Remarks by Achim Steiner at East African Power Industry Convention
Nairobi, 1 September 2010
Distinguished delegates, ladies and gentlemen,
We meet here a week after the birth of the 2nd Kenyan Republic, an historic moment full of new directions; possibilities and opportunities for this country and its people.
Part of that opportunity hinges on the path the power industry takes over the coming years and decades.
Will it be focused on a fossil fuel future based on oil, gas or coal or an increasingly a renewable one based on harnessing the abundant 'natural fuels' found here - from wind and water to solar and geothermal and perhaps one day even tidal or wave.
Indeed can we, at the dawn of a new era in Kenya's history with itself, and with the wider world, envision Green Energy; within a Green Economy in a 21st Green Republic?
Ten, perhaps even five years ago some might have smiled at such a notion: but not today.
It is in many ways already happening from the 300MW wind farm in Turkana to the rapidly expanding generation of, and exploration for, geothermal along the Rift Valley.
The challenge is how to maintain this fledgling momentum and to accelerate and scale-it up.
Before I come to this, let me perhaps share a journey that UNEP, headquartered here in Kenya, recently embarked upon that echoes to your challenge and indeed that of economies everywhere - developed and developing.
A journey that is crystallizing the elements of how to achieve a transition to a low carbon, resource efficient Green Economy and the logic underpinning such an evolution.
Two years ago, UNEP launched the Global Green New Deal/Green Economy Initiative, as nations around the world struggled with successive food and fuel price surges and persistent environmental challenges, compounded by a deep financial and economic crisis.
The basic thrust behind the these twin concepts is that is that the economic models of the 20th century are unlikely to assist in achieving the multiple goals the international community has set ranging from combating climate change to supplying freshwater, sufficient food and overcoming poverty - particularly on a planet of more than six billion people, rising to some nine billion by 2050.
But that investment including stimulus packages, allied to smart market mechanisms and creative fiscal policies, could trigger the start of a paradigm shift towards sustainability - nationally and globally.
These principles, vision, goals and arguments gained traction across capital cities world-wide and, as we speak, are in some economies triggering a significant refocusing of investments into areas such as sustainable transportation up to 'natural capital' such as freshwaters and forestry.
China for example invested one third of its stimulus package in green sectors and in the Republic of Korea it is more than 80 per cent.
Paramount among sectors requiring urgent action is energy, owning to its critical link to economic activities, social well-being and environmental sustainability.
Energy is key to a green economy transformation
Africa faces enormous energy-related challenges.
Access to energy is critical for economic growth and poverty alleviation. Today, chronic power shortages plague 30 African countries and only one in four Africans has access to electricity. Urban rural electricity provision is 58% while the rural rate is 8%.
The inadequate access to energy is rated by most companies as the single largest impediment to doing business.
Indeed, Africa's firms report losing 5% of their sales because of frequent power outages - a figure that rises to 20% for informal firms unable to afford backup generation. Overall, the economic costs of power outages can easily rise to 1 - 2% according to the World Bank.
While most people depend on traditional sources of energy such as biomass, those able to afford fossil fuels in rural communities often pay a huge health cost.
Fossil fuels are responsible for indoor air pollution that is causing more death among women and children than malaria and tuberculosis combined.
Not only are such sources of energy polluting and detrimental to health and productivity, they represent a huge cost. The "energy poor" spend around $17 billion a year on oil-based lighting sources such as kerosene lamps which can also be hazardous.
Providing clean energy to poor and low income communities in Africa will not only power economic activities and stimulate growth. It will contribute to enhancing health benefits and expand life expectancy among women and children.
With ever growing demand and worries about future energy supplies, global energy prices have been unstable, reaching levels unmatched in history during the past two years.
This not only resulted in higher energy expenditures, but also triggered higher food prices. Over the past two years, energy prices have increased by 50-100% in many African countries.
Thus, as in other parts of the world but also particularly on this Continent, African countries face an urgent need for greater quantities and more reliable sources of energy.
to ensure a rapid development and deployment of new and clean sources of energy that could contribute to facing a myriad of economic, social and environmental challenges.
Harnessing Africa's immense clean energy potential
The good news is that Africa possesses a significant potential in renewable energies - one that needs to be turned into an economic potential in order to deliver the much needed social and environmental gains.
Opportunities for the development of renewable energies relate to security of supply, accessibility for the poor in remote communities, improving public health, and economic and employment-related benefits.
Moreover, clean energy is emerging as an important potential contribution to expanding the benefits of the Clean Development Mechanisms to poor least-developed countries in Africa.
The new figures for Africa, compiled by UNEP Risoe Centre in Denmark, indicate that the first CDM projects are in a number of African countries including the Democratic Republic of the Congo (DRC); Madagascar, Mauritius, Mozambique, Mali and Senegal.
In Kenya new projects include a 35MW extension of geothermal, hot rocks, generation and a sugar cane waste-into-energy project with Mumias Sugar Company.
A deep and decisive new climate agreement could trigger around 230 such projects by 2012 in Africa.
These could cumulatively generate over 65 million certified emission reductions, worth close to one billion US dollars at a conservative carbon credit price of US$15.
(One reason why it is in the interests of governments and companies on this Continent to keep up the tempo at the upcoming UN climate convention meeting in Cancun, Mexico).
Governments and business in Africa are becoming increasingly aware of this potential.
As a result, new and innovative policies are being put forward in various countries, with prospects to drastically change the energy landscape.
Kenya's feed-in-tariff introduced in 2008 and revised this year is expected to produce about 1300 MW of electricity generation capacity from biomass, geothermal, biogas, solar energy, wind, and small hydro.
Rwanda is actively seeking to extract methane gas from the Lake Kivu, which could generate up to 100 megawatts of power for Rwanda and its neighboring countries, in addition to creating an estimated 200 jobs for residents near Lake Kivu.
Overall, be it in Kenya, Mauritius or South Africa, there is a good indication that feed-in-tariffs have proven to be effective policy instruments in overcoming a key long-term barrier to introducing renewable energy and making it economically viable.
They have given a strong positive signal for engagement of the private sector, which is essential for the clean energy revolution to happen.
UNEP's Sustainable Energy Finance Initiative shows that investment in renewable energy projects is also expanding globally, despite a slight decline in the context of the 2009 economic crisis.
Indeed for the second year running, there was more investment in new renewable energies around the world than in new fossil fuel generation.
In Ethiopia, a funding agreement was reached in 2009 for French institutions to invest $283.4 million in the120MW Ashegoda wind farm, the first of its kind in the country.
Egypt secured a $490 million, 200MW wind project in the Gulf of El Zayt in 2009 - a project to be developed by the New and Renewable Energy Authority in collaboration with German development bank KfW and the European Investment Bank.
Key challenges to the development and fast deployment of renewable energy technologies include technology costs and competitiveness, issues of technology transfer and capacity building, financial and technological risk, infrastructure and intermittency of supply, and sustainability criteria.
National policies, such as feed-in tarrifs can assist, as can global carbon markets such as the CDM.
But financing through the CDM is only part - perhaps 10 per cent or more - of the financial attractiveness of an investment.
Thus the regional development banks and private banks have a role not least in assessing and managing the risk and raising the funds needed to light a clean energy path on this Continent.
Some are stepping up to the bar. Last March, at the 2nd Africa Carbon Forum, a partnership between UNEP and its Risoe Centre, Standard Bank and the German Government announced the establishment of the Africa Carbon Asset Development Facility to do just this.
UNEP is also working in other ways to accelerate the transition. At the last UN climate convention meeting in Copenhagen, we launched three flagships and advisory services, linked with our Green Economy work.
One of these flagships was Clean Tech Readiness - building on an extensive body work on smart market mechanisms and other hurdles to barriers, UNEP will offer member states services on how best to incorporate renewable energies and energy efficient technologies in national climate, development and sectoral strategies.
This work dovetails with new initiatives being carried out in partnership with others including the UN Industrial and Development Organization (UNIDO); the UN Development programme (UNDP) and the World Bank.
Technology Needs Assessment - Over 30 countries to be supported in determining their specific low greenhouse gas technology needs: 15 countries are in the first phase, with others coming on board through 2010.
Green Economy Advisory Services - Over two dozen countries or relevant national institutions have requested or have signaled they would like assistance on how to tailor a low carbon, resource efficient Green Economy approach to national development strategies.
UNEP has recently launched a Green Economy Initiative in Africa, a project which comes to complement the already existing programmes on energy, such as the Africa Rural Energy Enterprise Development, known as AREED.
Ladies and gentlemen,
To power Kenya's 2030 Vision, a corner-stone of this new Republic's thrust towards a middle income economy, is going to require a significant up-scaling of power supplies.
There will be those who will argue that large investments in fossil fuel power stations is the fastest and cheapest path towards that future - and certainly in the near to medium-term fossil fuels will have a role.
But even putting aside the fact that these fuels will be wholly or largely imported at considerable cost to the economy, there are multiple reasons why renewables should be part of Kenya's energy vision 2030.
The sources are here and here in abundance. They can be rapidly deployed in many places without the need for a Grid and once installed the fuel is free and are can contribute to improved public health - set aside the practical and political link to climate change.
Markets are often viewed as God-given. But they are in the end human constructs, aimed at delivering economic and developmental goals.
If Kenya defines its goal as becoming a clean-tech hub and an energy independent country, it should look no further than the winds that blow across northern Kenya and on Uganda's border with Rwanda; the hot rocks of East Africa's Rift Valley and the sun that shines above our heads here on in Uganda, Rwanda and elsewhere in this region.
In doing so, it would be putting in place a major foundation towards a new kind of economy - a Green Economy: one that echoes to the promise and the vision promulgated last week by President Mwai Kibaki when he unveiled the Second Republic.
One that echoes to the opportunities that all East Africa countries have on their path to sustainable development.