Delivering affordableenergy solutions to lowincomecommunitiesBPBP has been investigating innovativeapproaches to marketing energyproducts to low-income customers. BPand partners have <strong>de</strong>veloped a cookingstove that integrates a liquefiedpetroleum gas (LPG) and biomass burnerin an effort to provi<strong>de</strong> low-income homesin India <strong>with</strong> sustainable, healthy energyfor cooking. The aim is to reach 3 millionhouseholds by 2008. BP plans todistribute <strong>the</strong> appliance through localsuppliers to provi<strong>de</strong> new businessopportunities to <strong>the</strong> community.Key challengeslimiting progressFossil fuels dominate global energysupplies but <strong>the</strong>y are unevenlydistributed and geographicallyconcentrated in a few regions of <strong>the</strong>world. This leaves many countries –particularly resource poor and<strong>de</strong>veloping ones – vulnerable todisruptions in supply and volatileenergy prices. Twenty-eight Africancountries spend more than 10% of<strong>the</strong>ir total import bill on oil. 23While some of <strong>the</strong> raw materials usedfor generating energy can be exportedand physically <strong>de</strong>livered to mostlocations around <strong>the</strong> globe, e.g., oiland natural gas, o<strong>the</strong>rs are morelimited in <strong>the</strong>ir scope for export.Electricity requires a network of hightension power cables to cover largedistances. The remoteness of certain<strong>de</strong>veloping country populations andunfavorable terrain in many of <strong>the</strong>seregions pose a fur<strong>the</strong>r challenge forenergy <strong>de</strong>livery. As a consequence, <strong>the</strong>majority of <strong>the</strong> rural population inmany <strong>de</strong>veloping countries is notconnected to <strong>the</strong> electricity grid.Today, <strong>de</strong>veloping countries face <strong>the</strong>challenge of achieving <strong>de</strong>velopment inan era characterized by global climatechange. It is now wi<strong>de</strong>ly accepted thatincreased emissions of greenhousegases (GHG) are affecting <strong>the</strong> climateand contributing to global warming.The greatest impacts from climatechange are likely to be felt in poorcountries, in arid as well as in coastaland water-stressed areas, which will beaffected by greater competition forcultivable land, increased water andfood scarcity, and rising sea levels. Acollective response from governmentsand <strong>the</strong> private sector will be nee<strong>de</strong>d tohelp <strong>de</strong>veloping countries in <strong>the</strong>iradaptation to climate change impacts.The Kyoto Protocol has sought to tackleglobal emissions by putting a cap oncarbon and o<strong>the</strong>r GHG emissions andcreating an international market fortrading <strong>the</strong>m. This has spawned a hugetra<strong>de</strong> in carbon offsets. The carbonmarket reached US$ 30 billion in 2006and is set to grow. Governments andcompanies in <strong>the</strong> countries that ratified<strong>the</strong> Kyoto Protocol have been able tocapitalize on <strong>the</strong> market opportunitiesthat <strong>the</strong> Protocol offers. However,adherence to <strong>the</strong> Protocol has beenuneven. The challenge presented by<strong>the</strong> competing <strong>de</strong>mands of energyprovision for economic <strong>de</strong>velopmentand climate protection requires aconcerted global effort. While <strong>the</strong>Kyoto Protocol was largely a top-downeffort, <strong>the</strong> WBCSD and somegovernments are calling for a new,bottom-up approach more appropriateto <strong>the</strong> national levels at which energypolicy is ma<strong>de</strong>, to kick in after <strong>the</strong>current emissions reduction period,2008-2012, ends. 24<strong>Business</strong> plays a major role in <strong>the</strong><strong>de</strong>livery of energy solutions andinfrastructure, but <strong>the</strong>se efforts aloneare not sufficient to meet <strong>the</strong> globalenergy challenge. Governments,working <strong>with</strong> business and civil society,need to set long-term policies that givebusiness <strong>the</strong> predictability andincentives to invest in sustainableenergy solutions.Governments should enhance <strong>the</strong>irefforts to <strong>de</strong>velop comprehensiveenergy policies, set realistic andachievable targets, and work outindicators to measure progress. Theyneed to take account of <strong>the</strong> societaland environmental impacts of energyprovision and use, and set targets forGHG emissions. They can assist inachieving such targets throughincentives or subsidies that encourage<strong>the</strong> <strong>de</strong>velopment and use of clean,renewable sources of energy.Fur<strong>the</strong>rmore, governments shoul<strong>de</strong>ncourage measures to increase <strong>the</strong>energy efficiency of <strong>the</strong>ir economythrough <strong>the</strong> introduction of standardsand labels, and introduce incentives tochange energy consumption patterns,e.g., by subsidizing cheap energy atoff-peak times.Finally, it will be a big challenge tochange <strong>the</strong> habits of people who havealways relied on biomass for <strong>the</strong>irenergy needs. Collecting firewood andcooking on simple stoves remain <strong>the</strong>only option in many societies wherewood is cheap and readily available.The incentives need to be right tochange <strong>the</strong>se habits; <strong>the</strong>se couldinclu<strong>de</strong> innovative financial solutions toreduce <strong>the</strong> (still consi<strong>de</strong>rable) up-frontinvestment required by new cleantechnologies such as solar energy ormo<strong>de</strong>rn biomass stoves.18
How businesscan contributeThe key to a sustainable energy futurefor <strong>the</strong> planet rests on four actions: amove toward a low-carbon economy,reduced <strong>de</strong>pen<strong>de</strong>ncy on fossil fuels,significantly improved energy efficiencyacross all sectors, and <strong>the</strong> <strong>de</strong>velopmentof cheap and affordable energy solutionsfor <strong>the</strong> 2.4 billion people who rely ontraditional biomass.Some of <strong>the</strong> lower carbon solutions,such as nuclear energy, already exist andare wi<strong>de</strong>ly <strong>de</strong>ployed. Hydroelectric, solar,wind and wave power are rapidlyimproving in terms of cost effectiveness,<strong>with</strong> Western Europe leading in <strong>the</strong><strong>de</strong>velopment of wind-generated power.Technology will be nee<strong>de</strong>d to increase<strong>the</strong> efficiency of solar energy andbatteries to store renewable energies.Clean coal technologies such asintegrated gasification combined cycle(IGCC) are being tested. Gasification alsoallows new coal plants to <strong>de</strong>velopcarbon capture and storage (CCS). Thesetechnologies can consi<strong>de</strong>rably reduce<strong>the</strong> environmental impact of coal-firedpower generation, while enabling coalrichnations such as China, India, SouthAfrica and Australia to cleanly takeadvantage of <strong>the</strong>ir abundant coalsupplies. Funding of a number of largescaleCCS-projects could reduce costsand promote a global CCS industry.New markets are emerging. Markets foralternative forms of energy already exist,but <strong>the</strong>se forms of energy remain un<strong>de</strong>rused.O<strong>the</strong>r growing energy sectorsinclu<strong>de</strong> markets for energy conservationservices and energy-efficienttechnologies. Energy efficiency measuresmake perfect sense for companies as apotential way to help reduce operatingcosts. To increase end-user energyefficiency, energy savings can becertified, and <strong>the</strong> certificates can <strong>the</strong>n betra<strong>de</strong>d (so-called “white certificates”).Some European countries (Italy, France,<strong>the</strong> UK) have started implementing suchschemes.Lastly, companies can <strong>de</strong>velop energysystems based on locally availableresources – such as biomass or smallhydro – and tailor <strong>the</strong>m to local needs.Local energy companies can help. Theytend to have in-<strong>de</strong>pth local knowledgeof requirements and of potentialmarkets, but <strong>the</strong>y often lack <strong>the</strong>capacity and <strong>the</strong> financial resources toprovi<strong>de</strong> infrastructure and energysolutions. Larger corporations canpartner <strong>with</strong> local companies to buildcapacity and <strong>de</strong>velop locally tailoredsolutions. By doing so, <strong>the</strong>y willfacilitate improved access to energyservices while enhancing <strong>the</strong>ir ownmarket share. Public-privatepartnerships could also help meet<strong>de</strong>veloping country energy needs.Key messagesFor business, investing insustainable energy services can: Create new markets and associatedrevenue streams for energy-relatedproducts and services for currentlyun<strong>de</strong>rserved populations in<strong>de</strong>veloping countries; Create competitive advantages by<strong>de</strong>veloping new and affordableenergy technologies that reduceemissions and/or improve energyefficiency; Reduce reliance on fossil fuels in<strong>the</strong> energy mix, <strong>the</strong>reby reducingsome of <strong>the</strong> exposure to volatilecru<strong>de</strong> prices; Lower operating costs by improvingenergy efficiency.For governments, an effectivepolicy framework for sustainableenergy services can: Improve access and reliability ofenergy supplies, <strong>the</strong>rebygenerating economic growth andhuman progress; Lead to successful implementationof lower carbon technologies using,for example, <strong>the</strong> Clean DevelopmentMechanism (CDM) to achieve scale;policies must place more emphasison <strong>the</strong> materiality and repeatabilityof solutions; Promote growth in <strong>the</strong> small andmedium enterprise (SME) sector toprovi<strong>de</strong> energy services,particularly in rural areas, <strong>the</strong>rebygenerating sustainable enterprisesas well as facilitating energy access; Raise consumer awareness of energyefficiency, <strong>the</strong>reby reducing <strong>the</strong>requirements for new energyprojects and freeing up capital foro<strong>the</strong>r basic needs; Improve public health by promotingcleaner forms of energy supply; Reduce <strong>de</strong>forestation and ecosystem<strong>de</strong>gradation arising from biomassharvesting.19