Mohinder Gulati is the Acting CEO of the Sustainable Energy for All Initiative. He acts as a strategic advisor to the CEO and supports day-to-day operations of the Global Facilitation Team. Before joining SE4ALL, Mohinder Gulati worked with the World Bank for twenty years, his latest assignment was as Adviser (Energy) and previously Sector Leader (Sustainable Development) for South East Europe.
As Program Leader in East Asia and Pacific region of the World Bank, Mohinder led the dialogue on establishing a regional electricity market in Greater Mekong Sub-region, managed a large cross-border export-driven private sector hydropower project and rural energy access programs. In South Asia he led World Bank-funded power sector restructuring and reform program in several Indian states (Andhra Pradesh, Uttar Pradesh, Orissa), enactment of new laws and regulation, creation of new regulatory institutions, and construction of power generation, transmission, and distribution projects. He is a graduate in Management (Harvard and Delhi University), Physics (Delhi University), and Associate of Indian Institute of Bankers.
1. The United Nations Sustainable Energy for All (SE4All) was established in 2011 to increase energy efficiency, renewable energy and energy access by 2030. What has been the progress on these objectives?
According to SE4All’s Global Tracking Framework 2015, the 2010–12 tracking period presents some encouraging progress relative to what was observed in previous decades. For instance, there have been notable advances in electrification during this period, providing access to electricity to an additional 222 million people. Primary energy intensity improved by more than 1.7 percent a year over the tracking period, compared to 1.2 percent in the previous decade. The incremental change in energy intensity from 2010 to 2012 alone avoided primary energy use of 20 exajoules (EJ) in 2012. The growth of renewable energy in final consumption also increased in recent years. It grew from 17.8 percent in 2010 to 18.1 percent during the tracking period.
The goals are no doubt ambitious, but we are also witnessing unprecedented mobilization of political and financial support. SE4All led the global debate on including sustainable energy for all as one of the post-2015 Sustainable Development Goals. These have been approved by the member states of the United Nations on 3rd August and are proposed to be adopted at the United Nations Summit on SDGs in September 2015.
The European Union, the United States and Germany have launched programs to halve energy poverty within fifteen years. India plans to add 175GW of renewable energy and achieve universal access. Partners of SE4All are helping prepare 27 action agendas and investment prospectuses in 16 countries in the first phase, and based on this experience the program will be refined and scaled up. The adoption of the SDGs, and finally agreement on how to implement them, will see a step-change in the investment climate and finance for sustainable energy investments.
On our end, SE4All has finalized 43 SE4All Rapid Assessments/Gap Analyses for country-level action, and identified 50 High-Impact Opportunities (HIOs). We have also organized the Global Energy Efficiency Accelerator Platform to promote energy efficiency
However, inadequate flows of financing to emerging markets could become a major challenge. Current investment flows of about US$400 billion a year would need to be increased to about US$1,000 billion a year to achieve the necessary pace of progress.
To catalyse investments and scale up financing for sustainable energy investments, the SE4All Advisory Board set up a Finance Committee, whose report was launched at the Third International Conference on Financing for Development in July 2015. The report makes recommendations on increasing the deal flow and takes a programmatic approach to preparing bankable projects, improving the policy, regulatory and institutional environment, improving the corporate governance and institutional capacity of state-owned incumbent utilities, and innovative structures to de-risk investments and attract non-traditional investors.
The adoption and piloting some of these recommendations would go a long way in scaling up financing to accelerate investments in sustainable energy. The Finance Committee has demonstrated that it is feasible to raise an additional US$120 billion a year in the next five years, before financing can be ramped up gradually to reach the target levels.
2. What are the outcomes of the 2nd United Nations Sustainable Energy For All Forum, which recently concluded in New York?
In May, more than 1,500 high level representatives from government, business, international organizations and civil society gathered for the forum. These thought leaders, which included more than 30 Energy and Finance ministers from across the globe focused on reporting and assessing progress towards sustainable energy for all, mobilizing further actions, partnerships and commitments, sharing best practices and showcasing innovation.
The emphasis was on concrete, substantial outcomes, including the launch of the SE4All's Annual Report for 2014, the second edition of the SE4All Global Tracking Framework, and a global campaign on Energy for Women and Children’s Health.
Partners working towards the three Sustainable Energy for All objectives announced commitments towards these targets.
The Forum also featured the first ever Global Energy Ministerial Dialogue at the United Nations, in order to reaffirm the determination of Rio+20 “to act to make sustainable energy for all a reality”.
The Advisory Board meeting called on the Special Representative of the Secretary General and the CEO of SE4All to develop a global implementation strategy for the proposed Sustainable Development Goal 7 on energy, including a five-year vision and action plan (2016-20). The Advisory Board also encouraged all partners to present concrete actions and commitments, including organizing a high-level event to highlight the work of its Finance Committee, at the Finance for Development Summit in Addis Ababa.
Its success reaffirmed that a grand coalition of SE4All partners from around the world and across society stands ready to help implement the outcomes of the UN Conference on Financing for Development in July, the adoption of the post-2015 development agenda in September and the UN Climate Conference (COP 21) in December.
3. ASEAN’s energy demand is set to increase by more than 80% by 2035 with coal remaining the baseload fuel of choice. In your opinion, how should we balance the need for affordable and universal access to energy with environmental sustainability?
In August 2015, UN Member States reached agreement on the Sustainable Development Goals (SDG) and post-2015 development agenda. To ensure access to affordable, reliable, sustainable and modern energy for all, it emphasizes not only universal access, but also environmental sustainability. The outcome document encourages international cooperation to facilitate access to clean energy research and technology, including renewable energy, energy efficiency and advanced and cleaner fossil-fuel technology.
Therefore, developing cleaner fossil-fuel technology and promoting investment in energy infrastructure and clean energy technology could be the first step towards sustainable energy in some emerging economies that are heavily dependent on fossil fuels. This dependency locks them into an energy pathway that causes severe local environmental impacts such as deteriorating air quality, soil contamination, heavy withdrawal of freshwater in competition with other uses and most importantly, catastrophic events induced by climate change.
Within their energy resource endowment, affordability, and economic viability, countries are beginning to choose the least-carbon energy development path. This is happening even while oil prices are extremely low.
IRENA’s report “Renewable Power Generation Cost in 2014” shows that most renewables have become competitive against fossil fuels; cost of solar has dropped by about 75% in the last five years and is forecast to drop by another 40% in the next five years.
ASEAN, with significant potential for economic growth and sustainable development, can play a key role in achieving sustainable energy for all, balancing the need for universal access to modern energy services with environmental sustainability – by assessing the economics of renewables and shifting its energy system away from a carbon-intensive development pathway. The presence of several energy institutions on clean energy, renewables, and energy policy in Singapore is a reflection of growing awareness and action in the region.
4. Financing for energy infrastructure and renewable energy has been a challenge for governments. How can we strengthen public-private partnerships to advance the SE4All objectives?
Large-scale public-private partnerships are needed to increase investment in developing and OECD economies. It is essential for governments to attract the private sector, especially in emerging markets that have small domestic capital markets, to meet their public policy goals.
The energy sector in many countries, particularly the power sector, is heavily controlled by the government through ownership, policies and regulation. The private sector may be asked to compete “for the market” but often not “in the market”. It is therefore important to strengthen the investment climate through stable and predictable policies and regulation, independent and competent institutions, transparent public and corporate governance, and a financially viable power sector. In addition, the emerging markets need affordable access to technology and long-term finance.
Public institutions are often unfamiliar with the complexities of public-private partnerships. The level of knowledge, capacity and incentives of the two contracting parties differ vastly, though they have a shared objective in making the transaction happen. Before deciding to structure a project as a concession or PPP for sustainable energy, governments need to assess whether these options are a good use of resources. In particular, project appraisal, assessing whether or not to develop the project and implement it as a PPP, should be carried out with specific criteria. The feasibility, commericial and economic viability of the project should be taken into consideration. Examining commercial viability, comparing the option against other possible structures, checking the fiscal cost of the project and accommodating the project within prudent budget and other fiscal constraints are also required in order to advance the SE4All objectives in a sustainable manner.
Key challenges in public-private partnership transactions in emerging markets include insufficient creditworthiness of the energy off-taker (often a state-owned enterprise), perceptions of high political risk due a high degree of state ownership, unpredictability of policies and regulation and an absence of independent regulatory institutions. The emerging markets face a difficult task in simultaneously improving the enabling environment while trying to attract private-sector financing.
One often-ignored aspect is the transition path and financing of transition costs to improve the enabling environment and sector reforms. Governments need to improve laws and regulation that would help attract private-sector financing, strengthen institutional capacity, improve the operational efficiency of incumbent utilities to bring down costs, and adjust tariffs to recover those costs, and put in place a robust system to protect economically vulnerable consumers by keeping their tariffs affordable. In order to manage an orderly transition, each country has to prioritize and sequence these actions, and choose the pace of reforms, according to its political, economic, and social context. Broad-based consultations with multiple stakeholders are often necessary to implement such changes.
Multilateral institutions and governments can help de-risk investments during the transition by smart use of their attractive but limited resources through blending, co-financing, leveraging and guarantees. Development Finance Institutions need to leverage their existing portfolio and balance sheet to bring institutional investors such as sovereign wealth funds and insurance and pension funds into the energy markets of emerging economies. The recent report by the Finance Committee of SE4All’s Advisory Board presents several concrete recommendations and structures that can help de-risk and scale up financing for sustainable energy investments.
5. In your opinion, what role do you see ASEAN playing in the implementation of SE4All initiatives at the regional level?
The ASEAN region has great potential for implementing SE4All initiatives. According to the Global Tracking Framework 2015, Southeast Asia contributed about 12% of the global increase in access to electricity and almost 10% of the global increase in renewables in final energy consumption during 2010-12. The region also contributed to improvements in renewable energy and energy efficiency.
SE4All has four regional Hubs to promote the implementation of SE4All activities in their respective regions. The Asian Development Bank, as SE4All’s Asia-Pacific Hub, is implementing the strategic objectives of the SE4All initiative in the region, supporting the preparation and implementation of Country Action Plans and Action Agendas. Singapore is home to several excellent initiatives on clean energy and, along with the SE4All Energy Efficiency Facilitation Centre in Tokyo, can play an important role not only for ASEAN but for the whole of Asia. ASEAN cities can also play a very important role through innovations in technology and the business models for improving energy efficiency in large urban areas, which are engines of economic growth and major consumers of energy.