The role of technology and innovation in facilitating the transition towards ...
Session1 towards a pan arab renewable energy strategy authored and_or presented by anhar hegazy
1. Promoting Renewable Energy for Greening
the Power Sector : The Role of Regulatory
Framework in the Mashreq Countries
By
Anhar Hegazi
Director, Sustainable Development and Productivity Division
United Nations Economic and Social Commission for Western Asia
The Meeting on Regional Challenges to Green The Power Sector,
28 June 2009, Sharm El Sheikh - EGYPT
1
2. Promoting Renewable Energy for Greening the Power Sector:
The Role of Regulatory Framework in the Mashreq Countries
I. Greening the Power Sector; Key Figures, Options and Barriers
II. Promoting Renewable Energy; the Regional Development
Challenges, Opportunities and Barriers
III. Greening the Power Sector; the status of the regulatory
framework
IV. Spotlight on relevant UN system initiatives and programmes
V. Conclusions and Recommended Actions
2
3. Promoting Renewable Energy for Greening the Power Sector:
The Role of Regulatory Framework in the Mashreq Countries
This paper focuses on:
– The Regulatory Framework required to
facilitate the promotion of Renewable
Energy Applications in the Power Sector
as an integral element for achieving
national and regional Sustainable
Development in Mashreq countries while
facing the Global and Regional
Development Challenges.
3
4. Promoting Renewable Energy for Greening the Power Sector:
The Role of Regulatory Framework in the Mashreq Countries
The Mashreq Countries,
considered in this paper
are the 14 Arab
countries, members of
UN ESCWA namely;
Bahrain, Egypt, Iraq,
Jordan, Kuwait,
Lebanon, Oman,
Palestine, Qatar, Saudi
Arabia, Sudan, Syria,
U.A.E. and Yemen
4
5. I. Greening The Power Sector in the Mashreq Countries;
KEY Figures, Options and Barriers
A- Key Figures
• The total installed capacity in 2007 reached 123
GW, dominated by natural gas, oil and hydro
(59.0, 33 and 7 %).
• The region is marked by an exponential growth
of demand on electricity, likely to increase by
2.6 between 2007 and 2020.
• Capacity is expected to increase to 235 GW by 2020; i.e. additional
capacity of about 110 GW is to be added
• About 20% of the regions population in 2007 (49 millions), in poor areas
do not have access to electricity, increasing energy accessability is
crucial for the region’s development.
5
6. I. Greening The Power Sector in the Mashreq Countries;
KEY Figures, Options and Barriers
A- Key Figures (cont’d)
• In 2007, The fossil resources (Oil and
Gas) accounted for over 92% of the power CO2 Emissions by Sector
sector consumption and a third of the Others Electricity
12% Generation
regions primary energy Industry 28%
15%
• New Renewables are still less than 1.0% of
resources used in the sector, further actions Oil and Gas
are needed. 6%
Transport
39%
• Nuclear option is under consideration in
the region. It is expected in the fuel mix by Electricity Generation Oil and Gas Transport Industry Others
2015 through the Egyptian projects
Transport, Electricity Generation,
Industry and Building Sectors
The emissions of the power sector accounted in
2007, for 28% of the total CO2 emissions. 6
7. I. Greening The Power Sector in the Mashreq Countries;
KEY Figures, Options and Barriers
B- Options
Options for greening the power sector, can include:
1. Accelerating the shift to Natural Gas, whose combustion emits 1.2
times less of CO2 than that of Oil. The use of natural gas had
already penetrated to the power sector and reached 59% of energy
resources used in 2007 as against 3% in 1971
2. Using more efficient technologies including, rehabilitation of the
old plants, larger generating units, combined cycle systems, etc.,
which is well considered by concerned authorities
3. Accelerating and strengthening grid interconnections and power
exchanges to optimize the operation of the production plants and the
needs for new production capacity, Remarkable Progress has been
achieved in the region
7
8. I. Greening The Power Sector in the Mashreq Countries;
KEY Figures, Options and Barriers
B- Options (cont’d)
4. Promoting the Renewable Energy electricity generation
• Large scale projects at local, national, intra-regional and inter-
regional levels, few initiatives in the region
• Distributed power systems in rural poor and remote areas. several
pilot/field projects, but not sufficient
5. Promoting Demand Side Management measures (DSM),
in particular in the major consumer sectors of generated
electricity, Residential (56%), Industrial (26%). Progress
achieved at different levels
In bases of the Above, focus will be on:
Promoting Renewable Energy; Challenges, Barriers, and
the role of the Regulatory Frameworks 8
9. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
A- Development Challenges
• Promoting Renewable Energy for greening the power sector can not
take off by itself, it should be developed as an integral element of
sustainable Development Strategies and Plans, taking into account
the following regional and global development challenges:
– The need to achieve sustainable development and MDGs in the
region
– The growing global demand for energy resources, and changes
in oil prices
– The increasing global trend regarding the importance of
addressing climate change
– The repercussions of the global financial crisis and the global
food crisis
9
10. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
B- Opportunities
• The currently prevailing challenges at the regional and global levels
constitute a supporting opportunity for promoting renewable energy
in the Mashreq Countries, in a way that contributes in meeting
the needs of sustainable development in general and the power
sector in particular, creates job opportunities for youth, contributes
to the mitigation of climate change, and achieves national and
regional interests.
• The following are highlights of these opportunities and the
possibilities relevant to each development challenge;
10
11. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
B- Opportunities (Cont’d)
1- The need to achieve sustainable development and the MDGs,
Create opportunities for promoting Renewable Energy:
Goal 1 : Eradicate Extreme Poverty and Hunger
Energy inputs are essential for promoting productive activities, food
security and all domestic activities; as well as industrial, agriculture,
transportation, and commerce micro-enterprises activities that generate
jobs and income.
Goad 7 : Ensure Environmental Sustainability
Energy production and consumption has many adverse effects on
environment including indoor, local and regional air pollution, land
degradation, acidification of land and water, and climate change.
Renewable energy, energy efficiency and cleaner energy systems can
help reduce all of these effects and to contribute to environmental
sustainability. 11
12. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
B- Opportunities (Cont’d)
2 - The growing global demand for energy resources, along with the
increase of the world’s political and security instability, oil prices
registered in 2008 significant fluctuations during which it reached the
threshold of 160 dollars/barrel before declining to fluctuate between 40-
75 dollars/barrel, resulting in a tendency towards:
• Increasingly tendency to rely on national energy resources, especially
renewable sources and to stimulate action to developing them in many
countries of the world
• A steady growth in the size of the market available for renewable energy
systems worldwide, and the emergence of the economic viability of their
projects.
12
13. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
B- Opportunities (Cont’d)
3. The increasing global trend regarding the importance of
addressing climate change, As 2012, the year marking the end
of the first phase of the Kyoto commitments, is drawing nearer, a
new phase in negotiations for defining the commitments beyond
the 2012 would be finalized in Copenhagen (Dec, 2009)
associated with around five main directions:
1 – Actions to mitigate greenhouse gas emissions
2 - Measures for adaptation to climate change
3 - Development of appropriate technologies to reduce the impact
of climate change
13
14. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
B- Opportunities (Cont’d)
4 - Financing relevant activities and projects
5- Project implementation in developing countries through the
Clean Development Mechanism
Renewable energy emerged as one of the most important
technologies to mitigate the effects of climate change.
Various initiatives and projects were adopted in order to
expand its uses especially in view of the development of
its technologies
14
15. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
B- Opportunities (Cont’d)
4. The Impacts of the Global Financial Crises
• All Mashreq countries have been seriously affected by the
global financial crisis, but in different ways;
– The crisis has resulted in a dramatic drop in the world oil
prices which has reduced the income of oil producers in
the region and many firms downsize their projects.
– FDI in the region was estimated to fall by no less than 21
percent in 2008 – largely as a result of the steep decline in
resource-oriented FDI,
– The diversified economy countries will probably have less
capacity to support largely publicly funded pension, social
insurance and social protection schemes. 15
16. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
B- Opportunities (Cont’d)
– Moreover, the crisis is likely to increase unemployment.
Across the region, since many firms have already signaled
layoffs or downsized their projects
– Export and tourism activities are expected to decline
sharply, increasing unemployment and reducing national
income
There is a need to expand Renewable Energy Projects in
a way to support the development of small businesses
and creating new jobs to reduce unemployment
16
17. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
B- Opportunities (Cont’d)
5. Outcome of the The regional experience;
• Countries in the region have devoted efforts at different degrees for
promoting renewable energy applications, the several projects
implemented and the experiences of countries in the region , reveal that
renewable energy is credible, appropriate and advantageous( Egypt,
Jordan, Syria, Yemen and Palestine for instance). This has resulted on:
(a) Political Will regarding Energy resource diversification
considered
The Abu Dhabi Declaration on Environment and Energy - 2003
expressed the political will of the countries in the region towards
increasing access to affordable, reliable energy services particularly to
rural and remote areas using a mix of available conventional and
renewable energy resources.
17
18. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
B- Opportunities (Cont’d)
(b). Available expertise and cooperation mechanisms
Efforts devoted to renewable energy development in the region have
not been sufficient, however it created reasonable human expertise and
local capabilities in the fields of R&D, systems manufacture and it set
the basis for the private sector contribution in this field.
Regional and sub-regional mechanisms in relevant areas are available
such as RCREEE and the ESCWA Regional Mechanisms for
Developing Energy Uses for Sustainable Development,
(c) Initiative for Large scale applications exists such as
• Egypt wind farm projects
•Masdar Initiative
Which enhance the national and regional capacities and database
available for promoting the large scale Renewable Energy generation.
19. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
The Abu Dhabi government has allocated 15 Billion
US$ for renewable energy projects that can support
sustainable development, GHG reductions as well
as associated R&D and industrial development,
several projects are considered.
20. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
B- Opportunities (Cont’d)
6. USA to take part in the climate negotiations
and promote Renewable Energy
• President Obama announced that USA will help in leading the world
toward a new area of international cooperation on climate change (Nov.
2008).
• Launching of the US Energy Plan:
Injecting a flow of investments 150 billion dollars over 10 years in
alternative energy to address climate change and create millions of new
jobs. (Jan 2009)
• The appointment of alternative energy and climate change experts in
President Obama Administration, including: Coordinator of Energy and
the Environment, Ms. Carol Browner and Special Envoy on Climate
Change, Mr. Todd Stern
20
21. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
C- Barriers
Renewable Energy technologies face a number of barriers that have
delayed scaling-up their production and use in the region. Most of these
barriers are common in countries of the region and are mainly:
1- The institutional and legal framework, major weaknesses have :
• Lack of integration into national planning processes
• The issue of the financial and administrative terms of connection
to the power distribution network for independent RE producers,
and
• The lack of institutional coordination or the absence of an
institution in charge of energy efficiency.
• Lack of information and of visibility concerning possible economic
and financial gains.
22. II. Promoting Renewable Energy; The Regional
Development Challenges, Opportunities and Barriers
C- Barriers
2- Economic and Financial Barrier
• Lack of information on RE visibility concerning possible economic
and financial gains
• The exploitation of RE potential is still hampered by economic
impediments: subsidies to fossil fuel
• Low efficiency of economic and financial incentives provided for RE
and REU.
• Lack of attractive environment for foreign direct investment
• Limited Allocated public funds for renewable energy
• Limited involvement of the private sector
3- Lack of Awareness and Capacity on the RE development status and
means for technology development, industry, marketing mechanisms. There
is a crucial need for:
• Developing of a regional capacity building hub on relevant issues
• Initiating technology transfer programmes
22
• Capacity building programs and local marketing mechanism
23. III. Greening the Power Sector; the status of the
regulatory framework
• In spite of the efforts devoted by countries to promote
RE use, progress achieved in promoting RE is much
below expectation and plans.
• Countries in the region have also devoted efforts for the
formulation of policies and regulations to accelerate RE
development, however;
• Such policies and regulations were either inadequate or
were not fully enforced which represents the top priority
barrier to be tackled and plans have to be implemented.
The following are examples of policies and regulations
adopted by some countries in the region.
23
24. III. Greening the Power Sector; the status of the
regulatory framework
A. In Egypt
The new electricity law being considered by the cabinet devotes a Section to be
considered within national plans for “Renewable Energies and Energy Efficiencies)
which facilitate :
• Building new power generation systems from clean energies
• Adapting the competitive bidding methodology to get better power generation prices
from renewable energies through private sectors investment as the Egyptian company
for electricity transmission will be committed to buy the generated electricity at the
agreed price for 15 years.
• Allowing the investors to construct, own and operate power generation stations from
the renewable energy
• Establishing a renewable energy development fund which can finance RE electricity.
The new law attracts international and national participation in the first electricity
generation from win 250 MW in Jabal Zait region through the competitive
bidding 24
25. III. Greening the Power Sector; the status of the
regulatory framework
B. In Jordan
• The Jordanian government has set a target of 10% renewable
energies in 2020 and initiated a number of activities to achieve it.
• The Government has issued an exemption, for the energy saving
equipments and renewable energy devices from the customs and
sales taxes.
• A section for the legal framework for the promotion of renewable
energy has been drafted as part of the new energy law
• The law also provides: a Renewable Energy subsidy window, a RE
and EE guarantee window, a studies and technical cooperation
window, a RE and EE interest rate subsidy window and an equity
window to support such fields. 25
26. III. Greening the Power Sector; the status of the
regulatory framework
B. In Jordan (Cont’d)
• The RE subsidy window provides a per-kWh subsidy to buy down
the cost of RE power generated by privately built, owned and
operated facilities About US$ 3.7 million is earmarked for this
window in the first three years of operation.
• Moreover, the GOJ committed to provide resources from the general
budget in the amount of JD 5 million over the Jordan REEF’s first
three years (2008-2010) and
• The GOJ has succeeded in attracting international funding for the
development of renewable energy
26
27. III. Greening the Power Sector; the status of the
regulatory framework
C. In Sudan
The government of Sudan adopted policies for (Developing the
Renewable energy resources) including:
– Implement rural areas electrification by solar energy in the field of cooling, lighting, water
pumping for irrigation, training and do surveys
• Complete the solar and wind energy map (atlas) in cooperation with international
agencies, solar energy application in rural electrification.
• Economical policies and awareness raising
• Set Environmental and Regulatory measures and
• Custom exemption for the equipments and for strategic industry, giving incentives.
• The move towards production of ethanol from sugar factories in Kanana Region
27
28. III. Greening the Power Sector; the status of the
regulatory framework
D. In Syria
• Currently the work is ongoing for the preparation new
electricity law which will encourage the investors from
the private, local and international levels to invest in the
new and renewable energy power generation systems.
• A national strategy was developed including renewable
energy targets for the power sector together with support
measures to overcome the existing barriers.
28
29. III. Greening the Power Sector; the status of the
regulatory framework
E. In Yemen
• A national strategy was developed
including renewable energy targets
for the power sector together with
support measures to overcome the
existing barriers.
29
30. IV. Spotlight on relevant UN agency initiatives
and programmes
ESCWA activities planned for 2009-2011 addressing climate change
mitigation in the energy/power sector include the following:
• “Report on Promoting Large Scale Renewable Energy Applications in
the Arab Region, an Approach for Climate Change Mitigation” (2009)
• Regional Programme on “Capacity building on renewable energy
technology applications for poverty alleviation in rural areas in the
ESCWA member countries” (Continuous)
• PV village electrification project in Ka’awa Village, Adan, Yemen
(2009)
• Report on “Energy policies and measures for promoting climate
change mitigation in ESCWA countries” (2010)
31. IV. Spotlight on relevant UN agency initiatives
and programmes (Cont’d)
• EGM on promoting private sector participation in implementing EE/RE
through the development of Energy Service Companies (ESCOs)
• ESCWA Regional Mechanism on “Energy for sustainable
development” was established in 2002 to promote intra-regional
cooperation among its MC’s in the field.
• Several regional programmes have been implemented through the
mechanism
ESC W A
S e c r e ta r ia t N FP N FP
ESC W A R PM SES
C o o r d in a tio n
U n it N E N E
F u n c tio n a l
O p e r a tio n s
31
C o u n tr y r e q u e s ts a n d /o r s e r v ic e s
T o th e C o o r d in a tio n U n it
32. IV. Spotlight on relevant UN agency initiatives
and programmes (Cont’d)
• The World Bank and UNDP have vast energy portfolios which are
largely aimed at improving access to energy and promoting pro-poor
growth strategies, while mitigating the risk of climate change;
Renewable energy is an important part of the programme
• World Bank also developed the Clean Energy Investment Framework
to finance Renewable Energy and Energy Efficiency.
• UNICEF is supporting renewable energy solutions for schools and
health centers in many countries and UNHCR encourages its
beneficiaries to use alternative fuels
• UNDP & Fortis Bank have initiated the MDG carbon facility offering
prospective emission reduction projects. UNDP providing project
development services and Fortis Purchasing and Marketing Carbon
Credits.
32
33. V. Conclusion and Recommendation
A. Conclusion
• The current regional and global environment represents
an real opportunity to join hands to Accelerate the
Greening of the Power Sector in the region, through
enhancing the contribution of Renewable Energy to the
sector fuel supply mix.
• Renewable Energy Development should be managed as
an integral element of the sector’s development and
national and regional sustainable development policies
and plans.
33
34. V. Conclusion and Recommendation
A. Conclusion (Cont’d)
• The Development and Enforcement of an
appropriate regulatory framework is a milestone
for Renewable Energy Promotion in the power
sector.
• In spite of the value of the existing policies and
regulatory framework in the region, however
these are fragmented and need to be further
developed to match the level of current needs
34
35. V. Conclusion and Recommendation
B. Recommendations
In order to utilize , build on the existing
capacity in the Arab countries and
maximize the benefits from efforts
directed to the development of the
required regulatory framework it is
recommended that:
35
36. V. Conclusion and Recommendation
B. Recommendations (Cont’d)
• The council of Arab Ministers Responsible for
Electricity initiate a task force of concerned Arab
experts to:
– Conduct a detailed assessment and evaluation of
existing regulatory framework in the region, and
experience gained from its implementation.
– Collect information on similar regulations in other
regions, in particular Europe
– Draft a regional Guidelines for National/regional
Regulatory Framework
Regional organizations can support such efforts in
particular LAS, UN-ESCWA and RCREEE and MED-36
EMIP
37. Finally,
Let all join hands to promote Renewable
Energy for Greening the Power Sector
37