[sustran] World Bank Energy & Environment Strategy Consultation

Paul Barter tkpb at barter.pc.my
Wed Sep 17 09:04:36 JST 1997


More Transport comments for the World Bank (this time from Germany). I have
cut the sections which have limited relevance to transport.  I have left in
the comments on energy pricing and  taxation because these need more debate
in the transport field as well.

I should also emphasise that all of these comments refer to a draft
document which is not yet World Bank policy.
A. Rahman Paul Barter.
--------------------------------------------------

Date: Tue, 16 Sep 1997 19:15:32 +0200
From: "Rudolph, Jochen, 4150" <Jochen.Rudolph at gtz.de>
To:  owner-strategy at geei.org
Subject: BMZ, KfW, GTZ: Comments on World Bank "Energy and Environment Strategy
         Paper"

Federal Ministry for Economic Cooperation and Development
(BMZ), Bonn, Germany
Rainer E. Lotz, e-mail: lotz at bmz.bmz.bund400.de

Kreditanstalt f}r Wiederaufbau (KFW), Frankfurt am Main,
Germany
Armin Brestrich, e-mail: armin.brestrich at kfw.de

Gesellschaft f}r Technische Zusammenarbeit (GTZ), Eschborn,
Germany
Jochen Rudolph, e-mail: jochen.rudolph at gtz.de

Our congratulations to the authors of the lucid, clear-cut
draft on a rather difficult and controversial topic! We
fully support the Bank's continued efforts to apply an
integrated, environment-oriented approach towards
sustainable energy development. We appreciate the Bank's
remarkably self-critical wording. We welcome the
opportunity to enter into an electronic discussion and
consultation already at the drafting stage. We invite you
to get in touch with any and all of us at the address
indicated above.

General Remarks

In its basic strategic orientation, the draft is in
agreement with our publication "Energie in der deutschen
Entwicklungszusammenarbeit" (BMZ-Materialien No. 96, Bonn,
March 1997; an English translation, "Energy in Development
Cooperation", is in print). We nevertheless volunteer some
comments.

A strong point of the draft is its analytical clarity
differentiating win-win options, local/ regional and global
externalities. We are convinced that given the ever
increasing role of the private sector in the provision of
energy services the World Bank and other institutions have
to make a clear point on what the particular contribution
to that sector is. We agree with most of the central
statements, in particular:
-       Energy services should be supplied following a
least cost strategy
-       Markets fail to capture the full economic,
environmental and social cost of fuel use
-       Regulatory frameworks should involve not only
polluters and government policy makers but also
representatives of the public at large and key sectors of
the market

The weak points of the present paper are the inadequate
discussion of the transport sector and the lack of
operational guidelines................
<stuff deleted>............

Energy pricing

We are surprised that energy pricing is treated as a low
ranking issue. It is only mentioned as one of several
aspects to be borne in mind (see page 18). It is a
well-known fact (extensively researched by the Bank itself)
that in most developing countries energy prices include
enormous subsidy components and price distortions. In our
view this is perhaps the single most important barrier for
the realisation of win-win opportunities and the
introduction of energy efficient technologies. There can be
little doubt that raising energy prices to cover the full
financial and economic cost is the most cost-effective way
to "remove barriers to energy efficiency and energy
conservation".

Any operational strategy should make clear, that energy
efficiency and energy conservation projects have to be
identified and defined with much more care in countries
with insufficient energy prices - because of an enormous
risk of failure. And it should be made clear that in these
countries the scope of activities which can be financed
from Bank funds is much more limited than in countries
which energy prices reflecting the costs. We are therefore
not as optimistic about the development of a competitive
ESCO industry in developing countries (pages 23 and 24) and
feel that this instrument will only work in the - thus far
- few countries were reform processes are fairly developed.

Sectorial minimum requirements
<stuff snipped>........

Role of Government
<stuff snipped>.....

Greenhouse gases (Shadow value for carbon/CO2 )
<stuff snipped>........

Win-win Options
<stuff snipped>.....

Energy Taxes

Competition and privatization lead to lower energy prices
(cf. Chile and Argentina as examples) and, hence, to higher
levels of energy consumption. This bounce-back effect needs
to be balanced out by the user-pays principle, particularly
in the form of energy taxation. The pertinent observations,
however, are overly abridged, especially on page 38, C2.
The strategy paper should clarify the role the World Bank
would assign to the introduction of fossil fuel taxes
within the context of its advisory services on sectoral
reform to reduce the emission of CO2 and other pollutants.
In that connection, reference could be made to the "double
dividend" concept, according to which fiscal income is
combined with taxation of negative external effects to
yield a positive steering effect.

Rural Energy Services and Global Environmental Protection
<stuff snipped>......

Transport

The draft paper's focus is biased towards industry.
However, since most carbon-monoxide and nitrogen-oxide
emissions derive from motor vehicles (up to 70% and around
50%, respectively) it would benefit the paper to be revised
by a transportation expert.

Win-win strategies for the transport sector are lacking,
for example, in the subsection on " Final Energy for
End-use" (page 16, bottom). This is where the reader's
attention should be called to the large potential for local
environmental protection to be realized by installing more
modern, fuel-efficient engines in existing vehicles and/or
replacing such vehicles with new ones. Likewise, measures
taken to improve traffic management can benefit transport
undertakings by cutting fuel consumption and saving time.

While the future strategies for the World Bank do include
an introductory reference (page 29, top) to urban planning,
improved mass transit systems, better fuel quality and new
vehicles as win-win options, these factors are missing in
the subsequent main components 1 through 5. Only industry
and energy are referred to from that point on. Apparently,
it was simply forgotten in this case, because the
strategies outlined in chapter 3 (page 34, top) include
these same measures as options. In addition the paper
contains no mention of traffic-avoidance options such as
integrated urban planning (e.g., short distances between
home and workplace). Also lacking is the aspect of
promoting non-motorized modes of transportation.

Hydropower
<snipped>

Solar Initiative
<snipped>



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