October 21, 2016
Going Green: Devising a Clean Energy Strategy for Developing Countries
By Rachel Ansley
As the date on which the Paris climate agreement goes into effect draws near and participating countries begin to take steps toward implementing their goals to reduce greenhouse gas emissions, Robert F. Ichord, Jr. sought to “emphasize the key role that developing countries will play in the future of the energy matrix in the world, and [how] that’s going to have profound implications for Paris.” He said “80 to 90 percent of energy growth is going to be in these countries.”
However, Ichord, who formerly served as the deputy assistant secretary for energy transformation in the State Department’s bureau of energy resources, added that these countries are “going to need huge amounts of energy if they’re going to develop, and that energy needs to be clean and efficient.”
Ichord joined Melanie Nakagawa, deputy assistant secretary for energy transformation at the State Department’s bureau of energy resources; Branko Terzic, a nonresident senior fellow at the Atlantic Council’s Global Energy Center; and Charles Feinstein, former direction of Energy and Extractives Global Practice at the World Bank at an event at the Atlantic Council on October 21. Thomas Cunningham, deputy director of the Atlantic Council’s Global Energy Center, moderated the discussion. Marking the launch of Ichord’s report, Transforming the Power Sector in Developing Countries, the panel discussed the strategy set forth in the report and the role of the international community in facilitating infrastructure reforms and the acquisition of foreign capital in developing countries.
The Paris climate agreement will enter into force on November 4. This agreement marks the commitment of fifty-five countries that together produce 55 percent of the world’s greenhouse gases to cut these emissions. The agreement’s entry into force has led the conversation within the United Nations (UN) framework to turn to the challenge of implementation to meet the ambitious climate targets set in Paris.
From November 7-18, Marrakech will host the twenty-second Conference of the Parties (COP 22). The meeting will aim to set an agenda to implement the targets of the Paris agreement.
This year has become a pivotal one in what Melanie Nakagawa, deputy assistant secretary for energy transformation at the bureau of energy, described as a “post-Paris world.” She said that there is a “unique moment in time right now where there’s a pull coming from countries all around the world putting out their stretch targets and wanting to do more.”
Nakagawa said setting goals is not enough if there is no political impetus to achieve them, as well as the general belief that the goals can be reached. “Countries now have this accountability because their targets [are] out there,” she said.
“Now the hard work of changing the policies, building the institutions, augmenting the financial flows, and investment flows to help countries achieve the nationally determined contributions (NDCs) is front and center,” Ichord said.
“The solution to climate change,” Nakagawa said, “is smart energy policy.”
Ichord emphasized the need to “really understand the political, economic change in [developing] countries that will allow them to move toward cleaner energy systems.” He cited urbanization, population growth, and income growth as factors driving the massive demand for energy.
According to Ichord, “the central challenge is power sectors that can be engines of growth and not drags on the economy.” However, “that’s going to take leadership and a global effort to try to address these in a coherent way,” he added.
He described the need to create an “enabling environment,” or an environment “that’s going to be conducive to investment and rational allocation of resources.” Additional necessary steps to help the growth of clean energy in developing countries include restructuring the energy market, acquiring investment, increasing access to electricity, facilitating regional electricity cooperation, and diversifying energy sources. However, Ichord said, “it’s a political process.”
“For the developing world, they’ve got the dual problem of electrification without carbonization…and then doing it economically,” Terzic said. To achieve this, he claimed that government is key. “The government has to start by establishing the structure of the industry,” he said. He stressed the need for adequate resources to support regulation.
Nakagawa said that the United States has a comparative advantage in supporting developing countries. For example, the US-India Clean Energy Finance Task Force is a government-to-government task force with a private sector advisory body that allows the United States to work bilaterally to establish an investment climate in India. The State Department is focused on relationships in other countries as well. “If we work country by country, region by region, trying to build the enabling environment for the smart energy policies, you are going to see the commitments realized,” she said.
Feinstein emphasized the need to mitigate the “perception [of] or actual risk faced by private investors.” A favorable political environment and perceptible commitment to energy policy are important factors for attracting capital, which will support the necessary growth. Ichord said, “one of the lessons we learned is that it’s very important at the country level…to have these dialogues with the senior leadership of the country and also to have forums where you have both the public and the private sector and the financial sector together.”
“This is not rocket science. This is fairly straightforward nuts and bolts, blocking and tackling, but it takes political will,” said Ichord. He added: “[W]e need to have more focus and make sure that we’re dealing with these fundamental reforms in these [developing countries].”
Rachel Ansley is an editorial assistant at the Atlantic Council.