From Free Market to “Our Power”

Energy and sustainable development are inherently linked -- a fact recognized by all organizations. Furthermore the inherent unsustainability of an energy system based upon the wasteful use of fossil fuels and non-renewable fuelwood supplies is also widely accepted.

The power sector epitomizes and provides the focus for the sustainable energy debate across the region. Access to clean, reliable, affordable electricity is development goal enshrined at a high levels through processes such the WSSD and the Millennium Development Goals.

In Asia the implications of continuing with the current power paradigm are staggering and mainly related to the continued dominance of coal power. Nearly 60 percent of global coal consumption will be in Asia Pacific by 2025 -- an increase of 1.9 billion tonnes per year. About 75 percent of incremental global coal demand is expected in China and India alone. SO2 emissions would increase by over 200 percent, carbon dioxide emissions by 85 percent. Even today Asia Pacific coal plants are responsible for 50 percent of global mercury emissions and acid rain alone costs the region about US$90 billion annually.

Pollution is a key development issue especially as its impacts usually most heavily impact the poorer sections of society who are either unable to relocate or oppose the development of polluting plant or associated extractive industry.

However the power sector is also a key development issue for other reasons. Inefficient plant technology, inadequate transmission infrastructure and massive overcapacity, stemming from bad planning and poorly designed regulatory structures, politicized decision making and politicized decision-making have left many consumers with spiraling bills, unreliable supplies and have constrained the extension of electricity supply to unconnected communities. Demand side management and energy efficiency, despite some isolated examples of best practice are widely neglected, and waste is a common component of all national power development plans.

Simply put the "conventional sources of and approaches to providing and using energy are not sustainable". And the so called "Hard Energy Path" for the power sector in Asia-Pacific is a classic example. WWF is therefore seeking a truly sustainable paradigm shift that solves the pollution problem, at the same time as improving access to cheap, reliable power.

It is also widely understood that technology is not a real barrier to a paradigm shift away from the Hard Energy Path. Demand side management is a demonstrated low cost alternative -- the Thai government's DSM program for example delivered at US1.3 cents per kWh compared to new coal supply at 5 cents. Economic renewable energy resources are substantial. In the Philippines for example 7300MW of wind power potential has been realistically estimated at between 5-6 c/kWh, compared to current marginal cost of fossil dominated grid generation of about 7c/kWh.

Taken together the potential for demand side management, renewable energy and efficient use of fossil fuels can provide a package of alternatives to a coal, nuclear and large dams in any country in the region. WWF's own scenarios, conducted with national academic partners in Japan, Philippines and Thailand reveal that such packages usually deliver a cost saving as the avoided infrastructure development from energy efficiency offsets the increased capital costs of renewables. Security of supply is also usually enhanced.

The flipside of this discussion is that, contrary to the common perception of many environmentalists, renewable energy on its own is not enough. Appropriate technology solutions and technology packages vary from country to country. However it is not the cost or the availability of the technologies that are the real barrier to a paradigm shift.

Many of these and other barriers to sustainable energy can be linked to power sector reform programs that have been promoted by organizations such as the World Bank, ADB, IFC and bilateral donors such as DFID and USAID. These programs, that have almost exclusively focused around privatization and liberalization as proxies for delivery of sustainable energy services, have often been dominated by a small number of actors with a vested interest in promoting the Hard Energy Path. This in turn has led to power markets with limited competition, little transparency in decision-making, few new market entrants and continued huge financial biases in favor of Hard Energy Path technologies.

The potential for a paradigm shift rests neither on the promotion of new technologies nor on the promotion of a shift to market based systems. The potential -- at least in democracies such as Philippines, Thailand, Indonesia and India -- stems from the fact that it is the small consumers that are paying the price of the current system. They can all talk to the press. And they can all vote.

Currently across democratic developing Asia, power plant developers are running into increasing opposition from local communities. In Pulapandan, Negros Province a 50MW coal plant was blocked for environmental concerns. This has spread to the neighboring Province of Panay which recently blocked a 100MW system for environmental reasons, but also because there was no consultation. In Thailand Bo Nok and Hin Krud developments -- some 1700MW of capacity have been forced to switch from coal to gas because of local environmental and political concerns.

Increasingly groups are moving beyond simply opposing individual plant. They are demanding a say in regional planning processes, in tariff discussions and in national political energy priorities. In the Philippines the giant distributor Meralco was temporarily forced to postpone tariff hikes after an NGO court challenge. In Thailand groups have commissioned research exposing the limitations of the governments proposed single buyer model and this year 60 000 people demonstrated regularly in Bangkok against the reform proposal. In Indonesia NGO panels must be consulted in the design of the implementing rules and regulations for the new power market.

In India NGOs have forced the publication of IPP contracts and exposed utility overcharging, forcing the regulator to intervene to block proposed tariff increases.

Whilst the examples are fragmented, the trend is clear -- empowered consumers, employees, local communities, local governments, local companies are beginning to act to demand cheaper, cleaner, and more reliable energy.