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Options for rational energy use and carbon conservation

In general terms, the policy options available to reduce energy use and carbon emissions are: low-carbon fuels and fuel substitution; renewable energy technologies; large-scale biomass development; energy efficiency technologies; energy pricing; and carbon taxes. This section will review each of these policy options as they pertain to the region.

Development of fossil fuel resources

West Africa has abundant exploitable energy reserves, including more than 2.3 billion tonnes of crude petroleum, about 90 billion cubic metres of natural gas; some high and poor quality coal deposits; vast hydropower resources; uranium; and large quantities of renewable sources of energy.

It will be easier to attract the requisite external development capital for oil and gas development than for coal as these sources are exportable and emit one third to a half of the carbon per unit energy output as does coal. These fossil fuels, however, are distributed unevenly with more than 80 per cent located in Nigeria. Moreover, more than 80 per cent of oil produced in the region is exported, even as some countries within the region suffer from an acute shortfall of oil. Additional prospecting may uncover more fossil fuel resources, although exploration is risky and expensive. The positive signs reported in the Gulf of Guinea suggest that joint ventures with foreign partners may be productive.

Presently, Nigeria flares more than 70 per cent of its natural gas production. The completion of its liquefaction plant now under construction will supply local electrical power and industrial energy needs and allow exports to nearby countries. The un-exploited hydropower resources of West Africa are estimated to be at least 40,000 MWe.20 Nearly all countries in the region contain hydropower potential. Hydropower may be constrained both financially and environmentally, however. The climatic impacts of large-scale hydro development must be studied before large investments are sunk into this option.

Fuel substitution

Fuel substitution is possible in households and in the electrical supply system. In the Sahelian countries, LPG substitutes for woodfuels as a cooking fuel in urban households. Countries with such programmes include the Gambia, Senegal, Burkina Faso, Mali and Niger. Ghana promotes widespread use of LPG in households and institutional users.

Replacing woodfuels with petroleum based fuels may increase carbon emissions unless the biomass is produced on a renewable basis. In any case, shifting to gas will likely reduce the pressure on forests that have not been cut by woodfuel suppliers. Natural gas offers a more attractive substitute than coal. Not only is natural gas less carbon-intensive, but gas-fuelled combined gas turbines can be built at lower total cost than other fossil fuel power plants, and even large hydropower plants.

Renewable energy sources

Modern renewable energy sources which emit little or no carbon have great potential in the region, especially for small and decentralized applications and to meet the needs of dispersed, vulnerable groups. The high front end costs, however, must be made more affordable for the intended users.

At present, some mature renewable energy technologies have proven their viability in the region. Solar energy devices for household use, and standalone power systems especially for communication and water pumping, are very promising. Technical and pricing problems remain, however. Recent studies show that wind speeds equivalent to those exploited in Denmark exist along the coast of Senegal and Mauritania. The falling cost and increasing technological maturity of wind generators offer the possibility of integrating wind-power into a national distribution grid.

Biomass energy

Biomass energy utilization in the region is limited to small-scale energy applications except for a few agro-based industries. Recent work has shown that this energy source can be used in large-scale end uses and can compete with other modern fuels. If these systems (referred to as biomass integrated gasifiers/gas turbines or BIG/GT) are well planned, then their net carbon emissions can be minimized by replanting programmes. The configuration of these systems can be varied. The most promising application is in the sugar industry, a major part of the regional economy.

These technologies are likely to be commercialized by the mid-1990s, after which time they could play a major role. A pilot plant is already under construction in Brazil and another is contemplated for the Ivory Coast. The successful introduction of ethanol as transport fuel in Zimbabwe and Malawi can be emulated in West Africa, especially in land-locked countries.

Energy efficiency technologies

Energy efficiency technologies offer the region many opportunities to increase energy services from existing and new energy transforming capital stocks. Energy efficiency, therefore, should be treated as equivalent to supply options at the margin. The potential for using energy efficiency technologies in developing countries is great, not least because their energy sectors are so wasteful.

The most attractive sectors for implementing these technologies are the most carbon-intensive in the long-term scenarios of this study, namely, the residential, transport and industrial sectors. Three sets of efficiency technologies have promise capital-intensive measures which will require external financial assistance; housekeeping and retrofitting at little or no cost; and improved household devices. The first requires external assistance from the highly industrialized countries which will develop most of these technologies. The other two can be undertaken largely by local efforts.

Relatedly, transmission and distribution (T&D) losses offer additional potential to conserve carbon. Up to 15 per cent improvement in overall T&D efficiency is easily achievable in Nigeria and Ghana by the year 2025. Most of the technical measures needed to reduce T&D losses are not expensive and are quickly recovered by utilities, as occurred in Sudan where the benefits were 12 times the installed cost of efficiency measures. Improving the thermal efficiency of the whole power system, which can drop as low as 22 per cent, as in Benin, can also slow the growth of emissions in the regional power sector.

Improved woodfuel stoves and charcoal kilns have great technical potential to reduce energy consumption and to conserve carbon, especially in urban areas. These devices, however, have limited acceptability in rural areas because of social and financial constraints. Nonetheless, designs have been tested successfully and disseminated in Kenya, Sudan, Burkina Faso and Niger.

Energy pricing

Energy pricing is a useful instrument for controlling the quantity and type of energy used. However, prices are also used to promote welfare goals in many poor countries by inter-fuel and cross-consumer subsidies. Nonetheless, cost recovery rather than social equity guides energy pricing policy in most of the region today. Reforming electricity prices is linked to changing billing and revenue collection practices. The failure to bill and collect revenue has left many utilities unable to realize revenues based on nominal high tariffs.

Biomass fuels are largely unregulated and suppliers often use their market power to exploit consumers. Prices for energy services in the region badly need to be adjusted to reflect real economic and environmental costs. The analysis that should underlie a price reform strategy should consider several innovative measures including carbon taxes.

Carbon taxes

Events at the global level affect the macroeconomic environment of countries in West Africa. Carbon taxes are one recent method proposed to fund collaboration between developed and developing countries for carbon conservation. Revenues from carbon taxes could fund businesses with minimal adverse environmental effects in developing countries that would use equipment and expertise supplied by the developed countries.

Obstacles and strategies

A significant number of financial, institutional and technical obstacles exist which block the region from implementing these options.

Lack of investment finance is a major obstacle to energy development in the region. This scarcity arises from the inability of local economies to generate domestic capital and diminishing access to foreign capital. Establishing mechanisms to mobilize local capital as occurred in Ghana can improve the situation. However, the region's inability to repay its existing energy loans casts doubts on its ability to take on new debt to increase its energy efficiency and to reduce carbon emissions. The continuous fluctuation of exchange rates further erodes the region's capacity to meet its debt obligations. However, stimulating local investments, minimizing foreign inputs, and establishing better planning mechanisms can reduce these difficulties.

'Institutional inertia' also affects the implementation of new ideas. The power sector is especially susceptible to institutional conservatism. Also, many energy institutions are rated in terms of their technical efficiency rather than on their energy or financial performance. The generally poor management of energy and related institutions also hinders the effective implementation of these measures.

Institutional reform, therefore, is an essential ingredient of a carbon abatement strategy. Separating generation from distribution, as in Nigeria, and privatization of utilities, as in the Ivory Coast, exemplify such reforms. New institutional mechanisms to produce and use biomass energy are also needed urgently due to its potential importance in the energy sector of the region. Adequate information must also be disseminated to equipment producers, government personnel, local R&D personnel, and technology users if these technologies are to diffuse rapidly. An institutional framework for the collection, organization, storage and retrieval of this information is another prerequisite for success. Computers can provide cheap access to international information flows. Harmonizing equipment standards will also ensure increased compatibility between equipment, a crucial issue for developing countries at the receiving end of donor programmes.

Finally, improving training facilities and programmes and improving labour markets will increase the supply of technical competence when and where it is needed, as well as reducing dependence on foreign assistance. A rational allocation of local human resources, developing well-planned follow-up programmes, enhancing a well-articulated local R&D system, and establishing collaborative programmes with external agencies can further ameliorate these problems. Increasing public awareness to promote these options will also facilitate their use.

Economic opportunities for implementation

The region's poor economic prospects accentuate the need to take advantage of least cost energy strategies and foreign funds available to support such programmes. The technology choice model used by energy planners should be selected carefully to ensure that the least cost investment strategy that minimizes foreign exchange requirements is selected. It is essential that this model places efficiency improvements at end use on an equal footing with additional supply options. Unfortunately, inadequate information on the region restricts the level of analysis now possible to a largely qualitative exploration of the least cost strategy to provide energy services and conserve carbon. Electricity generation will be singled out here because of its capital intensity and developmental significance.

Electricity generation

The HES and LES scenarios indicate that as countries in the region develop economically, so the ratio of energy to GDP will fall. This outcome is the result of substituting more efficient energy forms for inefficient biomass fuels. In the scenarios, the primary energy per unit GDP declines between the base year and 2025 by 24 per cent (HES) and 38 per cent (LES) in Ghana; 44 per cent (HES) and 56 per cent (LES) in Nigeria; and 34 per cent (HES) and 46 per cent (LES) in Sierra Leone. Also, as Table 9.2 reveals, the primary energy supply more than triples in the HES and falls only by 20 per cent on average in the LES in all the countries. Moreover, the scenarios show that power sector investment grows faster than GDP. This result implies that financial resources will have to be diverted from other non-energy sectors.

The scenarios indicate that electrical supply can be increased by greater energy efficiency at end use and by reducing T&D losses. Nonetheless, a major increase in power generation will be required to meet demand. Hydropower is the most available supply option but also needs the biggest front end investment, much of which is in foreign exchange. Technological maturity makes it difficult to reduce historical costs of hydropower.

The development of large-scale hydropower is necessary in the region.

However, international donors are reluctant to invest in hydropower because of environmental problems associated with large dams. Nonetheless, countries that can obtain the requisite resources may do well to exploit hydropower because of its extensive backwards and forwards developmental linkages.

Natural gas development using combined cycle plants is more attractive as the investment cost is only about US$600lkWe-installed. This option is attractive for Nigeria which has large domestic gas reserves. It remains unclear, however, if its gas-powered electricity can be exported to neighbouring countries at competitive prices. Much will depend on whether local technical inputs are used to minimize the costs of developing this power supply.

Three options should be explored in the region to maximize carbon abatement. First, gas-fuelled combined cycles for electricity generation cost less than oil or coal fuelled plants (which cost US$800-1500/kWe). Also, the gas cycle has a higher thermal efficiency and emits less carbon and almost no sulphur dioxide or particulates. It also takes less time to construct and has lower maintenance requirements, being of modular design.

Second, agricultural wastes should be used as fuel in steam-generating plants and later in large-scale energy applications. These systems are expected to be commercially competitive with conventional systems within a few years. Third, many low cost steps should be taken at many end use sites to improve the overall efficiency of the energy system. This option is important because it requires little or no foreign help.

Carbon conservation in other sectors

This section is necessarily qualitative, as carbon emissions disaggregated by individual abatement measures could not be counted in the scenarios. The results are shown in Table 9.5. The aggregate energy and carbon savings from adopting least cost technologies were evaluated by subtracting the LES from the HES, sector-by-sector.

Residential sector
The residential sector offers great potential for energy and carbon savings. The LES assumed a widespread deployment of improved biofuel stoves and charcoal kilns; improved lighting and electrical appliances; and fuel substitution. Large-scale dissemination of improved woodfuel stoves and charcoal kilos will produce significant energy savings.

Most of the options in this sector do not require much financial investment or intervention by government, as the case of Kenya has illustrated. The primary role of government is to facilitate technological R&D. However, the supporting infrastructure needed for this measure may require foreign assistance.

Table 9.5 Energy and carbon savings (HES - LES)

*Extrapolated values

Transport sector
In the transport sector, three sets of important measures can produce energy and carbon conservation. These are: improved traffic management and vehicle maintenance; fuel substitution and modal shift; and increased vehicular efficiency.

The first set will give only moderate energy and carbon savings. Conversely, these measures require relatively little investment, and some can be locally financed and managed. The second set involves capital intensive measures such as improved urban transport, ethanol, and more railways. These measures will give substantial carbon savings but need large investments with significant foreign exchange requirements. Third, more efficient vehicles rely largely on foreign technological innovation by car manufacturers. Nonetheless, it is important that governments regulate imports and local assembly of cars to increase vehicular efficiency at low cost.

Industrial sector
Industrial activities promise large carbon reductions. The emerging iron and steel industry in Nigeria, which will draw on raw materials from Sierra Leone, Guinea and Liberia, can be built to high standards of energy efficiency and implement standard housekeeping measures to obtain moderate energy and carbon savings at low cost.

Despite the lack of disaggregated data, these options were assessed to give an indicative representation of their cost and emission reduction potential. Table 9.6 summarizes the results.

Policy issues for the region

Policies to foster the energy and carbon conservation potential of the region fall into two categories: regional and national.

Regional policies

The region can only fully benefit from the highly competitive external funds if regional mechanisms are created to analyse and develop well-articulated projects. Such options include: strengthening existing institutions such as the Economic Community of West African States (ECOWAS); creating linkages between national organizations; and developing nodes of analytical skills. The Climate Change Convention recommends that all these steps be taken. The commitments contained in the convention to promote technology transfer, education, and training, etc. can only be realized in West Africa if there is a strong regional framework. The increasing difficulties of donors in meeting aid commitments and competition between recipients imply that a minimum technological capability must be established in the region if it is to tap the climate change related aid programmes. The operation of the Global Environment Facility has already demonstrated the need for such a regional structure. Fragmented regions will be disadvantaged in global fore.

Table 9.6 Cost assessment of carbon abatement options

Rankings refer to the possible point in a cost-emission reduction curve.

National policies

At a national level, specific areas that require policy attention are: fuel pricing for all fuels; an R&D structure with strong links to policy-makers, industries and end-users; the promotion of education and awareness on energy and environmental issues; the development of improved information systems; and the establishment of enforceable and feasible standards.

Governments must also create an environment conducive to the full participation of the private sector, while regulating its activities. Financial mechanisms such as loan guarantees, insurance schemes, and fiscal incentives should be explored also to encourage private sector involvement. An overriding task is to establish an appropriate mechanism to ensure that governmental decisions and goals on energy development and climate change are spelled out clearly and remain flexible in the face of rapidly changing global events.

Conclusions

I have demonstrated that although West Africa's contribution to global carbon emissions is small, its role in a global carbon abatement strategy is important. It is inevitable that energy consumption and carbon emissions will increase as the region develops. However, many of the measures discussed in this study are available to countries in the region at low cost and with external donor support.

To exploit these opportunities, the countries of West Africa must develop strong regional initiatives. There are many barriers to realizing the technological potential to increase energy efficiency and to reduce carbon emissions. But these are susceptible to a variety of policy initiatives. A regional approach is an important prerequisite for successful mobilization of local capital and technological capabilities.

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