What is Green and Inclusive Growth?

Caribbean Growth ForumJune 18, 2012

CONTENTS

• Sustainable development and green growth

• Urban challenges in LAC – an example of inclusive green growth challenges

• Inclusive green growth in practice

• The green energy challenges - Caribbean

3Source: Country Environmental Analyses, World Bank

A BAD ENVIRONMENT IS COSTLY

Cost of Environmental Degradation(% of GDP equivalent)

Average

… economic growth that is environmentally sustainable.

• Not a new paradigm, but aims to operationalize sustainable development

• An approach for countries to achieve robust growth without locking themselves into unsustainable patterns

• Not inherently inclusive, hence the need for specific policies to ensure the poor benefit

GREEN GROWTH IS…

GREEN GROWTH IS…

1. Clean

2. Efficient

3. Resilient

But it also has to be Inclusive

GREEN GROWTH IS…

Clean Efficient Resilient Inclusive

…but

• What does this mean for policy makers? • For setting investment priorities?• For choosing among trade-offs?

Since Rio, Latin America and Caribbean has served as the world’s laboratory for inclusive green growth

• From Payments for Environmental Services to high production agriculture…

• From community-driven slum upgrading to the world’s most extensive use of Bus Rapid Transit…

• From the first regional catastrophic risk insurance facility to the lowest carbon energy matrix of the developing world.

 

But how do we mainstream?

Sectoral Policies, Regulations, Investments, Incentives and

Behavioral Changes

URBAN AND INFRASTRUCTURE SERVICES:

Key Objectives for Green and Inclusive Growth

LAC Regional Challenges

Percentage Urban Population LAC

40

90

1950 2020

URBAN FOOTPRINT

Atlanta

Barcelona

Kingstonc.700,000 people (2011)480 km2

Exhausting land, straining service delivery

URBAN FOOTPRINT

Atlanta

Barcelona

KingstonPopulation equalized with Barcelona

Exhausting land, straining service delivery

URBAN FOOTPRINTSMALL AND GROWING ARE ALSO

SPRAWLING FASTER

Brazilian Cities

Sprawl Index (2000)Pop

ula

tion

Gro

wth

2000-2

008

URBAN TRANSPORTWE ALREADY OWN A LOT OF CARS

Road congestion in Mexico City

…and growth in automobile ownership is skyrocketing

Vehicles per thousand people LAC

300

16

BOLSTERING RESILIENCEprotecting physical capital and enhancing

competitiveness

The challenges

political economyentrenched behaviors

limited and traditional financing

18

THE REAL CHALLENGES: Political acceptability and governance

failures

19

THE REAL CHALLENGES: Social acceptability

and entrenched behaviors

ENERGY

Key Objectives for Green and Inclusive Growth

Energy

Clean

A low carbon composition

of technology

and fuel mix in generation

capacity.

Efficient

Increased efficiency in production, supply and

use of energy.

Resilient

Increased system

resilience, for instance

through inter-

connection.

Resilient

Provide universal access at

affordable prices.

Inclusive

21

Energy in the Caribbean – Booming Demand

Average annual growth of 3.6 percent throughout 2028

Doubling of demand between 2009 and 2028

Individual country growth rates vary between 2.4 and 7.9 percent per year

Peak demand will grow in * Dominican Republic from 2,300 MW in 2009 to 4,400 MW in 2028 * Jamaica from 680 MW to 1,500 MW

Electricity – the Caribbean Fuel Source

22

Country Diesel

Heavy Fuel Oil

Natural Gas Coal Other

Antigua and Barbuda X XBarbados X X X BagasseDominica X HydroDominican Republic X X X X 20% HydroGrenada XHaiti X XJamaica X X Bagasse,

WindMartinique X XSt. Kitts X XNevis X GeothermSt. Lucia XSt. Vincent and the Grenadines

X X

Trinidad and Tobago X

23

Existing Generation Technologies (MW)

Gas Turbine

Steam Turbine

Low Speed Diesel

Medium Speed Diesel

Hydro

Other

0 200 400 600 800 1000 1200

692

900

1115

650

551

47

24

Base Case

Scenario

Fossil Fuel Scenario

US$2.5 Billion

Interconnection / Renewables

ScenarioUS$2.6 Billion

Integrated ScenarioUS$4.4 Billion

Energy Affordability - Cost Savings by moving from Base Case to Integrated Approach

through 2028

14

Green Energy - Investment Requirements (Million US$)

Integrated Scenario

Antigua and Barbuda 107

Barbados 140

Dominica 818

Dominican Republic 6,200

Grenada 194

Haiti 360

Jamaica 1,937

St. Kitts 2

Nevis 1,913

St. Lucia 61

St. Vincent and the Grenadines 195

TOTAL 11,926

Production Cost Savings 14,500

26

INCLUSIVE POLICIES- INCLUDE SMARTER SUBSIDIES AND

TRANSFERS

Average distribution of energy consumption subsidy benefits across 20 countries

Poorer 20% population7% of benefits

Richer 20% population43% of benefits

27

Looking Forward

Caribbean countries face huge challenges to meet growing energy demand and diversify energy mixRelying on diesel and HFO is the most costly solution No silver bullet but requires a combination of fossil fuels and renewables to meet future demandPipeline gas, LNG, geothermal, wind should play a much more prominent role in future generation mixThe speed of renewables development will influence future demand for fossil fuel requirements

28

Integrating power systems, building submarine cable connections and sub-regional power markets are win-win solutionsInvestment requirements are large but production costs saving are hugeA variety of private, public and IFI support will be necessaryRequires countries to improve legal, regulatory and institutional framework and cross-country cooperation

Looking Forward