Friday, 4 April 2014

Image of the Day: Nat Gas vs Renewables in the Developing World

Imagine you had $10 billion to invest in providing electricity to people in the developing world who currently go without.

The lack of electricity in the developing world is a major issue. Almost 3 billion people burn twigs and dung to keep warm and heat their food. This causes indoor air pollution, which has been estimated to cost over 4 million lives per year. Electricity allows refrigeration to keep food from spoiling and rotting. Refrigeration is also vital to keep certain medicines in good condition. Electricity powers computers and phones that allow people in developing countries to connect to the world.

The Center for Global Development have worked out how far your $10 billion would go if you were to use renewables, or were to use gas, or some mix of the two. How many people could you connect to an electricity supply?

If $10 billion of your aid and development money is invested in renewables in the developing world, it will provide electricity to 20 million people. If that money is invested in gas-fired power, it will provide electricity to 90 million people. Bjorn Lomborg provides a neat summary of the issues at stake that I recommend reading. 


  1. It's great to see the popularity of solar panels for creating electricity in situ where needed in the developing world (e.g. parts of India).

    Do the refs you refer to factor in the negative externalities of fossil fuel use (instead of clean green renewables) in producing electricity on poor people/communities in poorer countries via increased C-emissions and thus climate change impacts such as droughts and flooding extreme weather events - which hit that sector of the world's population the hardest? (ref eg Stern report & IPCC reports)?

  2. Hi Henry,

    haven't gone through the references here (one's behind a pay wall), but off the top of my head the Stern report 2009 figure for the cost of externalities was $80 USD per tonne CO2e. I hear it's been revised down since then, but I don't know what to.

    (That's also with a 0 discounting rate, which is ultra-conservative in terms of the price of carbon (to the high side), and also front-loads the effort to decarbonise onto the present generation. Whether or not that is a good thing I leave to you to decide.)

    The difficulty with incorporating this into the calculations, is that if you're looking at this negative externality, you also need to include the positive externalities of supplying more people with power, such as increased economic growth and productivity, and the effects of that for the poor (fewer and healthier children, better health and nutrition, increased ability to adapt to climate change effects), which are tricky to estimate. If you find a good estimate that includes all of these, please share it, that would be really interesting.

  3. Managed to have a look at the Centre for global development methodology, didn't see any externalities in there. I don't consider this unreasonable, as these are notoriously difficult to estimate. Given the positive externalities of electrification (which is why the program in question exists in the first place), I imagine these would not significantly change the result of the analysis.

  4. Unfortunately I do not myself have the expertise or time to do such calculations of the externalities so as to internalize them into the analysis. I'll leave that for the experts. Nonetheless, conclusions (by CforGDD) would be incomplete and not fully meaningful and usable if the emissions/climate-change consequences are not at least referred to as being very important if not measured. Furthermore, assessing benefit-loss can't of course just be confined to money terms.

    Broadening the subject to an overview - the huge climate change threat to poor people in poor countries of adding to fossil fuel use can't be ignored.

    However there would probably be net reduced emissions from using gas to cook instead of burning twigs (and consequent deforestation [>>soil erosion]). But solar will ultimately probably be better for supplying household electricity than gas power stations.

  5. Here's Rowan Williams' ex advisor on climate change writing about fracking. she's well qualified to comment as she has a D Phil in medieval literature.Lomborg referes to Williams on climate change

  6. @Henry You and me both, I'll leave all that analysis to others better qualified. It would be worth remarking on them in the CforGDD report, if they are not. Again, I can see why they'd exclude them, as they inevitably involve fairly subjective estimates, and it's all too easy to produce a report that tells you only about the assumptions you've made in the progress.

    Benifit loss cannot, as you quite rightly say, be confined to money terms. However, it's worth pointing out that the estimates made in the Stern report (and elsewhere) in terms of the social and environmental cost relate to value, not money. So while the value of, say, a marshland could be assessed at $x, it doesn't mean you could somehow convert that marshland into $x cash, but that the value that the marshland provides to people is broadly equivalent to the value that $x would provide, in both tangible and intangible benifits. The use of money in this is only as a unit of value, rather than representing only financial value.

    With regards to your overview, the threat of climate change to poor people in poor countries should indeed not be ignored, or lightly dismissed. However, nor should the other threats, future and present, that they endure, of disease, violence, poverty, restrictions on freedoms, and many others. Elevating the threat posed by climate change above the sum of all other threats could easily impinge on these people with lethal consequences. Electricity provision is extremely important for development, and it is not unreasonable to see providing electricity quickly and cheaply to these people as a priority.

    You make an excellent point in terms of the gas also being used for cooking and heating, as well as electricity. Solar power is indeed a very useful power source for providing electricity and interior lighting, with suitable associated technology (batteries and LEDs). This is especially true in remote locations that are unlikely to be connected to a centralised grid any time for practical and economic reasons. However, for high population density areas such as cities, where increasing numbers of people are living, there are real practical limitations to the use of solar for domestic elelctricity. Here a centralised grid with power generating plants makes more sense. The development of productive (and job sustaining) industries may also require a constant and significant wattage of electrical power, which is more easily provided by gas-fired plant.

  7. @micheal roberts

    interesting article, enjoyed the read.