PSD Blog - World Bank Group

A (LED) light at the end of the tunnel

Close to 75 percent of Sub-Saharan Africans, about 550 million people, do not have access to electricity. Lighting Africa, a conference in Ghana that ended today, is tackling how to mobilize the private sector to supply modern off-grid lighting such as Light Emitting Diodes (LEDs) to over more 250 million people living in Sub-Saharan Africa by 2030. This is a timely effort given surging oil prices and the fact that Africa spends about $17 billion on inefficient lighting fuels such as kerosene lamps and paraffin yearly.

Earth Day celebration ideas

To celebrate Earth Day some people join protest rallies, some others disappear into the wild, but here is a list of more conventional ideas. Feel free to send your own.

• Calculate your carbon footprint (and preferably try to reduce it).
• Plant a three to offset 730kg of carbon emissions (if not one cuts it down).
• Bike to and from work.
• Recycle (even if no one is looking).
• Avoid plastic bags.

Locally-grown food in the middle of New York City

New York Magazine asked four architects to design whatever they would like for a full city block of space with no clients to worry about. One design offered was a vertical farm, complete with water tanks and each floor would be used for the cultivation of a different crop. Amale Andraos, of Work AC, the firm responsible for the intriguing idea, said in the article that they “are interested in urban farming and the notion of trying to make our cities more sustainable by cutting the miles [food travels].”

Ok, maybe that’s taking sustainable design to an extreme; does anyone have more eco-friendly (and preferably profitable) ideas?

Richard Posner on food prices

"The demand for agricultural products has grown, though not as a result of population growth; instead as a result of increased demand for ethanol and other biofuels, and for food that requires more agricultural acreage to produce. Today, besides people and pigs eating corn, our motor vehicles "eat" corn that has been converted into ethanol."

Read the entire piece here.

Here's your diploma, now go pump some oil

In times of off-the charts oil prices and environmental concerns, it may be surprising to find out that thousands of people graduate every year to go work in the oil industry. The Wall Street Journal published an article analyzing where these graduates are coming from. During the 70s and 80s, most petroleum graduates came from Texas A&M and other top U.S. and European institutions, says the article.

The tables have turned. Today, schools in Azerbaijan, Brazil and other nations with state energy firms that manage vast hydrocarbon resources are expected to produce more than 12,000 petroleum-engineering and geoscience graduates in 2008, double the roughly 6,000 in the U.S., Canada and Europe, according to recent data from Schlumberger Ltd., the world's biggest oil-services firm by revenue.

Ethanol production and access to finance

What does the U.S. Energy Policy Act of 2005 and its mandatory doubling of renewable fuel additives by 2012 have to do with access to finance? A recent paper uses the sudden increase in demand for U.S. corn, the primary input for ethanol production, as an external shock to see how access to finance affected corn producers in the U.S. It shows that productivity increased after 2005 in corn production as opposed to soybean production and more in counties with better access to finance. Now, just imagine the effect in developing countries!

Putting a price on carbon: time to get hands-on

The recent spate of announcements by financial institutions looking forward to a world with a price on carbon - and their decisions to set a price for carbon in their own calculations on project viability or to adhere to generic principles on carbon which may influence the future shape of their portfolios - are the latest evidence of a world preparing itself for some kind of public policy context to emerge from international negotiations. But perhaps of equal significance is evidence that the risks and opportunities from managing exposure to carbon are seen as real and present, not potential and distant.

To dig down into performance and beyond rhetoric a number of challenges face financial institutions. A carbon price helps one understand risk in a future where carbon carries a price, but how do you decide where to invest in carbon intensive projects and where not?

Climate policy map

Econsense created an interactive database for all-things climate. Much like our Do-Your-Own-Analysis, it allows to compare and contrast data across countries, in this case, on topics such as greenhouse gas emissions, fuel tax, emissions trading and biofuel production.

Not so green after all

Ceres, a coalition of investors, environmental groups and other public interest organizations, believes that the financial services industry – with nearly $6 trillion in market capitalization – should play a role in combating climate change.

Most recently, Ceres released a first comprehensive assessment of how the world's 40 largest banks fulfill their commitments to the reduction of greenhouse gas emissions.

The study found that, despite an overall widespread positive trend, only 12 banks made climate change a governance priority; only 6 said they were calculating carbon risk in their portfolio and "no bank has set a policy to avoid investments in carbon-intensive projects such as coal-fired power plants."

Unusual champions of global sustainability

It is often assumed that the greatest potential for improving business environmental practice in developing countries lies with foreign multinationals and not with the countries' own businesses.

These case studies reject this common assumption and point to the crucial role of developing-country firms as they serve the world's most populous and fastest growing markets

Says Simone Pulver the guest editor of "Greening Development: The Role of the Developing-Country Private Sector" published in the "Studies in Comparative International Development" [subscription required]. The recent issue is based on case studies of selected firms in China, India and Latin America.

Africa and the oil price

From the FT:

Surveying 13 non-oil-producing African countries, including South Africa, Ghana, Tanzania, Ethiopia and Senegal, the [International Energy Agency] found that the increase in the cost of oil bought by the countries since 2004 was equivalent to 3 per cent of combined GDP.

This was more than the sum of debt relief and aid received over the past three years by the countries, which have a combined population of 270m, of whom 104m live on less than $1 a day.

Prison with a paycheck or a cruise ship ride?

A short video shows Albion Village, Shell's $12billion facility housing 2,500 workers in Wood Buffalo, in Alberta, Canada, where oil deposits are comparable to those in Saudi Arabia.

Though some call it a prison with a paycheck, the company hopes that the Albion's five recreational directors, a golf simulator, and a generous three-pound weekly steak allowance will be enough to prevent losses of millions of dollars caused by labor shortages.

A roadmap for international financial institutions

International financial institutions too need a clear climate change roadmap. While the Bali negotiations continue into the night, it is not too early to think about what the G8 when it meets in Japan in seven months should ask these institutions:

1. Leverage commitments from donors with private financial flows to a leverage number of their choice.
2. Come up with tools for developing countries and the firms that drive their economies to understand their adaptation risk and engineer financial products with the private sector to insure against and offset those risks.
3. Never use public aid funds to undermine the development of a market where a market may flourish and never act to become the market, but rather facilitate their creation.
4. Target subsidy to speed up the adoption of new clean technologies based on a carbon price.
5. Ask each institution to report its baseline for GHG emissions from its portfolio in FY09 with a goal to reduce over that baseline over time with criteria for exceptions based on meeting the energy access needs of the poorest countries.
6. Climate proof long range development programs.
7. Work with developing countries to create the investment climate necessary to support clean technology adoption, promote distributed, local renewable energy solutions, and water pricing policies.
8. Campaign against trade barriers that act against the interests of the climate change agenda.

A low hanging fruit?

According to IETA, carbon capture and storage – CCS for the connoisseurs - is a low-hanging fruit which could potentially be one of the main solutions to climate change. Friends of CCS met today to exchange their latest news. The European Commission is only days away from presenting to the Parliament and the Council new legislative amendments to allow for the transport and storage of carbon.

Rio Tinto and BP have together created Hydrogen Energy, a company investing in hydrogen fuelled power stations. This is how it works: coal is burned, the CO2 is extracted and stored, which leaves hydrogen as a fuel. CCS should really fall under the Clean Development Mechanism, argued Eskom, the South-African power utility.

So how low is this fruit exactly? Enel, Italy's largest power company, warned that the technology for power plants is not yet ready. And because the process of capture and storage is in itself high energy, it requires very efficient power plants. Rio Tinto confessed that none of Hydrogen Energy's plants are yet in operation. One plant requires a capital investment of about $2 billion, and finding adequate reservoirs is extremely difficult and costly. Furthermore, some plants are faced with objections from a public which has not yet bought into the idea. ECN, the Dutch energy research center, called "emotional" those reactions against CCS.

Flashbacks at Bali

Walking into the Bali Convention Center, you know that you have become a fixture in the world of international sustainable development when the UN security guard welcomes you with a broad smile and a "how have you been." You swore as a younger woman and an activist you would never become one of those grey haired incrementalists around the negotiating halls.

And then you look around and you see your old friends, all with traces of grey at the temples, reporting, representing UN agencies, working the trade agenda, running think tanks, hanging out on the west coast of the US with other ageing activists and having fun being still irreverent, or slightly proud that Michael Crichton may have based his caricature of the evilly powerful NGO on you.

Looking around you see a remarkable repository of knowledge, not just of the substance of the negotiations, but of the social anthropology of summitry. Of the personal that makes up the political and the history of institutions, a history that often impedes collaboration and undermines trust.

A public/private partnership to the moon

The technologies are available, the savings obvious, yet consumers are slow in adopting energy efficient products. Speaking at the Bali Global Business day on the margins of the UN Climate Change conference, a Philips official wondered why two thirds of the world still uses old lighting technologies when switching to existing modern technology would represent a 40% saving in total lighting energy consumption.

The private sector is asking for a public/private partnership where governments implement stronger energy efficiency standards, including labeling, adopt greener public procurement requirements, and grant financial incentives.

In developing countries, investors' appetite for clean technology investment is also growing but private companies are facing additional obstacles: the risk perception, the lack of market research, the need to adapt technologies to the requirements of these markets. Again, a public/private partnership makes sense.

GEF and IFC launched today the Earth Fund which aims to give those businesses keen to invest in environmental technologies in developing countries that extra support they need to take the leap. The most exciting feature of the fund: a prize! The very same company that stimulated with a prize the launch of the first private rocketship in outer space, will manage the Earth Fund's prizes for innovative environmental technology.

Money on trees

The host sets the tone: last year's climate change talks, held in Nairobi, revolved around adaptation. This year, with Indonesia hosting the UN climate change conference, the prevalent issue is deforestation.

The malaise here in Indonesia is clear. Rising commodity prices and a boom in biofuels have led to uncontrolled deforestation. To improve its image and to offset the conference, Indonesia has just been on a planting spree with 79 million new trees in the ground. The word is that the conference, as a result, is "carbon positive." The question is: what measures, if any, will flip the current incentive scheme and will make it financially more interesting to keep the forests standing.

In a new report CIFOR suggests payments to land users for environmental services. The report, however, does not mention how high those payments should be to represent a real alternative, nor where those payments would come from, nor where local people previously employed on these lands would find a new job.

A little while ago, when offered to be paid as custodians of the country's landscapes, French farmers vehemently declined the idea. A real job and their dignity, that's what they wanted.

New ethanol - nothing corny about it

A solution to the food vs. fuel feud may be finally on the horizon. It comes from a close cousin of traditional ethanol - cellulosic ethanol. Unlike corn ethanol, it is uses feedstock that doesn't have alternative uses such as wheat straw, corn stover, grass, and wood chips. It's also cheap and abundant.

And though earlier this year many feared that cellulosic ethanol won't be able to commercially compete with corn ethanol, more and more companies are already sprouting up.

Waste: don't just take it away

Born out of a failed methane experiment comes a water-treatment system that uses 90 percent less energy than conventional sewage system and cost 50 percent less to operate. Dean Cameron – the creator of the Biolytix Water – harnessed worms, beetles and billions of microscopic organisms to turn human waste into water suitable for irrigation.

The low cost (a small version for four people could cost $175) and its minimal energy use hold a promise for 2.5 billion people around the world who can't afford proper sanitation. So far there are 3000 biotanks installed in homes and businesses across the Pacific.

Carbon CARMA - who's been good or bad

So there are 10 billion tons of carbon dioxide emitted into the atmosphere every year. But who's exactly producing it and in what quantities?

Carbon Monitoring for Action Database (CARMA) - a new online-database containing information from 4,000 utilities and 50,000 plants – has the answers by country, city, company or a single plant.

One person's trash is other person's fuel

"Everybody is dealing with a byproduct they don't want" says Arnold Klann, the CEO of BlueFire, a California company which uses acid to convert organic material into fuel.

His firm is one of many in a race to perfect the technology to transform not only traditional biomass, but even old tires or human waste, into fuel.

Predicting energy use in China and India

The International Energy Agency (IEA) released its World Energy Outlook 2007. The report predicts that the world's demand for energy will increase by over 50 percent by 2030.

Burning of coal, as the cheapest and most secure energy substitute, will see a return – rising over 70 percent in the 25 year period. The IEA projects that China and India will account for 80 percent of coal consumption.

Waste included for better cell phone service

As more and more people in developing world depend on cell phones for their business, can microbial fuel-cell chargers, which derive electricity from plant waste, bridge the infrastructure gap? Yes, according to students at MIT.

Potent ferment

Today, 3,500 biogas plants generate just under one percent of the energy used in Germany and more are under way. These cone-shaped buildings work much like bovine stomachs. They turn organic material into methane. But unlike cows, they burn gas to produce electricity, which can be sold to the grid.

There's more. Growing one hectare of crops optimized for use in biogas production facilities can create enough energy to run a car for over 40,000 miles compared to 12,000 miles on biodiesel.

Fuels vs. food

Former Senate Majority Leader Tom Daschle takes on Ford Runge and Benjamin Senauer's claim that biofuels will exacerbate world hunger:

Despite the authors' allegations, the facts are clear: U.S. corn is used to feed mostly animals, not people; converting the starch from a portion of the U.S. corn crop into biofuels is an efficient way to reduce the United States' dangerous dependence on imported oil; and the recent firming of grain prices in the United States -- and therefore the world -- will help, not hurt, farmers in food-deficit nations.

Biofuels feed food prices

What do Kellogg's, Fidel Castro and Hugo Chávez all have in common? All three blame biofuels for pushing up food prices.

The new issue of Newsweek breaks down components of the recent price hike.

Battle for best bottle

Out of 50 billion plastic water bottles used in the U.S. last year, only 23 percent were recycled. The rest - 38 billion – ended up in landfills.

To quench the thirst for biodegradable packaging comes a new generation of compostable plastics. Though the new bottles look and feel like plastic, a bio-polymer replaces fossil fuel-based petrochemicals with plant starch.

Environmentalists are excited but the operators of recycling systems, at least in New Zealand, are less so.

Update: The Economist also analyzes the subject.

Green cards from GE a.k.a war on methane

General Electric's financial arm, GE Money, released a credit card designed to offset the effects of greenhouse gases by allowing consumers to allocate either half or one percent of their purchases to gas credits.

GE, in turn, will buy the credits on behalf of the credit card customers from a joint-venture it created with the AES corporation.

Kevin Walsh, managing director of Renewable Energy for GE Energy Financial Services charged with investing $4 billion by 2010 in renewable projects, explains the focus on methane in a video interview.

The program has its skeptics. According to Michael Brune, from Rainforest Action Network, "GE supplies parts for coal-fired plants, so its credit card offsets emissions it helps create."

Green computer returns

Zonbu is a new $99 Linux-based computer with a monthly subscription fee. Interesting about it is the absence of a disk drive and a fan inside. The result is a 15-watt PC, rather than standard 200-watt, and up to $10 in energy savings per month.

Although Zonbu is a for profit solution, the new technology may be relevant to Nicholas Negroponte's project, especially as things with Intel didn't always seem to look good.

Happy meal: bad for you, good for environment

McDonald's menu may be infamous but its environment record gets cleaner every day.

By the end of this year, the company will power all 155 delivery trucks in the UK with cooking oil collected from restaurants (an estimated 1.6 million gallons a year) and converted into biodiesel.

The fast-food company, which spends more than $1 billion a year on energy globally, will use a networking system to save power on everything from fryers, grills and, milk-shake machines to air-conditioners.

Bon appetit.

Biofuels: a blessing or a curse?

From Foreign Affairs:

The enormous volume of corn required by the ethanol industry is sending shock waves through the food system. […] corn futures rose to over $4.38 a bushel, the highest in ten years.

Biofuels have tied oil and food prices together in ways that could [have] potentially devastating implications for both global poverty and food security.

[…] resorting to biofuels is likely to exacerbate world hunger. Several studies […] suggest that caloric consumption among the world’s poor declines by about half of one percent whenever the average prices of all major food staples increase by one percent.

Lighting the bottom of the pyramid

A new solar rechargeable flashlight - backed up by three AA batteries that last up to three years (costing $0.80) - gives up to 7 hours of light. In a market where nearly 2 billion people have no affordable access to light, light is a big deal:

If you're an environmentalist you think about [the problem] in terms of discarded batteries and coal and wood burning and kerosene smoke; if you’re a feminist you think of it in terms of security for women and preventing sexual abuse and violence; if you're an educator you think about it in terms of helping children and adults study at night.

BOP households spend an average of 7% percent of this income on energy. In Africa, where 250 million poor spend an estimated $12 billion, energy ranks third in households' expenditure. In Asia, mainly due to India’s share, it ranks second.

To learn more or participate in the initiative click here.

Escaping the resource curse

In a new book Messrs. Humphreys, Sachs and Stiglitz explain why countries with lots of natural resources tend to do worse than countries with less resource wealth.

This vade mecum for governments advises on how to gain advantage over oil corporations and how to effectively redistribute (oil) revenues. Foreword by George Soros.

Attention carbon-watchers

Much like the Weight Watchers Points Tracker, which helps keep track of your caloric intake, the new Zerofootprint Carbon Calculator allows you to enter details about your vehicle, your house or even air travel to estimate your CO2 footprint on the world.

Biofuels starved for private investors

Brazil, which produces half of the world's ethanol, will need $4 billion to triple its production by 2020. Argentina will require $300 million in the next three years to maintain the levels of biodiesel and ethanol mandated in traditional fuels distributed at gas stations.

Latin America as a whole provides nearly 80 percent of all biofuels and has a clear potential for more:

Guatemala, Peru and Colombia, large sugar cane growers in the region, stand to benefit from the new boom in ethanol demand. These three are considered to be very efficient producers, yielding more sugar per acre than Brazil, which in turn is eight times more efficient than U.S. corn-based ethanol producers. Colombia too, as the fifth-largest exporter of palm oil, could become a source for biodiesel.

Do it yourself – infrastructure in India

Dismayed by the state of affairs, India's private sector takes matters in its own hands. Result: a record $500 billion investment in infrastructure projects will take place over the next three years.

Sounds expensive? K.V. Kamath, chief executive of ICICI Bank, explains that with an average profitability of 25 percent over the last years, many corporations will be able to fund almost 70 percent of projects with internal cash.

Running on chicken grease

An oil and food firm team up to cook fuel, while another turns to a nondairy output of cows to light up houses in Vermont - one cow at a time.

Update on Rwanda's privatization campaign

Rwanda's privatization drive of the last decade is showing signs of success. From an FT article:

• Telecommunications. After the October 2005 sale of the state telecom to Terracom for $20m, high-speed internet connections are up, hundreds of miles of fiber-optic cable have been laid, and connection prices are 10% of 2003 prices. All this helps Rwanda in its battle with Kenya and Tanzania as the technology hub for East Africa.
• Banking. The Banque Commerciale du Rwanda was no longer lending in 2003, but thanks to a $6m deal with Actis, it's now the country's second largest commercial bank.

Unfortunately, the energy sector's key privatization, of Electrogaz, has been a failure by virtually any account.

Privatization has fallen out of favor among many politicians, but Rwanda illustrates the benefits it can bring. In particular, the deals above increased government revenue and freed up resources. BUT much more importantly, the private sector firms made huge investments of capital and technical know-how that directly benefit Rwandan customers.

Appropriate technologies get a boost

Peter Haas and his nonprofit AIDG have an excellent idea to bring low-tech solutions to basic problems of energy, water and sanitation in developing countries. Their first project is a 10-man shop in Guatemala that will build a 40-home microhydroelectric system as part of a UNDP contract. Since the workers are locals, they'll be around to fix it later. Haas envisions a network of self-sustaining businesses that build and repair low-cost technologies. Hats off. Kudos too for the impressive website - complete with blog and volunteer opportunities abroad.

I saw the article in FastCompany just in time, as it seems that Mr. Haas himself will be speaking at the Bank's auditorium today as part of a UN Week conference on Youth, Innovation and Development. I can't make it, but would love to get any comments from staffers that can.

Contest round-up

1. Western Wind Energy is hosting a viral video contest, with the winning entry on wind power to take home $10,000. In need of some Monday diversion? Watch the close to 50 entries so far.
2. One week left to vote on the 13 finalists in the Ashoka/Changemakers competition: how to provide affordable housing. Check out the mosaic of solutions, linking projects to the particular housing barrier they help overcome. Will CentroMigrante win more startup money?
3. The Asian Development Bank (ADB) is running a sustainable development essay competition until October 31. Eligible are students under 30 from the ADB's developing member countries.
4. Congratulations to the 16 winners of the Business in Development Challenge! Their business plans carry names like African Skin, Barefoot Power, and Latrine Emptying PLC.