Action Plan on Integration of Climate Issues into Swedish Energy Sector Development Cooperation

The starting point for the assignment is the assumption that climate change will hit developing countries hardest. Sustainable development can reduce vulnerability to climate change, but climate change could also hinder nations´ abilities to achieve sustainable development pathways. Avoiding dangerous CC will require deep adjustments. Taking the world as a whole, we would have to cut emissions by half until 2050 and with sustained reductions until the end of the next century. Many impacts can be avoided, reduced or delayed by mitigation. A portfolio of adaptation and mitigation measures can diminish the risks associated with Climate change. The energy sector plays a crucial role in mitigation, since it accounts for around two thirds of emissions of greenhouse gases. Energy use and its consequent emissions is very unevenly distributed in the world. The industrial production is shifting towards Asia and the developing world, with more carbon intense and less efficient use of energy. CC shall be mainstreamed as part of the environmental agenda into development assistance and contribute to the overarching objective of poverty reduction.

Sweden has comparative advantages within the Energy-climate area. The Swedish resource base has a potential to be better utilised. Key points are: better cooperation between specific areas of expertise, a more systematic and result oriented approach to capacity building, enlarged resource base, fostered competition and exchange of experiences. Sida has a major influence on the capacity development, and can contribute significantly.

The geographical focus of Swedish bilateral assistance and prioritized areas for effective support to reduce climate change. Sida commissioned the study to determine where it should focus its interventions on, particularly within its support to Sub-Saharan Africa.

The study arrived at a set of conclusions and recommendations that are different for different countries and regions.

• LDCs with energy sector support have small energy markets and their contribution to GHG is far below what is considered as targets after 2012. Improved access to efficient and sustainable energy services shall be supported. Renewable energy is no panacea and shall not be overly emphasised.
• Even with low energy use per capita, the potential for energy efficiency is large, and to realize this potential is the main general recommendation for all countries and regions. It shall be addressed from the end user perspective, and start with the major point sources like energy intense industries. Capacity for emission inventories, energy and environmental audits, best available technologies and sound pricing principles holds the key.
• Regional support to a sustainable system for electricity supply and energy services in Southern Africa holds a major potential for mitigation when phasing out inefficient and unsustainable use of coal.
• Regional support to transparent information on the three essential elements constituting an efficient policy to reduce GHG emissions is recommended also for Asia and countries with selective support; mainly China and India, but as appropriate also Indonesia, Vietnam and Bangladesh. The three elements are carbon pricing, technology policy and removal of barriers to change.
• New investments within the energy sector are needed to change the unsustainable consumption and production patterns. There is yet no clear understanding or recommendations on energy sources or technologies that fit into a “clean energy investment framework”.
• Initiatives on programmes and investment frameworks are laid forward from major International Financial Institutions. They will not solve the main problem of identifying bankable and sustainable projects without sufficient capacity (see above) being developed at the same pace.

The recommendation for Sida is to cooperate “hands on” for focal areas: with the WorldBankGroup Clean Energy Investment Framework on Improved energy access for Sub Saharan Africa and with the EBRD Sustainable Energy Initiative on Energy efficiency from the end user perspective.