Contenu du sommaire : “Which Energy Policies for Sustainable Development ?” AFD-PROPARCO/EUDN 2014 Conference

Energy makes a much more substantial contribution to economic growth than most conventional macro-economic approaches acknowledge. This issue is all the more crucial since several “weak signals” (of varying degrees) suggest that time is running out for a number of Southern countries to eradicate poverty and prepare their populations to deal with the damage done by both the depletion of natural resources and climate change. Unless a decisive shift towards circular economies occurs, the prospect that Southern societies could collapse and Northern societies could face long-term impoverishment can no longer be ruled out.JEL Classification: O13, Q01, Q54.

Energy is an important component of the economy and is a fundamental factor of production. In general we expect its use to grow with some relationship to growth in economic activity. Empirically we see a closer relationship (higher E/GDP elasticity) in emerging economies where the energy-intensive stage of development is still in progress. Traditional fossil energy sources remain the least cost source of providing many or most energy services but present an environmental challenge. Managing the growth in energy use and its impact on the environment is a central challenge of “green growth.” Examples of the interactions of energy development in China are used to provide a deeper understanding of these links.JEL Classification: D58, O13, Q53, Q54.

Africa faces chronic power problems, including insufficient generation capacity, low connectivity, poor reliability and high costs, all of which constrain development. Power capacity additions in Sub-Saharan Africa (excl. SA) since the 1990's were minuscule. Historically, investments in the power sector in Africa have come mostly from governments or public utilities (with foreign aid support). In recent years these sources of funding have been flat. The fastest new sources of funding are from Independent Power Producers (IPPs) and from China. To understand the determinant of the new sources, the paper analyses the effect of several key factor and find non-expected results, such as there is no obvious correlation between unbundling, or the presence of an independent regulator, and the level of private investment through IPPs; or that there is no correlation between Chinese investment in generation and resource rich countries (dispelling the myth that Chinese firms are only interested in Africa's resources). The paper delivers several recommendations that indicate that more attention needs to be given to issues related to planning, procurement and contracting as well as securing revenue flows.JEL Classification: O13, O25, L94.

Rigorous impact evaluation that includes appropriately selected control groups must be a part of rural electrification program designs. Budgeting evaluation activities and engaging with evaluators at an early stage improves to likelihood of having a high quality evaluation design; plus, if deviations occur after the design stage, the evaluators are better prepared to adjust the design so that the impact results remain informative to policy makers and future program designers. Another takeaway is to use unified framework to specify the expected outcomes and the plausible sizes of impacts. If done at the beginning of the program, this will provide context to the kind of discussion that policy makers should engage in (e.g. if they should focus on health benefits or the potential to diffuse information campaigns to rural households). These points focus mostly on internal validity, but we also need to focus on external validity as well. Large scale rural electrification programs will provide an opportunity to test if the results from small scale impact evaluations translate to other settings. Something we have not stressed so far but that is important to keep in mind are the complementarities in the provision of different type of infrastructure. Large projects can provide an opportunity to explore complementarities with other infrastructure programs, such as mobile telephony, road access, and improved water and sanitation access. They can shed light on what are the most welfare-enhancing policy options when deciding what types of infrastructure to provide in rural areas, and especially to poor rural households. Finally, we reiterate the need to use an objective function that casts a wider net when deciding where to place electrification programs. Focusing solely on cost minimization can result in missed opportunities. When deciding where to deploy the electric grid in rural areas it is imperative to take into account the potential profits, specifically the agricultural potential of these areas. By using the isoprofit and cost minimization framework described, rural electrification programs have the opportunity to reach more poor households and have larger impacts in the lives of the rural poor by providing new opportunities and enhancing the synergies between the agricultural and non-agricultural sector.JEL Classification: O13, O38, Q56.

The investment requirements to achieve the United Nations' universal electricity access goal by 2030 are estimated at 640 billion US Dollars. The assumption underlying this goal is that electrification contributes to poverty alleviation in many regards. In recent years, a body of literature has emerged that widely confirms this positive poverty impact assumption. Most of these studies, however, are based on data from Asia and Latin America. This paper challenges the transferability of impact findings in the literature to the African context. Using a unique data set that we collected in various African countries we suggest that impact expectations on income, education, and health should be discounted considerably for Africa. In many cases, the low levels of electricity consumption can also be served by low-cost solar alternatives. To ensure cost-effective usage of public investments into rural electrification, we call for careful cost-benefit comparisons of on-grid and off-grid solutions.JEL Classification: O33, P46, Q41.