Breaking the Poverty-Energy Nexus : Perspectives and Problems of Renewable Energies in Developing Countries with High Fuel Import Dependency

Content of the Diploma Thesis:In our seemingly modern world, more than 2 billion people still have no access to modern energy services, relying instead on traditional biomass sources like fuelwood, charcoal and animal dung. This has severe implications for the day-to-day life of the majority of poor people in developing countries because energy is vitally linked to numerous important dimensions of development: economic productivity, health, nutrition, education, gender, agricultural production and environmental quality. Bearing this in mind, a commonly shared belief is taking hold that the central Millennium Development Goal of halving global poverty by 2015 will not be achieved without considerably improving the energy situation in developing countries. However, while the current debate is successful in shedding light on the various linkages between poverty and energy and incorporating the so gained insights into overall poverty-reduction strategies, the debate also has some major shortcomings. When it comes to the adverse impacts of unsustainable energy use in developing countries, the energy-poverty debate is mainly restricted to the rural or household level of analysis. On the whole, little detailed investigations are made about the structural economic costs associated with current energy consumption patterns on the macro or national level. This is especially the case for the great majority of developing countries that do not possess significant commercial energy resources and therefore heavily rely on fossil fuel imports to meet part or all of their commercial energy needs. When reference is made, the analysis is mainly limited to a narrow set of country examples and a short appraisal of the adverse macroeconomic impacts arising from high energy import expenditures (e.g. terms-of-trade deterioration, loss of foreign currency reserves, inflationary pressure and increased indebtedness). The thesis is intended to bridge the discrepancy between the repeated acknowledgment of energy import dependency as being a severe problem for developing countries and the lack of a thorough and comprehensive structural analysis of how energy import dependency and poverty are linked at the macro level.Organization of the Diploma Thesis:The thesis is organized into five parts. Following the introduction, Chapter 2 provides a critical overview of the recent poverty-energy debate and explores the nexus between inadequate access to modern energy services and the social and economic hardship of the poor. Special emphasis is thereby placed on the linkages between energy and household income, energy and health and energy and the environment. Reference is also made to the potential role of energy in achieving the Millennium Development Goals and the Johannesburg Summit Commitments. Chapter 3 starts by giving a brief summary of some major oil import dependency concepts and indicators frequently used in the present literature. This serves as a starting point to operationalize and measure the broader concept of energy import dependency. With this as a theoretical background, one physical indicator and two economic indicators of energy import dependency for 166 countries are compared. These indicators are the following: (1) net energy imports as a percentage of commercial energy use, (2) ratio of fuel import expenditures to total merchandise export earnings, (3) ratio of net energy import expenditures to GDP. The first indicator is taken directly from the World Bank s World DevelopmentIndicators 2002, whereas the latter two are calculated by making use of data derived from the United Nations Commodity Statistics Trade Database (UN Comtrade). Comparisons are based on inter-group differences. In accordance with World Bank terminology, I differentiate between high income, upper-middle income, lower-middle income and low income countries. The second part of the quantitative analysis is devoted to the socio-economic opportunity costs of energy import dependency. The analysis is confined to two public sectors generally considered essential in combating poverty and enhancing opportunities for future generations, namely the fields of health and education. Furthermore, the opportunity costs of energy import expenditures for developing countries will be measured by calculating the loss of potential transfer income to directly eradicate extreme poverty. Based on the quantitative findings made in the previous section, Chapter 4 explores how renewable energies can contribute to overcome high levels of energy import dependency and which barriers may complicate a country s transition to a cleaner and more sustainable energy future. A short case study of Mali complements the analysis