Energy For Human Development


November 16, 2016 | Ted Nordhaus, Alex Trembath, Shaiyra Devi,

For over two centuries, an abundance of dense, fossil energy combined with modern agriculture, cities, governance, innovation, and knowledge has fueled a virtuous cycle of socio-economic development, enabling people in many parts of the world to live longer, healthier, and more prosperous lives. The discovery and conversion of modern fuels arguably enabled sustained economic growth for the first time in human history. These energy sources–principally coal and oil along with natural gas, hydroelectric power, and nuclear energy–have enabled rising living standards since the onset of the Industrial Revolution.

Along with these material gains have come liberalizing social values, the ability to pursue more meaningful work, and environmental progress. Billions of people around the planet are increasingly free to choose their own destiny.

In this report, we consider the relationships between energy systems, economic growth, human development, environmental protection, and climate change.

Read the full report here.

Understanding these relationships represents among the most pressing social and environmental questions facing the world today, as roughly three billion people have yet to make the transition to modern fuels and energy systems. These populations remain trapped in what we call the wood economy.

Living in the wood economy means relying upon wood, dung, and other basic bioenergy for primary energy consumption. For people who live in the wood economy, life choices are extremely limited, labor is menial and backbreaking, and poverty is endemic. There is little ability to produce wealth beyond what is necessary to grow enough food to meet minimal nutritional needs. For women especially, the wood economy is oppressive. Educational opportunities are limited, off-farm employment is rare, and social mobility is non-existent.

While there is broad global agreement that everyone should have access to modern energy, there is no similar consensus about how best to achieve that outcome, how to mitigate climate change and other environmental impacts associated with energy development, or even what actually constitutes access.

There is, however, a rich history to draw from. Over the last two hundred years, nations around the world have made concerted efforts to bring electricity and modern fuels to most or all of their populations. While the context and details have varied, there are a number of consistent features that have characterized successful efforts. Nations that have achieved universal electrification and access to modern transportation and fuels have uniformly moved the vast majority of their populations off of the farm and out of the agricultural sector. There is no nation on earth with universal electricity access that remains primarily agrarian. To date, urbanization and industrialization have been preconditions for universal access to modern energy systems.

The relationship between rising incomes and rising energy consumption is bi-directional. Modern energy infrastructure enables large-scale economic enterprise that creates opportunities for off-farm employment, higher labor productivity, and rising incomes in the wage economy. Rising incomes allow people to afford modern fuels and electricity and the appliances that turn modern energy into useful energy services. Similarly, levels of energy consumed within households cannot be disentangled from energy consumed outside the household. Unless there is energy and infrastructure to support large-scale employment outside of the household and the subsistence agricultural sector, there is little income available to purchase energy or appliances for household use.

Micro-finance, micro-enterprise, and micro-energy are no substitute for industry, infrastructure, and grid electricity.

Historically, rising household energy consumption, especially electricity consumption, has come as a side benefit of industrialization, urbanization, and agricultural modernization. Rural electrification has been the last step toward achieving universal electrification, after rural regions have depopulated, population has shifted to urban and suburban areas where economies of scale and population density allow electrification to be achieved at lower cost, and rising societal wealth in the urban and industrial core allow extension of electrical grids to the periphery, usually with some form of state subsidy. Even in these contexts, rural electrification has only proved sustainable where it is targeted to raise agricultural and labor productivity, and hence produces incomes for rural populations consistent with rising consumption of energy.

Contemporary efforts to address energy poverty in developing nations that ignore this history are unlikely to succeed and will, at best, provide very limited development benefits. Programs that target household energy consumption without attending to broader economic factors are unlikely to significantly raise household energy consumption, even if they check the box marked “energy access,” and risk, instead, confusing charity with development.

Achieving modern levels of energy consumption for the three billion people who currently are locked out of the modern energy economy, consistent with achieving the human development goals with which energy consumption is highly correlated, can be achieved with more or less impact on the environment and the climate. But tradeoffs are inevitable and policies that condition development of energy infrastructure to a limited set of zero-carbon energy sources are unlikely to succeed at either their development or climate ambitions.

Decentralized renewable and off-grid energy technologies can play an important role in some contexts, where they are targeted to increase agricultural productivity or otherwise support productive economic enterprises capable of raising incomes, particularly when they are deployed in ways that augment expanding centralized grid electricity. They cannot, however, substitute for energy and other infrastructure necessary to support industrial-scale economic enterprise. Micro-finance, micro-enterprise, and micro-energy are no substitute for industry, infrastructure, and grid electricity.

Developing economies do still have choices, however, and some of those choices might result in significantly lower carbon trajectories. Sub-Saharan Africa, for instance, is rich in both natural gas and undeveloped hydroelectric capacity, suggesting that African development might largely bypass coal. China and India, both with large populations without access to modern levels of energy consumption, have both made significant commitments to both conventional and advanced nuclear energy and to utility-scale wind and solar development.

The right mix of fossil and low-carbon energy technologies for any given economy will depend upon local resources, technological and institutional capabilities, geo-political considerations, and a range of other factors. Given current technological options, however, no practical path to universal access to modern levels of energy consumption is likely to be consistent with limiting global atmospheric concentrations of carbon dioxide to 450 parts per million (ppm).

While this reality brings with it unquantifiable risks of dangerous climate change, insisting – either implicitly or explicitly – that the poorest people on earth forego basic economic development in order to mitigate climate change would seem to be, at the very least, a morally dubious proposition, particularly given that energy development generally increases societal resilience to climatic extremes and natural disasters.

Moreover, even without eradicating energy poverty, most plausible projections of future emissions find stabilization at 450 ppm increasingly unlikely.

However, climate mitigation and a world beyond 450 ppm do not represent a zero-sum proposition. A world of 500 or 550 ppm is one less likely to experience catastrophic impacts than one that stabilizes at 700 ppm. More importantly, there are plausible decarbonization pathways that could bring significant climate mitigation benefits that are consistent with a world in which every person consumes energy at modern levels.

Whether 450 ppm or beyond, any practical path to deep global decarbonization will likely require low-carbon energy systems capable of supporting a global population with fully modern standards of living. Key priorities for achieving modern levels of energy consumption for the global population as quickly as possible include the following:

  1. Prioritize energy development for productive, large-scale economic enterprises. Economic opportunity at scales consistent with broad improvements to household incomes is not possible without significant growth in non-farm and non-household economic sectors.
  2. People to the power. There is no pathway to significantly higher levels of energy consumption without moving most people out of subsistence agrarian poverty and into higher productivity off-farm employment and livelihoods in the formal knowledge, service, and manufacturing economies.
  3. Energy and electricity are not the same. Efforts to address energy poverty must address needs for transportation fuels and infrastructure, and for fertilizer and mechanization of agriculture.
  4. Maximize bang for the buck. Given the enormous population still lacking access to basic energy services and consuming energy at extremely low levels, national and international investments in new energy infrastructure must prioritize bringing the most energy to the most people.
  5. Off-grid investments must be an on-ramp, not a cul-de-sac. Where off-grid technologies are the focus, they should be understood as transitional technologies to full grid access, not an alternative, and should be deployed in ways that hasten the arrival of grid electricity.
  6. Energy abundance is a public good. Successful efforts to end energy poverty have and will continue to succeed when they are not pursued piecemeal but through strategic government industrial and agricultural policy, strong institutions, public utilities, and regulated monopolies.

None of the above assures decarbonization at levels consistent with meaningfully mitigating climate change. Building a high-energy, low-carbon planet demands accelerating the transition out of energy poverty for the world’s poor while also making progress towards deep decarbonization by sometime later this century. These parallel social and environmental goals suggest several imperatives for policy and development:

  1. Focus on carbon intensity. The key to mitigating emissions to the greatest extent possible while addressing energy poverty will be to accelerate the long-term trend toward higher-density, more efficient, lower-carbon fuels and technologies. 

  2. Leapfrog dirty energy, not development. In some cases, energy development may “leapfrog” some high-carbon fuels and technologies, but key steps in the development process such as urbanization, industrialization, and agricultural modernization cannot be leapfrogged. 

  3. Innovate for a high-energy planet. Current-generation low-carbon technologies cannot meet growing global energy demand at the necessary scale. Innovation must take center stage if all the world’s inhabitants are to enjoy secure, free, prosperous, and fulfilling lives on a high-energy, low-carbon planet.