A Free-Market Energy Blog

Energy and Poverty – What is Really at Stake in Cancun

By Donald Hertzmark -- December 6, 2010

A year ago during the Copenhagen conference on climate change, I published a post, Electricity for the Poor–What Copenhagen Really Needs to Confront, where I noted that some 1.5 billion people did not have access to reliable electricity supplies. To update this, there is more electricity generated this year than last, mostly due to newly commissioned large conventional sources of electric power – gas, coal, hydro, nuclear. The new estimate is 1.4 billion living in energy squalor.

To hear the good and the great at Cancun, the sustainability issue of energy poverty is hidden. Occasionally, one of the climate-change grandees slips up and admits that this the real subject is wealth redistribution, not climate. But that is about as close as it gets.

All the more reason that the international forums on climate change, energy environment, and the like should get to first principles and study this map:  The World At Night (courtesy of Bert Christensen)

When you fly overnight from Johannesburg to Europe the lights thin out just north of Lusaka, Zambia, a few more in Zambia’s Copper Belt and then nothing (and I mean nothing) until the North African coastline.  For most of this 11-12 hour flight there are no artificial lights below.  From the Sahara on south, but excluding South Africa, a region that is home to more than 400 million people consumes less electricity than New York City.

The International Energy Agency has looked at the issue of energy poverty.  They conclude that for less than a 1% increase in CO2 output everyone in the world could be connected to the modern energy economy.

UN and Energy Poverty

Recently, the UN has revisited the topic of energy and poverty as a part of its Millennium Development Goals Report for 2010.  They rely on the mostly sensible IEA suggestions:

  • Move people away from traditional energy sources and toward modern fuels, especially LPG;
  • Reduce the reliance on subsidies for energy consumers;
  • Strive to maintain modern energy availability at affordable prices – in conjunction with the reduction in subsidies, that means cost effective modern technology to supply energy;
  • Remove barriers to trade for modern energy sources; and
  • Promote decentralized decisionmaking regarding supply and use of energy – i.e., use markets.

The word wind is mentioned once in this 20-page report; LPG is used 7 times.

Some People Are Catching On – Reliable Electricity is a Wonderful Thing

South Africa, one of three sub-Saharan countries with universal electrification (the others are Namibia and Botswana), supplies electricity the old fashioned way:  they burn coal for more than 90% of their electricity generation.  Nuclear and (big dam) hydro provide the rest.  Not for them the run of river hydro projects or rooftop solar collectors.

Most other countries in the region are overrun with proposals to erect wind farms, solar collectors, run of river hydro and the like.  Nothing in this approach can provide a modern economy with energy.  Pressed to sign on with renewable energy projects and incentivized by Clean Development Mechanism (CDM) revenues, the scarce human and business resources of Sub-Saharan Africa are diverted into schemes that do not produce much economic benefit for the country.

We have found elsewhere that this approach to energy does not produce the kind of electricity supply that is needed for industry.  It is fine, however, for tourists (and keeps the wages of waiters and game preserve guides quite reasonable).

For years governments and their international advisors have assumed that poor people are not willing pay for reliable energy.  They have never had a choice in the matter.  They should, it is the only way to light up that map.

Even the august Atlantic Monthly, usually a treasure trove of “correct thinking” on energy and environment, is taking a new look at what clean, reliable energy really means in developing countries.  In its most recent issue author James Fallows weighs in on how China can increase access to affordable modern energy and still reduce the country’s damaging pollution from coal-fired electricity.

In the past, or in the hands of Tom Friedman, this always leads to extoling China’s new dedication to wind and solar.  They do it, we don’t, they’re smart, we’re stupid.[i]

According to the Atlantic article, China has made extensive investments in cleaner ways to use coal – gasification and higher boiler pressures and temperatures.[ii] In fact, the country is the leading builder of coal gasification and “clean coal” power plants.  These investments will result in reduced emissions of Plain Old Pollution[iii] as well as reductions in overall fuel consumption, and hence carbon emissions, for power generation.

The math is elementary: replacing 33% efficient coal plants with generation units that achieve 45% conversion reduces fuel consumption per kWh by 27%.  The widespread deployment of these technologies for using coal more efficiently can help developing countries increase electricity output and reduce pollution.

Currently, the average Chinese consumer uses about 18% as much electricity as the average US consumer.  By using its coal resources more effectively China can continue to spread the benefits of modern energy to their huge population while mitigating environmental impacts.  Just the changeover to better technologies in the current power plant fleet in China will permit consumers to raise their per capita consumption of electricity to 25% of the US level accompanied by a reduction in emissions.

IEA, China, and Atlantic Monthly Knows, Why Don’t We?

Current approaches to electricity supply in developing countries are mostly bankrupt.  The methods tried after independence – state-owned monopoly with subsidized prices – did not work.  The state-owned companies, with a few exceptions, are mostly broke, unable to invest in new capacity and suffering serious reliability problems.

It has been noted on this blog that the US Government pointedly ignores the potential for the technologies that could lead to a dramatic reduction in emissions and fuel use in the power sector both in this country and in those that receive US foreign assistance.  Just recently US Government participation in an advanced technology coal project was cancelled.  But that cancellation is only the tip of the iceberg.

Like China, the US has a fleet of old, inefficient and dirty coal-fired plants.  It has become operationally impossible to take them out of service given their importance to baseload supplies and they cannot be rehabilitated to modern technologies cost-effectively.  Holding out a vain hope for the promise of renewables governments at all levels in the US have created increasing reliance on these old plants instead of replacing those 40 year old plants with new ones.  In fact, for a number of years cancellations of new coal-fired plants in the US  have outpaced new construction.  The cancellations are mostly due to the difficulty in obtaining approvals and permits for new coal facilities – even though these new plants would result in a dramatic net reduction in emissions.

US consumers, like most of the rest of the world, are willing to pay for reliable electricity supplies.  They are even prepared to pay to clean up the air.  Willing-buyers willing sellers; it would be a shame if we have to turn to China to restart the engineering and construction of large power plants that are at the heart of a modern economy.

The understanding that reliable, inexpensive energy is one of the most important elements of development has not been lost on China, or on the IEA, or even, apparently, on some at the UN.  Unfortunately, this wisdom has been lost on many of us in the developed world, especially those in a position to turn back the energy clock.

[i] The US remains the largest generator of wind energy in the world, with more than 30,000 MW installed.  Previous posts at Master Resource have addressed the issue of whether these investments represent net contributions to electricity supplies, reductions in fuel use or carbon emissions.

[ii] Usually referred to as supercritical or ultra supercritical combustion.  See Peltier for a description of the technology.

[iii] That would be ash, carbon monoxide, sulphur, trace metals and other delights.


  1. Kent Hawkins  

    Congratulations on an excellent article on one element of a rational approach to our electricity future that is consistent with our desire to reduce emissions. We must see past the unthinking, inherent prejudices against this energy source and look to ways to use it better, for the benefit of all countries.

    There is no easy solution to a ‘clean’ future – only optimal ones. In the West, we are being seduced by the siren call of renewable energy, and, if we continue to be enraptured by its false message, we will suffer the fate of the misguided sailor in Heine’s Die Lorelei and will crash on the rocks of reality.


  2. Ed Reid  

    Much of the issue of old coal plants can be laid at the doorstep of US EPA, which has chosen to use New Source Review as a “blunt instrument” any time any modification is made to an old coal plant. Plant owners quickly realized that simple maintenance and direct equipment replacement were far safer than any combustion or efficiency improvements.

    The old coal plants will ultimately be replaced. However, it is important to realize, from this discussion, that the power plant decisions we make today will likely be with us for 40-60 years.


  3. Administrator  

    In addition to how these decisions play out for the US, they also influence international investments as well. Decisions by the World Bank and other institutions to eschew clean coal in favor of wind and solar leave the “beneficiaries” with large loan balances and a poor electric power system.

    Even in relatively advanced countries such as parts of the former Soviet Union the fastest way to improve the efficiency and emissions picture is to replace conventional coal plants with better ones, not wind and solar. The renewables fixation has had the net effect of tilting the investment profile toward plants that do not play well with others (wind, solar) while ignoring the increasingly obsolete conventional plants that actually carry the load.

    A case study is in the works.


  4. Ed Reid  

    Depreciation is the key to replacement of obsolete facilities and equipment. The forty year depreciation schedules typically applied to utility plant effectively guarantee obsolescence prior to full depreciation. Reality bites!


  5. DocForesight  

    Two questions: (1) Assuming the development, licensing and deployment of SMR nuclear over the next 10 years (hopefully), and assuming sanity is restored to Congress, the EPA and our national energy policy, do you foresee these old, inefficient coal-fired plants being replaced with new, smaller nukes?

    (2) Wherever energy poverty is prevalent, there will be a hierarchy of priority to deploy reliable electricity. Rural areas will be low on that list. At a cost ranging from $3k to $20k per km to string a power line, is it possible that ‘renewable’ power pods/nodes to service a village with localized modest power capacity is a reasonable ‘bridge’ for the next 20-30 years until base-load can be deployed?


  6. Donald Hertzmark  

    Good questions. Frankly, I have no idea whether the USG will come to its senses over licensing of new generation plants, but debt has a powerful way of focusing people and we may eventually realize that willing sellers and investors are the key to electricity reliability.

    The point that you raise on small market electricity in developing countries deserves its own essay. In my experience it is the productive uses of electricity that need to drive grid extension or isolated “mini-grids.” A lot of small industry – food processing, sawmills and the like – can add sufficient value to pay for almost any reasonable prime mover technology. This includes small engines, small hydro and hybrid renewable-diesel systems. The key is to begin with those who need reliable electricity to add value to their current activities – farming, fishing and forestry.

    Electrification using large subsidies for unreliable power or household use only has proved beyond the ability of most poor countries to finance. But once the productive uses are in place people can (and will) pay the price for improved access to modern energy. There are many examples of this and they will be addressed in a subsequent post.


  7. DocForesight  

    Thank you for your response. I struggled with this conundrum over the comparative high-cost of solar – wind – battery back-up systems until I realized that, to someone who has no electricity at all, even having a modest amount – 200W to 300W per day – could make a significant improvement in their quality of life.

    Since most health problems stem from a lack of potable, fresh water for drinking and cooking, providing the means to address that issue would have a large pay-back. Lighting for a village central area or modest refrigeration for a village clinic to preserve medicines would likewise be a multiplier of benefit.

    I found this site: http://www.self.org by happenstance and it helped to quell my uncertainty about the need for a ‘bridge’ source of energy – from absolutely nothing – to 24/7 base-load. It isn’t a perfect solution, but perfect shouldn’t be the enemy of ‘good enough for now’.

    Let me know what you think.


  8. No Apologies  

    […] Read the complete article here. Public date: December 16th, 2010Categories: Analysis, UncategorizedTags: electricity, energy, environmentalism, fossil fuels, Gaia, International Energy Agency, pantheism var addthis_pub="4a0d336a0bd73092"; Leave a Reply Click here to cancel reply. […]


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