Why are overseas development advocates pushing us down the greenhouse gangplank?
by Charlie Cray
© Les Stone / Greenpeace
Support for the shift from renewable to gas comes from the Center for Global Development (CGD), a beltway development group with ties to the gas industry and big finance institutions like the World Bank, which has a long history of supporting destructive and carbon-intensive oil, mining, and gas projects.CGD recently stepped up to provide cover for the congressional greenhouse gangbangers working the behind-the-scenes legislative play with a white paper authored by policy analyst Todd Moss. Moss argues that weakening OPICs greenhouse emissions cap in order to ease up restrictions on gas plants will deliver electricity to tens of millions more impoverished Africans. OPIC financing for natural gas plants, Moss concludes, would provide 60 million more people access to electricity than renewable energy. The core argument Moss makes is that OPIC support for gas projects will leverage 3-4 times more capital investment from other sources than the agencys support for solar power would. Many people who know a thing or two about energy development policies have begun to take issue with CGDs analysis. Pacific Environments Doug Norlen and Prof. Dan Kammen of the University of California, for instance, recently posted a critique describing many of the papers methodological flaws and omissions. Several of those strike me as fairly obvious. For one, CGDs paper suggests (see Appendix B, table 1) that, leaving their dubious financial leverage ratios out, a nearly equal capital investment in renewables vs. gas results in the same additional power generated by each, with gas having a slight edge. However, if CGD had bothered to bring their cost assumptions up to date and then projected out just a few years (a fraction of the life of any capital-intensive gas power plant), they might have noticed that the costs of solar are coming down every year. As the International Energy Agency and others including a growing number of public and private banks have found, for the majority of people without energy access, off-grid and mini-grid renewable energy solutions are now cheaper than fossil fuel energy generation, even without counting externalities.
What that means is that before long solar will likely leverage as much or more private-sector financial support as natural gas. Therefore, OPIC financing for natural gas power plants could end up saddling whoever ends up owning them with a stranded asset, and commit countries to sunken investments and technological models that obstruct the smooth transition to cheaper, cleaner alternatives.Lets play devils advocate for a minute and assume its true that OPIC financing for gas projects is currently able to leverage about 3-4 times more capital investment than for solar or other renewable energy projects. With renewable energy technologies reaching price parity and a competitive advantage in many areas of the world, why should taxpayer funds be used at all to support an entrenched industry that doesnt need so much help attracting investors? Sure, many countries without electricity have gas that could be converted into electricity. But if thats so attractive, why should OPIC be the one to provide the money. There are many other countries without gas that would welcome the help in developing its renewable power infrastructure (I suspect that gas-rich countries would welcome such investments, too). Funding an entrenched industry is sheer corporate welfare when the alternative is to seed new, more environmentally sustainable technologies that are on the cusp of commercial maturity. And OPIC seems to get that. Norlen/Kammengo into greater detail on a number of related points, so Ill just make a few points about CGDs paper:
- Comparing solar installations to big generating plants without factoring in the cost of distributing the electricity ignores the design advantages of solar and the much larger costs that are inherent to centrally generated electricity. If the cost advantages of renewable technologies did not exist already (which they do even in places like Minnesota), then why do monopoly utilities here in the U.S. feel so threatened by distributed generation technologies such as rooftop solar?
- Without conditionalities that would require developers to deliver an OPIC-funded power plants electricity to poor communities what will stop them from avoiding the grid costs by selling that juice to energy-intensive industrial and commercial customers? They are usually much easier to reach, and their owners are more politically connected. Absent OPICs climate policy, there is nothing to prevent this from occurring.
- It makes little sense to support capital-intensive projects in conflict-ridden regions where industrial infrastructure is often targeted by insurgents and terrorists. Moreover, as numerous national security leaders from both parties have repeatedly warned, financing greenhouse gas-intensive projects anywhere in the worlds especially in regions most vulnerable to drought and other climate-related impacts risks causing significant national security blowbacks: [T]he effects of climate change in the worlds most vulnerable regions present a serious threat to American national security interests. Without precautionary measures, climate change impacts abroad could spur mass migrations, influence civil conflict, and ultimately lead to a more unpredictable world.In fact, we may already be seeing signs of this as vulnerable communities in some of the most fragile and conflict-ridden states are increasingly displaced by floods, droughts and other natural disasters.Protecting U.S. interests under these conditions would progressively exhaust American military, diplomatic and development resources as we struggle to meet growing demands for emergency international engagement.