Official Executive Summary

First Meeting of the Global Forum on Sustainable Energy

Rural Energy: Priorities for Action

11 - 13 December 2000

IIASA (Laxenburg), Austria

Purpose of the GFSE

The Global Forum on Sustainable Energy (GFSE) is intended as a platform for multi-stake-holder dialogue on issues pertinent to energy for sustainable development. It grew out of the outreach efforts of the World Energy Assessment and is envisaged to orchestrate a series of dialogues that will facilitate decision-making on policy issues in the appropriate fora and promote concrete cooperation endeavors in the field.

Main Message of the First Meeting of the GFSE

The First Meeting of the Global Forum on Sustainable Energy, dedicated to „Rural Energy: Priorities for Action" concluded with a strong plea for the central role of energy policy interventions with a view of eradicating poverty and achieving the internationally agreed development targets.

Recent studies demonstrate clearly how lack of access to modern energy carriers limits development opportunities, perpetuates poverty and social injustice and places a severe burden on human health and the local, regional and global environment.

To implement the goal accepted by the international community to halve the proportion of people living on less than $ 1 /day by 2015,  access to affordable modern energy carriers is a pre-requisite. Today an estimated 2 billion people lack access to electricity and use traditional fuels for cooking. It is proposed to adopt a clear goal: To reduce the proportion of people without access to clean and affordable fuels and electricity by half by 2015. This will require a combined effort of the public and private sectors and civil society, and targeted regulatory, financial, institutional and education training efforts as well as significantly increased streams of public and private investments.

Since the energy requirements to meet the basic needs in rural areas represent a minor fraction of global oil consumption, it should be possible to meet this energy need, provided there is sufficient political will. Political will is required especially to generate the public money needed to provide transitional finance until the rural poor can generate sufficient income to be able to pay full cost. In the long term, in principle users should pay the full cost. Although many poor people pay in the order of 10 $ a month for energy, many modern energy carriers are beyond their present capacity to pay.

To reach the goal of reducing the proportion of people without access to modern energy carriers by half, the determined promotion of both conventional energy, especially LPG to meet cooking needs, and renewable energy, especially biomass fueling modern conversion technologies both in decentralized and grid-connected systems, are essential. The provision of clean fuels and of electricity are to be simultaneously advanced.

There was a convergence of views on the important, complementary roles that governments and the private sector have to play in a two-pronged approach in order to address the problem of energy access effectively. The private sector was felt to be best-placed to address these needs where functioning commercial markets can be created. The public sector's main role was perceived as addressing market reforms and providing transitional finance, including properly crafted subsidies, using domestic budgets, development bank loans and ODA. The public thrust could begin with a new „donor pledge" to target funds to leverage market transformation and avoid competing with/crowding out private investment. Furthermore governments could direct export credit agency lending so as to promote sustainable energy technologies for rural areas.

In this regard it was felt that a new level of public-private cooperation should be found with public institutions working in concert with private investors. Since ODA flows will always be scarce - even if they are increased as was felt is necessary - it seemed important to establish how ODA could best contribute to creating suitable framework conditions for attracting private investments. Ways have to be found to match local affordability with the commercial need for adequate returns.

Participants felt that - given the wide variety of circumstances - solutions to address the energy access problem should be tailor-made. No one solution would fit all situations; various energy sources should not be played off against each other; since both renewables and conventional energy would be needed. Energy solutions should build on local knowledge and be suited to local needs. Regional cooperation was encouraged.

Energy policy - regarded as a sectoral activity - must seek to be compatible with sustainable development. Furthermore energy considerations must be treated in a cross-sectoral way and integrated in development priorities and national/regional strategies.

The lack of adequate data on the energy situation in developing countries, especially in rural areas, was high-lighted.

Among the key policy issues to be addressed the following were emphasized:

 

n  multi-stake-holder undertakings to bring together actors from all key sectors in the energy field to identify compatible public/private strategies;

 

n  the need to enhance coherence between finance, energy & environment agencies, both at the domestic and international levels;

 

n  market reform („re-regulation" rather than de-regulation to enable the markets to function in ways compatible with sustainable development), creating the right framework conditions to attract investment from domestic and international capital;

 

n  realistic pricing systems (users pay for usage, access may be subsidized);

 

n  link local agriculture and cottage industries to rural energy development;

 

n  capitalize on synergies between many greenhouse gas reduction strategies and expanded delivery of modern energy services.

 

The following were highlighted as priority actions:

 

n  Financing institutions to extend favourable conditions for „new" renewables (e.g. by treating loans for „new" renewables on a par basis - concerning payback periods, grace periods, interest rates, etc. - with conventional energy project with similar risk/reward profile and by offering „blended" financial products that mix available concessional resources with commercial offerings and which are therefore tailored to the needs of investment opportunities in the off-grid and renewables sub-sector);

 

n  Donors to make available additional funds and to work towards enhanced donor-coordination;

 

n  Developing countries to introduce regulatory systems to promote rural energy access (e.g. financing connections, covering up-front capital costs, renewable portfolio standards, etc.);

 

n  Public finance - even „proper" subsidies - should be required when commercial grade investments are absent; subsidies (with „sunset" clauses) for demand side, applied to access costs, not operating costs;

 

n  Promote local energy enterprises as employment opportunities - enhance local private entrepreneurs ; developing local dealers to sell maintain/equipment, built on local retail networks and relationships;

 

n  Concessions (with potential for subsidies as needed) to create delivery networks through local franchises.

The need for agreement on  a concrete action plan - with active involvement of private sector representatives - at CSD 9 was emphasized.

Participation and sponsors

Some 150 participants attended the First Meeting of the GFSE in their personal capacity. They represented governments, academia, the private sector (i.a.WBCSD, WEC, E7, Shell, BP, Verbund-Plan ), international organisations (UNDP, DESA, FAO, UNIDO, UNEP, IIASA, IEA, IAEA, World Bank, ICSU) and NGOs. The meeting was co-sponsored by Austria, UNDP and IIASA. Financial support toward the participation of experts from developing countries from Norway, Sweden and LEAD is gratefully acknowledged.

Follow-Up

The report on the First Meeting of the GFSE will be circulated as an official contribution to the deliberations of the Commission on Sustainable Development on Energy in April 2001 and will also be submitted to UNCTAD in the lead-up to the Third Conference on the Least Developed Countries (LDC III) in May 2001 in Brussels.

Future Meetings of the GFSE

The usefulness of bringing together various stake-holders in a neutral and informal setting of the GFSE was generally acknowledged and the willingness was expressed to continue to cooperate on future occasions. A next meeting of the GFSE could study the respective roles of FDI and ODA in the context of facilitating the transfer of energy technologies. Provisions for holding such a meeting in 2001 have been made by the Austrian side. The decision about the topic will be taken in the light of the outcome of CSD 9. The readiness of the City of Graz to host a Meeting of the GFSE in 2002 was gratefully noted. In order to guide the future work of the GFSE an international advisory board will be electronically convened.

Report by the IISD on the First Meeting of the GFSE

A 10,000 word summary of the meeting by the International Institute for Sustainable Development (IISD) is also posted on the web: http://enb.iisd.org/crs/gfse1/

For questions and comments on the GFSE

please contact the Convenor of the First Meeting of the GFSE

Ambassador Irene Freudenschuss-Reichl

Tel: +43-1-263 72 91

Fax: + 43-1-263 72 81

e-mail: irene.freudenschuss-reichl@bmaa.gv.at