is more precision in assisting the poor, not less assistance to them

Jim Adam is Chairman of the World Energy Council.

PHOTOGRAPH: Ong Hooi Giin/UNEP/Topham

This issue:
Contents | Editorial K. Toepfer | Secure and sustainable | Fuelling multilateralism | Meeting growing needs | Make way for the zero-litre car | Power sharing | Oil and rising water | Energetic challenges | At a glance: Energy | Competition | Power to the people | Cutting carbon | Winds of change | Power and choice | Rising sun | Give us a wave! | Less energy, more wealth

Complementary articles in other issues:
Issue on Climate and Action December 1998
Issue on Climate change December 1997

AAAS Atlas of Population and Environment:
Air pollution
Climate change