SE4Jobs Toolbox - Co-benefits

SE4Jobs Toolbox – Laying the foundations for a sustainable development

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Co-benefits

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Tools PRODUSE EQuIP CADRE Interactive RE Toolkit AILEG HELIO ELMA

What is the issue of co-benefits about? [Expand] Expanding RE and improving EE can lead to numerous co-benefits, which can (more than) justify the high upfront investments. For example, co-benefits include: Contribution to local employment and development: Creation of jobs, including for skilled and unskilled workers; contribution to empowerment of women, young people, minorities; contribution to building technological capacity and local value through investments in RE/EE and cooperation on international technology transfers; etc. Improved energy safety and security: Reduced need for fuel imports; electrification of remote areas, potentially at lower costs compared to fossil fuels; etc. Financial and macro-economic impacts: Fostering new markets and new sources of income for public entities and private households that (over)compensate for losses in the conventional energy sector; etc. Environmental and health impacts: Reduced local air pollution in urban areas; reduced greenhouse gas emissions; increased resilience and reduced impacts of climate change, such as heat stress, water scarcity or malnutrition; etc. Providing evidence for these co-benefits can strengthen their legitimacy and boost support or reduce opposition. They should therefore be taken into account from the outset, alongside the main motivations in energy policy for investing in RE and EE. Why is the issue of co-benefits important for the expansion of RE and EE? [Expand] Strategies and policy measures that advance RE and EE compete with other policy goals over (more or less) scarce resources. Quite often, superficial assessments of the various technologies underestimate the benefits of a reduced dependency on fossil fuel energy, all the more so as externalities are generally not taken into account in the energy price. A better awareness of what co-benefits exist, and how they can be ‘harvested’ and distributed, can substantially increase support for RE and EE policies and investments. They are therefore vital for any large-scale and truly sustainable transition towards a new, low-carbon energy mix. What are key questions for addressing the issue of co-benefits? [Expand] Identifying the co-benefits of RE/EE can support your efforts in at least two key ways: by broadening your support base among societal stakeholders and by showing that the co-benefits for society outweigh the initial investment costs. Therefore, you have to (a) correctly identify the key concerns of the most relevant actors in your policy context and ensure that your respective roll-out strategies address them, (b) assess how they are likely to react to your proposals and whether they may turn into supporters or not, and (c) collect and communicate conclusive evidence substantiating the various positive (or negative) consequences of investments in RE/EE in the short and longer term. Thus, key questions to consider are: Who are the stakeholders within government (e.g. ministries and agencies) and outside government (e.g. business, industries, scientific community and NGOs) that may be positively (or negatively) affected by the expansion of RE/EE, and that are therefore likely to be supporters (or opponents) that should be won over (or side-lined)? This is commonly referred to as „stakeholder mapping“. Which kinds of co-benefits can be expected from RE and EE in the short and longer term, how do they relate to and interact with the concerns of the groups mentioned above, and what kinds of reactions is this likely to elicit? Areas in which to consider possible co-benefits are: Local employment and development: To which extent will these technologies act as a driver of growth and create new sources of income for local populations? How many (direct, indirect, induced) jobs could be created; for whom (e.g. youth, women or men); for which level of qualification (skilled / unskilled) and for what duration (short / long term)? How much added value would be created from the expansion of RE/EE, and how would this affect economic productivity? To which extent would these new opportunities help to reduce the overall resource and carbon-intensity of an economy and stimulate the evolution of more sound, sustainable modes of production and consumption? What role will these new economic opportunities play in supporting a better alignment of the economy as a whole with the increasingly low-carbon economy of the 21st Century? Improved energy safety and security: To what degree can RE and EE lower dependence on fossil fuels and enhance the resilience of an energy system? Do RE provide a useful approach to electrifying remote areas (or other marginal groups) that lack access to modern energy services? Can decentralized RE lower the costs of providing power to such non-electrified communities (compared to fossil fuels)? Financial and macro-economic impacts: How do RE and EE impact external and internal financial flows? How do they affect the trade balance and spending power of a country? Do they open up new avenues for domestic investments and create new jobs and sources of income for public entities and private households that (over)compensate for losses in the conventional energy sector? Environmental and health impacts: How much can RE and EE contribute to lowering air pollution and health hazards? To what extent can RE and EE investments lower climate change related impacts, such as heat stress, water scarcity or malnutrition? How can the issue of co-benefits be addressed? [Expand] Data to provide evidence on the overall impacts of RE/EE or to estimate all the co-benefits for society are not always readily available. As a first step, you can review what data are already on offer – e.g. on existing and potential employment and value creation in RE/EE or on the use of UNFCCC carbon credits to finance investments. Secondly, data can often be derived using the tools, methods and methodologies outlined in the section on the assessment of capacities for RE and EE Such models and scenarios provide evidence of the possible co-benefits for your country in the short and longer term. Thirdly, a further source of evidence can be studies on the co-benefits of RE/EE in other countries. While this approach cannot replace a thorough analysis of the impacts in your case, it can indicate which stakeholders might be affected and how, and therefore whether they are likely to support, oppose or take a neutral stance on the expansion of RE and EE. Practical aspects of the issue and good practice options [Expand] Employment in and through RE and EE The domestic employment effects of RE and EE are a key factor in securing public support. While worldwide data suggest that the employment intensity per unit of energy produced (or saved) is on average higher for renewables than for fossil fuels (and in turn higher for efficiency-enhancing than for generation measures), results can vary significantly. Modelling potential employment effects is therefore a very useful approach to increasing the legitimacy of RE/EE policies. To conclude, sustainable energy technologies not only have the added benefit that they are significantly more employment-intensive than conventional energy technologies (and that many of the jobs are created locally, especially in the case of EE and distributed generation), but also that it is much easier for local providers to gain a foothold in these markets. Moreover, actors previously not involved in the energy market may find it easier to enter new markets that did not exist before. Sustainable energy technologies can thus benefit old and new actors. Estimating employment effects from RE and EE Examples from the MENA region There are a number of studies using different methodologies to shed light on the employment co-benefits of RE and/or EE in the particular case of the MENA region. One of them studied the employment effects of concentrated solar power plants in Egypt, Algeria, Jordan, Morocco and Tunisia. It considered various scenarios for regional development and found a wide spread of employment effects across the region up to 2020 (including up to 180,000 jobs) (World Bank, 2011). A second study looked at the employment co-benefits of both RE and EE in Morocco and examined scenarios with different shares of local manufacturing and overall growth rates (Kingdom of Morocco, 2012). A third looked at the employment effects of RE and EE in Tunisia up to 2030 using input-output tables and different scenarios to illustrate the impacts over time on different sectors and in different occupations (Lehr et al., 2012 & 2016). Others have looked into sector and technology-specific socio-economic impacts in selected countries or at a regional level. All of these studies can serve as examples of how to inform the public discourse and policy-makers about the employment potential of RE/EE and the skills needed in order to maximize the number of jobs they create in the MENA region. Co-benefits from the diversification of energy sources and independence from fossil fuels In most developing countries energy policy is driven by one primary goal: guaranteeing a sufficient supply of energy, and specifically of electricity, to meet the rising demand at acceptable prices for end consumers and other politically sensitive groups. Global demand for fossil fuels may be rising, but a strong dependency on fossil imports or exports is associated with high risks in terms of sudden cost fluctuations (price spikes or slumps), supply or demand disruptions, excessive capital outflows or inflows (leading to current account disturbances and ‘Dutch Disease’ phenomena), and other pressures, which may be motivated politically or otherwise. Diversifying a country’s energy mix via RE and reducing its energy consumption through EE are effective strategies for mitigating these energy security risks. Energy Security: Tunisian Solar Plan & 30-30 Strategy Tunisia’s electricity system is based almost entirely on natural gas. The decreasing yields from its own fields have been compensated by rising shares of gas imports from Algeria. Royalties from the gas pipeline from Algeria to Italy also play a crucial role in this context. The recent slowdown in the Italian economy has led to a drastic slump in Italian gas purchases from Algeria, and this is also negatively impacting Tunisia, as it increasingly needs to secure its gas supplies via the world market. Moreover, Algeria is finding it increasingly difficult to honour its supply obligations vis-à-vis neighbouring countries, since its own production is falling while domestic consumption is soaring. The Algerian government has therefore announced that it will not be able to uphold its exports for long, unless it manages to increase production from unconventional sources. For these reasons, Tunisia is aiming to diversify its electricity mix in the medium term by taking advantage of its own renewable resources (average solar irradiation of 5.1 kWh/m²/day and wind speeds of up to 10 m/s in the north). For that purpose, in 2012 the National Energy Management Agency (ANME) developed the Tunisian Solar Plan (TSP) as well as the 30-30 Strategy in 2014. Accordingly, a 30% share of Tunisia’s electricity supply shall come from renewable energy sources in 2030, especially from wind (15%), PV (10%) and CSP (5%). In addition, the 30-30 Strategy envisages a 17% reduction in the primary energy demand by 2020 and a 34% drop by 2030 – compared to a trend-based scenario. By implementing these targets, Tunisia intends to lower its dependence on (increasingly imported) fossil fuels and thereby secure its energy supply in the long term. In pursuing these goals Tunisia has opted for a bottom-up approach based on small, decentralized applications (PV and SWH). Their deployment is also serving to build up its domestic solar industry, which is increasingly able to manufacture, install and operate technology components and entire systems. The decentralization of supply is a further co-benefit related to the expansion of RE/EE. Decentralized sources of energy, such as wind, solar and biomass, are re well suited to supplying access to electricity in some locations, particularly remote locations that would otherwise be expensive to connect to the national grid. Decentralization is also a distinctive hallmark of EE and RE in general. Planning, commercializing and implementing RE and EE measures requires an in-depth knowledge of the local market. It necessitates both inter-personal and physical proximity, and associated construction, installation, refurbishing or evaluation tasks require manual labour and expert scrutiny, which cannot be delivered from a distance or by non-humans. Brazil: Diversification of electricity sources as a key benefit of RE investments The Brazilian electricity supply is dominated by cheap hydro-power. However, droughts in recent years have led to blackouts and strengthened the recognition that the country needs to diversify its power supply to make it less dependent on a single source. As a consequence, the ten-year expansion plan (2012-2022) foresees a reduction in the share of hydroelectric power from nearly 66% (2012) to 62% 2022). In turn, the plan envisions increasing the share of non-hydro renewables from 18% (2012) to 23.5% (2022) and reducing the share of non-renewable power sources from 16.2% (2012) to 14.1% (2022). Brazilian policymakers have developed strategies and planning documents that clearly indicate installation and production targets for specific technologies and time lines. These have played an important role in preparing the public in general, and industry in particular, and are a key tool for structuring the expansion of RE in any given jurisdiction. The Brazilian approach is an example of good practice in this regard. [Table: Development of the power supply (capacity targets) in Brazil by power source until 2022, according to the Ten-Year Energy Expansion Plan. INSERT TABLE. Source: Ministry of Mines and Energy, 2013.] Public health benefits The public health benefits that can be derived from RE and EE investments are particularly relevant for urban and industrial areas. Like other sources of air pollution, power or heat generation from coal or fuel oil has significant detrimental effects on the health of citizens, animals and plants. World Health Organization (WHO) statistics are an important source that provide a good starting point for assessing public health co-benefits and communicating them to your audience. China – Public health as a reason for closing coal power plants According to WHO data, China experiences close to 300,000 deaths per year from air pollution from particulate matter (PM10) and about 90% of Chinese cities have yet to meet official air quality standards. To tackle the issue, the government adopted an “Action Plan on Prevention and Control of Air Pollution. Introducing Ten Measures to Improve Air Quality” that mandates lowering the share of coal in power generation by 2017, among other measures (People's Republic of China, 2013). As a consequence, the government of Beijing has forced all four coal power plants in the city to shut down (the last one in 2016) (Shen, 2015). The policy of forced closures due to health concerns may be particular to the situation in China, but the example still provides a good illustration of the in-direct costs of fossil fuels and the benefits of switching to emission-free RE. The relevance of local air pollution as an argument in favour of RE investments will vary across different countries, according to how much dirty power generation is seen as causing public health problems in the public discourse. Directing investments from domestic and international sources of finance into RE and EE Another co-benefit of developing RE and EE is that they create new opportunities for investment, ranging from large-scale projects to decentralised small-scale applications by businesses and private households. Investments in the expansion of RE capacity and EE measures create a demand for goods and services, foster local value added and employment (in case these can be sourced locally) and thereby generate both macro and microeconomic benefits for the recipient country. Policymakers can support such investment in a variety of ways (see issue “Regulatory Framework" [INSERT LINK]). Alongside domestic sources, international actors can also serve as a source of additional funding for RE and EE investments. Projects can (partly) be financed by international sources of carbon finance or market-related mechanisms like the UNFCCC’s Clean Development Mechanism (which is currently being reformed). An RE or EE project in a developing country can be financially supported by countries with emission reduction obligations under the Paris Agreement (subject to the further operationalization of Art. 6 of the Paris Agreement). Another option will be to submit project or programme proposals to the newly established Green Climate Fund (GCF). Support of sustainable energy structures will be a key GCF priority, as climate mitigation can be considered a major co-benefit of energy transition processes. Already, there are a large number of different climate finance funds at international level that can serve as sources of capital for investments in RE and EE. They are mainly provided by international organizations and development banks, as well as directly by governments, and have very different focuses and rules (IEA, 2014). Through processes of getting climate finance ready (see the GIZ activities as part of the Climate Finance Readiness Programme (CF Ready): https://www.giz.de/expertise/html/19694.html). Another option will be to submit project or programme proposals to the newly established Green Climate Fund (GCF). Support of sustainable energy structures will be a key GCF priority, as climate mitigation can be considered a major co-benefit of energy transition processes. Already, there are a large number of different climate finance funds at international level that can serve as sources of capital for investments in RE and EE. They are mainly provided by international organizations and development banks, as well as directly by governments, and have very different focuses and rules (IEA, 2014). Through processes of getting climate finance ready (see the GIZ activities as part of the Climate Finance Readiness Programme (CF Ready): https://www.giz.de/expertise/html/19694.html). Mexico’s Luz Verde programme  The Mexican Luz Verde programme uses carbon finance under the Clean Development Mechanism to finance the distribution of energy-efficient light bulbs among poor households in Mexico. The programme is particularly interesting as it was the first ‘programme of activities’ under the CDM to receive CERs in 2012. As a ‘programme of activities’, the programme can be continued and scaled-up with lower transaction costs as it does not have to go through the CDM project cycle again. The Luz Verde programme is an example of good practice on how to design EE policies and use international sources of carbon finance to finance them. Challenges in implementing the issue of co-benefits [Expand] There are various key challenges in demonstrating and communicating the co-benefits of RE and EE. Availability and reliability of data. There is a growing amount of data available to assess the aforementioned co-benefits of RE and EE. For instance, international organizations such as the ILO, WHO, IRENA and others publish data on issues like employment creation or public health. However, most of these datasets are highly aggregated and it is often difficult to extrapolate country or region-specific information. To obtain high precision and quality data to properly assess and quantify the co-benefits in your particular case, it is necessary to have sufficiently differentiated and regularly updated data collection and evaluation mechanisms at national and sub-national level, as well as for relevant sectors. It is likely that these data are not available in many countries and that they will have to be gathered, organized, and systematized over time. Calculation of net effects and their societal impacts. With regard to employment, most analyses do not go beyond the calculation of gross effects over a relatively short time span. A lack of data has meant that there have been few more complex and ambitious attempts to quantify the macro-economic and societal impacts of RE and EE over an extended period of time, and of those even fewer have been successful. Net effects comprise substitution effects between different energy sources and technologies, price and budget effects resulting from the allocation and distribution of costs and benefits, and the societal distribution of the value added, be it from saved costs, technological spill-overs, or additional sources of incomes for private and public households. Analyses that fail to consider induced effects or account for the redistributional consequences of various energy mixes and rollout regimes are short-sighted and lopsided at best. Competition with other policy goals and vested interests. Simply producing evidence of the positive co-benefits of investing in RE and EE is unlikely to be enough to succeed in raising awareness, given the number of issues competing for public attention. The key challenge is to communicate effectively and to build coalitions of supporters within government and in society that are willing to support policy strategies and measures that foster RE and EE. Also crucial for shaping and driving decision-making processes at national and subnational level is the creation of transnational networks among policy-makers, business leaders, technical experts and civil society actors. These allow actors to develop a mutual understanding of the challenges and possibilities involved, build a shared sense of cohesion and purpose, and create a common platform for action and communication.

Good Practices Brazil China India Mexico South Africa Turkey

Reference

This article is part of the RE-ACTIVATE project. RE-ACTIVATE “Promoting Employment through Renewable Energy and Energy Efficiency in the MENA Region” is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Ministry for Economic Cooperation and Development (BMZ).