In this episode, host Daniel Raimi talks with Todd Moss, executive director of the Energy for Growth Hub and a nonresident fellow at Rice University’s Baker Institute. A former diplomat with the US Department of State’s Bureau of African Affairs, Moss discusses efforts to build electricity capacity across Africa, as well as economic and political hurdles that complicate the expansion of power. Exploring the impacts of the coronavirus pandemic on emerging economies, Moss warns about the long-term impacts of delayed infrastructure projects and declining oil prices.
Listen to the Podcast
- Limited access to electricity across Africa: “[In Africa] today, almost 600 million people—more than half of the population—lack access to any modern electricity at all ... But the bigger picture is actually even worse. So many people who might technically be counted by the UN as having access to energy, they might just have a solar lantern or some very small system with a couple of lights. They don't have access to the energy that you'd need to run most appliances or any machine that you would use on your job … This is a problem—not just for people at home, but for industry and commerce.” (8:21)
- Coronavirus crisis makes stark inequalities clear: “The COVID pandemic [has] thrown a very harsh light on energy as a source of global inequality. We are all very reliant on energy in our homes, and literally billions of people around the world don't have that same capability … Just to give you an example of how stark the differences are, Californians use more electricity playing video games than the entire country of Kenya uses … Pools and hot tubs in California use more electricity than the entire country of Senegal.” (18:04)
- Reinvigorating struggling economies after COVID-19: “This global slowdown has hurt people's lives and especially their livelihoods … We're seeing that around the world. And, of course, the poorest people have the least capability to go without earning income ... And if we just think about remote working as the most obvious example, you need electricity, and you need the internet … Building robust, functional, modern, adaptable power systems is going to be seen as part of building global resilience and helping to dig the world out of the hole that we're in.” (21:00)
- Why fossil fuel use in Africa should not be a preeminent concern: “If we could magically triple electricity consumption tomorrow [in sub-Saharan Africa], and we did it entirely with natural gas, that would produce the equivalent of about 1 percent of global emissions … I know some people want to lump coal and gas and to try to ban finance for all fossil fuels, but this doesn't actually make sense from an economic standpoint. It definitely doesn't make sense from a development or climate standpoint. And I think the ethical issues are extremely fraught.” (30:01)
The Full Transcript
Daniel Raimi: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future. I'm your host, Daniel Raimi. This week, we talk with Dr. Todd Moss, Executive Director of the Energy for Growth Hub and a nonresident fellow at the Baker Institute at Rice University. Todd has worked for years on expanding access to energy around the world, and particularly in Africa. On today's episode, I'll ask him about the current strategies that countries, companies, and international institutions are taking to expand access in Africa. We'll also talk about how COVID-19 is affecting these efforts along with the intersection between expanding energy access and mitigating climate change. Stay with us.
Okay. Todd Moss, from the Energy for Growth Hub and the Baker Institute at Rice University. Welcome back to Resources Radio. Thanks so much for coming back on, you are a glutton for punishment.
Todd Moss: No, great to be with you Daniel.
Daniel Raimi: So Todd, when we had you on, gosh, I guess it was about a year ago, we talked a little bit about the concept of the resource curse, we talked about Guyana, and we talked about energy access. Today, we're going to focus on energy access, particularly in sub-Saharan Africa, and we're going to talk about whether and how the COVID-19 pandemic and the recession that has accompanied it might affect energy access in that part of the world. But before we kind of get into the topic itself, as you'll know, we always ask our guests how they got into the topic that we're discussing. So I just want to ask you how you got interested in particular in these issues of energy, poverty, and energy access around the world.
Todd Moss: Yeah, I came at this issue I think from the opposite of how most people arrive at energy. So I wasn't an engineer, I was an economist that by accident wound up working in the State Department as a diplomat. And something that struck me was whenever I was talking to our African allies about all of the things the United States wants our partners to do, they always had a very common response of what they would like from the United States, and it was almost always infrastructure investment, and very often it was in the power sector. And I was really struck at how important that seemed to be to virtually all of our African allies. So when I left State and went back to my job at a think tank, the Center for Global Development, I set up an energy program focused on ways that the international community could fight energy poverty and support energy ambitions in Africa, so that was kind of an accidental way.
And then, as I was doing work like a typical economist at a think tank, I was playing with data and looking at all kinds of comparisons of electricity consumption. And I remember one weekend I was looking at data that was saying that in the United States we use about 13,000 kilowatt-hours a person a year. And well, in Nigeria, it was only 150 and in Ghana, it was only 400. And it seemed like big differences but didn't really mean very much to me. But later that day I had to go with my family to buy a refrigerator, and you know those yellow energy star tags on the fridge. On that tag, it said that the fridge I was buying was 450 kilowatt-hours a year. And I thought, oh my gosh, my fridge is going to consume more than most people living in Africa. And that for me was like the moment where I really got the passion about a lot of the issues that we're going to talk about today.
Daniel Raimi: Yeah. Wow. That's fascinating. Yeah. Well, energy stickers, apparently somebody out there is reading them.
Todd Moss: That's right.
Daniel Raimi: That's good news. So when we think about energy access, when I think about it at least over the last 10 or 20 years, there's a lot of, kind of good news to tell about how energy access has expanded around the world, particularly in places like China, India, other parts of Asia. Before we talk and focus on Africa, which is what we're going to do for most of the episode, can you talk a little bit about the trends of energy access growth and describe some of their key drivers over the last, let's say 10, 20 years?
Todd Moss: Sure. So historically, electrification, and I know we're talking about energy, but let's talk specifically about electricity. Electrification has been driven in most places first by industrialization. The typical path has been to start with big power for industry, for large cities, you build a grid and over time you expand that grid and eventually you reach farms, and virtually everywhere, rural electrification was always last. And as people had jobs and industry grew and incomes rose, then you started to see that driving higher residential demand for electricity, because now people can afford appliances and things that use electricity. And this pattern has been common for most of the West, certainly for the United States and Europe, and then largely followed by China and large parts of Asia. Even Vietnam is more or less following this path.
Now, India has been a little bit different. They have partially been following that model, but as a kind of unintended benefit of being somewhat late, people in rural areas of India now no longer have to wait for the grid to finally arrive. There are now things like these very basic solar systems for homes, and we have new models of distributed energy, like mini grids that can power some kinds of small industry. And this is super exciting. Especially India is an incredibly dynamic, exciting energy market, but it's not what I think many people think it is. Now these new technologies and business models, they allow people to have certain electricity systems far earlier than they would have had. In the past, they'd have to wait, and this is absolutely wonderful. But there's a big caveat here, which is that these small solar home systems can really only deliver very basic power, they can't power machinery, or certainly anything with significant heating or cooling is out.
So it's definitely, some of these new systems are a wonderful first step on an energy ladder for the very poor and especially for rural, isolated communities where the grid is very far away, but it's really only a first step. And even with mini grids, which are kind of like small utilities for a neighborhood or a village, they have far more capacity and they can even in many places be more reliable than national grids. But so far the cost of electricity for many grids is many, many times higher than grid power. In Africa, which I know we're going to talk about in a second, a mini grid can cost 10 times what the national grid will cost per kilowatt-hour. So it's fine for certain industries and certain uses, but it's not globally competitive. And so it might work for local isolated markets, but some of these models, they won't work for anything that's very energy reliant that you would hope to export and be globally competitive.
Daniel Raimi: Right, that makes sense. So let's turn now to Africa and if my recollection is right, and the background readings that I was doing are accurate, it seems like sub-Saharan Africa in particular is a part of the world where we see some of the highest rates of energy poverty or lack of access to electricity. Can you talk a little bit about what some of the major challenges are to expanding access in that part of the world?
Todd Moss: Yeah. So Africa is facing some of the problems and issues I just mentioned in India, it's just far more extreme. So today almost 600 million people, more than half of the population, lack access to any modern electricity at all, and this is very bad of course. But the bigger picture is actually even worse. So many people who might technically be counted by the UN as having access to energy, they might just have a solar lantern or some very small system with a couple of lights. They don't have access to the energy that you'd need to run most appliances or any machine that you would use like on your job. And it's even worse for those sometimes who have grid power, because grid power is almost always in Africa very unreliable. And this is true in every market in Africa, including South Africa. And it also means the unreliability of grid power in Africa, also means that this is a problem, not just for people at home, but for industry and commerce, so most businesses rely on low cost, reliable power.
And it's not just steel mills or factories. If we think about the new digital economy, how do you run a data center without cheap 24/7 electricity? You can't. So these are some of the big challenges. Now, of course, Africa is 54 different countries, so some of the issues are different country to country. But maybe I'll just highlight a couple of issues that are pretty common across the continent. So one is just a general lack of infrastructure. Power generation is generally pretty easy to do and good projects can quickly get financed and built, but it's the transmission and distribution components that are far harder. And we're seeing a lot of countries right now that have an ability to bring on a lot of generation, but it's really the transmission that's now the bottleneck.
Related to this, a lot of countries, most countries, nearly all countries in Africa have set the electricity tariffs below the cost recovery for obvious political reasons. But what this means in most places is that every kilowatt-hour sold actually loses money for the utility. So you can imagine the effect that that has on investment. And that's one of the reasons that you've got an infrastructure deficit is that the utilities that should be building that are all under severe financial strain. And the international community has a big role in Africa, too, they're active in a lot of markets in the power sector, and we've seen a lot of really positive interest in financing power projects. There's an initiative of the US Government called Power Africa, which President Obama started in 2013, and President Trump has continued, and it's actually been a pretty big success and I hope over time, it will get even bigger.
But carrying on some of the issues I raised earlier, the donor and some of the investor communities, I think have, in my opinion, I think they've oversold the potential of some of the off-grid renewable models. There's a lot of hype around leapfrogging, but building an energy system that can support modern lifestyles and a modern, globally competitive economy is far more complicated than finding a way to put a solar panel on every roof. Solar home systems: I don't want to take anything away from the off grid market, it's very dynamic and it's fantastic for, for many energy services and they're reaching communities that are massively underserved, but it's not useful for everything that we need an energy sector to do.
And I often think of transportation as a useful analogy. We need a very diverse, robust transportation system for our lives and for our economy. And bicycles are great. I love my bike. It's cheap, it's easy, it's clean, I can get around with no problem. And we can make bikes really efficient, we can make high tech e-bikes, we can do all kinds of things, but no matter what we do, bicycles will always be useless for hauling cargo across the country. We need different types of transportation for different uses, and we need different types of energy systems for different energy services as well.
Daniel Raimi: Right, absolutely. Yeah. And if I want to, not that I can do this today, but if I want to go to Paris, my bike's probably not going to get me there.
Todd Moss: Definitely not.
Daniel Raimi: Certainly not in today's times. So let's talk now about kind of some recent developments in Africa, and then we'll talk about COVID-19 and how that might be affecting things. You mentioned the US's Power Africa initiative. Are there some other major initiatives that you want to highlight that are currently underway, expanding energy access in Africa? The first thing that comes to mind for me is the Belt and Road Initiative coming out of China, but I'm sure there are also domestic initiatives and other international or intergovernmental initiatives. Can you maybe highlight a couple other efforts that are currently underway to expand energy access?
Todd Moss: Sitting above any individual government or agency effort first are the sustainable development goals. And we do have a SDG-7, which is to deliver affordable, reliable, sustainable, modern energy for all by 2030. This is a brilliant goal and it's actually helped to motivate a lot of agencies to get into the power sector. If we think back 10 or 20 years, most of the community was not in this sector at all, so that's been a very positive sort of overarching effort. And as part of that, there's an initiative within the UN called “Sustainable Energy for All” or SEforAll. And an exciting development is they've got a brand new leader of that effort, a dynamic, a woman from Nigeria named Damilola Ogunbiyi, and I'm actually watching her settle into this new job. I'm very optimistic that she's going to play a role in galvanizing more international support for Last Mile Investments, for those final 600 million people in Africa, and roughly 200 million people around the world that have no modern energy for all.
And I'm also really enthusiastic that she will help to raise the bar on energy goals around the world so it can also help to drive job creation and economic growth in all parts of the world. So that's a kind of global chapeau that I think is very positive. There are a lot of development finance institutions that are like Power Africa using different tools to support power transactions. The British have an agency called the CDC Group that just launched an interesting investment platform focused on electricity transmission. The Germans, French, Danish, most of the European governments all have a development finance institution that's investing in the energy sector. Even Canada just launched their own, it's called FinDev Canada, and we'll watch to see what they do.
And you mentioned the Belt and Road Initiative. China has been for a long time and now is very active in building and financing power stations in all of the surrounding infrastructure. In many places, this is positive. One absolutely positive effect of the Chinese initiative is that it has spurred competition among the other agencies to get into the sector. The US has a new development finance institution called the DFC, which just opened its doors about five or six months ago. And we have that agency in large part because the US saw what China was doing and wanted to respond. And I think it's important to highlight the active role of the private sector. GE has a big Africa business, they've got an office in Nairobi, and I see that Siemens, the German firm, just signed a major deal to help expand the power system in Nigeria. So we are seeing a range of financial and private sector institutions start to get into the African power space, and I think that's very positive.
Daniel Raimi: Great, that's really helpful. So now I'm going to ask you a question that's probably impossible to answer for several reasons.
Todd Moss: Those are the best questions.
Daniel Raimi: Yeah. So here's the question, and then maybe I'll outline at least some of the caveats.
Todd Moss: Sure.
Daniel Raimi: So the question is, how do you think COVID-19 is affecting these initiatives and is likely to affect them in the years to come? And obviously the huge uncertainties here are: We don't know how long the pandemic is going to be with us, we don't know the exact economic toll it's going to take, we don't know how that's going to play out over time, we don't know what governments are going to do in response in terms of investments, and we don't know what private sector actors are going to do with any precision. But I'm just very interested in hearing your reflections on what this is meaning today, given your extensive contacts in the area and what it might mean for tomorrow.
Todd Moss: Yeah. I mean, the most immediate takeaway is that the COVID pandemic and especially the effects of the lockdown in the global recession have really, I think, thrown a very stark and harsh light on energy as a source of global inequality. We are all very reliant on energy in our homes, being able to respond to what's going on in the world. And literally billions of people around the world don't have that same capability. And I was looking at the data recently and, just to give you an example of how stark the differences are, Californians, just people in California, use more electricity playing video games than the entire country of Kenya uses. And that's just Californians, just playing video games, right? And pools and hot tubs in California use more electricity than the entire country of Senegal.
So I do not worry that I'm not going to have enough electricity to run air conditioning in my house, it's 95 degrees where I am today, my air conditioning is cranking as we speak, and I'm not worried about that. But for billions of people, they just don't have that luxury. And I think the global crisis has put that in stark contrast. If we think about how the recession—not so much the pandemic, but the pandemic-induced recession—how that's hurting the energy sector, there's a couple of effects we're already starting to see. So I'd mentioned earlier that utilities in Africa are under financial stress, well, this is putting them all under even more financial strain. In Nigeria in response to COVID, they've announced free electricity for three months. So if the utility was bankrupt before, it's an even a deeper hole now.
The decline in global oil prices and worries in the gas sector is putting many large infrastructure projects in Africa on hold. I wouldn't say that anything's been canceled yet, but we've seen some delays. And certainly the effect, the knock on effect of the rising cost of capital in emerging markets is going to make all of these projects more expensive, so that's certainly going to have a ripple effect down the line. But when I think about the intersection of the energy sector and the global crisis right now, I think what's really interesting is sort of the reverse of your question, not how the pandemic is affecting energy, but how is energy going to be essential to economic recovery and to building future resilience? And so this global slowdown has hurt people's lives and especially their livelihoods. And it's not just in the US where unemployment is high.
We're seeing that around the world. And of course the poorest people have the least capability to go without earning income. And people obviously need power to generate income and to create jobs. And if we just think about remote working as the most obvious example of this, you need electricity and you need the Internet. And if you don't have electricity, you can't obviously work remotely. And what does the internet run on? The internet runs on a lot of electricity. So I think that building robust, functional, modern, adaptable power systems is going to be seen, I hope, as part of building global resilience and helping to dig the world out of the hole that we're in.
Daniel Raimi: Yeah. So that gives us a great sense of what's happening in today's market and how COVID-19 might be shaping the next round or how energy as you've described, how the energy system might be able to shape a recovery. When you look ahead, what are some of the policies or programs, either ones that you've already discussed or new ones that might be on the horizon that you think might be helpful in expanding energy access in the context of a recovery?
Todd Moss: Yeah. So as we think about building modern power systems, especially for regions like sub-Saharan Africa, I think a very important focus has got to be not just reaching that last mile, but really driving down the costs of power for industry and commerce. The cost question just cannot be avoided given the global economy and the nature of global supply chains, so really trying to focus on costs and second, investing a lot in reliability. And this means both the hardware and the software to manage a flexible grid, especially as countries want to take advantage of very cheap solar and increasingly cheap wind, you need to have a system that can handle more intermittent renewables, and very few countries have the capability to do that. And then the last thing is that, the new technology really enables us to build power systems that are far smarter than what we had done in the past.
So we can use things like remote sensors and satellite imagery and big data to build systems that meet the development goals of countries. And just as one example, if you're an energy minister and you've got resources to build one more transmission line or one more power plant, you can use these tools to figure out where to put that, which will give you the biggest return. And this is not just for the grid, it's actually also important for the off-grid sector because the more clarity you can get around electricity planning, it allows you to seed other areas to the off-grid sector. So one of the biggest problems of trying to develop a mini-grid market or an off-grid market is that you're worried that maybe next year the utility is going to come in with a power line and destroy your market. So we can certainly do this far more efficiently using these new technologies today than was even remotely possible in the past.
Daniel Raimi: Yeah, that's really interesting. One related question is as we think about building out the grid in Africa, or really anywhere around the world, one of the questions that often comes up, and it's a sort of fraught question, is whether there's a potential tension between expanding energy access and limiting CO2 emissions. I think pretty much everyone is excited about the idea of expanding energy access to everyone in the world and meeting those sustainable development goals that you discussed. And that hope is often paired with the desire that those energy needs are met with clean energy compared with other countries like China or the US that have developed with a more carbon-intensive model. So from your perspective, are those two goals in any tension, and if they are, is that even the right way to think about the problem?
Todd Moss: Yeah. So if you define energy access down to everyone gets a lightbulb at home, then there's obviously no trade-off there. If you're actually thinking that truly modern energy access is about living in a high energy modern economy, and everyone living a modern lifestyle and working in a modern high energy economy, then you actually do start to have some trade-offs. But I think there's a couple of facts that we should start with when we think about what does that mean for the energy choices that Africa makes and the role of the international community there. The first fact to start from is that today Africa is basically not emitting greenhouse gases. And if you accept the notion of a carbon budget, Africa is hardly using anything in the carbon budget.
And Africa also is already mostly using clean energy today, and the future is mostly going to be clean energy. There's tremendous untapped wind and solar. Kenya today is a good example. Most of their electricity is coming from geothermal sources. Ethiopia, big, fast growing country—nearly all of their electricity is hydro. And I think another distinction when we do think about carbon is not to think of all fossils the same. So coal is obviously the worst from virtually every perspective environmentally, but coal in Africa in my view is essentially dead. So South Africa has a big coal problem that they're going to struggle to resolve right now, but outside of South Africa, there's a little bit of coal in Botswana, a tiny country. Maybe there'll be one coal project in Zimbabwe sometime in the next five years, but I just don't see coal being any part of Africa's energy future.
So it's not really an issue. It's really natural gas, which I think is the interesting case and where this potential trade-off comes into play. And here, lots of African countries have natural gas: Nigeria, Ghana, Senegal, Mozambique has just had an absolutely massive natural gas find. So Africa feels that this is a resource they have. We've seen a lot of Western companies investing in African gas. Even in the middle of COVID, Total has committed to a huge new investment in LNG in Mozambique. And of course, the West itself is increasing its use of natural gas. The US today has about 3,300 power plants that run on some kind of fossil fuel. Most of that is gas, and gas is an increasing share of that power. Now, in contrast to those 3000 plus plants in the US. Kenya today has eight power plants running on a fossil fuel, most of it heavy oil, which is dirty.
And Nigeria, which is a huge country of 200 million people and will be bigger than the United States sometime in the next 20 years, they have just 18 power plants versus our 3,300. So we have to put gas in a little bit of perspective. And I think importantly, for those of us that hope that Africa has a cleaner energy future than we have, and I think that's most of us, natural gas is actually very well-suited to pair with wind and solar because of both its financial model and its technical ability to ramp up quickly. So if you want Africa to have a lot more wind and solar, you want it to be a very high proportion of their energy mix, gas is actually an ideal match to help enable that higher renewables penetration.
And I think big picture, of course we want to do everything we can to mitigate climate-related emissions, but natural gas in Africa is not really a big climate issue from a global perspective. And just to give you one example of this is, if all of sub-Saharan Africa tripled electricity consumption overnight, if we could magically triple electricity consumption tomorrow, and we did it entirely with natural gas, that would produce the equivalent of about 1 percent of global emissions. So the continent is just starting from such a small base and the idea of where it's headed in the next few years, it's just not a factor given the tremendous size of China's economy, India's economy, Europe's economy, and the United States. And so I know some people want to lump coal and gas and try to maybe ban finance for all fossil fuels, but this doesn't actually make sense from an economic standpoint. It definitely doesn't make sense from a development or climate standpoint. And I think the ethical issues are extremely fraught, and we should be very, very, very, very cautious about that.
Daniel Raimi: Yeah, absolutely. Thinking about the equity issues involved in the fairness and who has developed in the past and, as you say, who's responsible for the bulk of historical emissions, let alone modern day emissions, it really puts things in perspective.
Todd Moss: Absolutely.
Daniel Raimi: So thank you Todd once again for joining us to talk about energy access and so many complicated issues, I know as always, we're just scratching the surface here, but hopefully this peaks people’s interests and encourages them to learn more. I'd like to close it out with our final question that we ask all of our guests, which is what's at the top of your literal or metaphorical reading stack? And for me, as well as I imagine many of our listeners, it's been a little hard to concentrate on work the last week or two. The protests over the murder of George Floyd and so many other horrible events that we've seen over the last couple of weeks in the US have just really just made it hard to, to keep your mind on work.
And so for me, I've actually been rereading Ta-Nehisi Coates, his book Between the World and Me, which is just a wonderful sort of open letter to his son about what it's like growing up black in the United States. And it's been certainly not a balm, but it's helps again, put things in perspective for me to try to understand some of the deep feelings that people are feeling out there. I should note that we’re recording today on June 3rd, 2020. And so things may change by the time this episode airs, but that's what I'm thinking about. How about you, Todd, what's on the top of your stack?
Todd Moss: So I found reading about COVID and some of the other crises facing us a little overwhelming. So I've been trying to escape some of that, and I know everyone's streaming Netflix, but the series that I have really enjoyed, this is going to show you what an energy nerd I am, is a just released six part series called Power Trip: The Story of Energy, which is inspired by Michael Webber's book Power Trip, and Michael, who people may know it was with the Energy Institute at UT Austin and now is the Chief Science and Technology Officer at Engie, the big global energy company.
His series has just dropped, it's on PBS, and I was watching it on Amazon Prime, I think it's on Apple also. But it's a really beautiful and well-done series, which it runs through how energy is essential to water, food, wealth, cities, transportation, and war. And if you don't know Michael, he's a wonderful communicator. And it talks about complex energy issues in a highly accessible way. And even though I eat, live, and breathe energy issues every day, I absolutely loved it and I I'd encourage people to take a look at Power Trip.
Daniel Raimi: That's a great recommendation. I read the book, but now I need to see the movie. And we've had several of Michael's former students on the show, we've never actually had Michael on the show, so we'll have to get him up here sometime soon.
Todd Moss: Yeah. He'll be a great guest.
Daniel Raimi: Yeah, great. Well, once again, Todd Moss from the Energy for Growth Hub. Thank you so much for joining us today on Resources Radio, we really appreciate it.
Todd Moss: Thank you, Daniel, be safe, thank you.
Daniel Raimi: You've been listening to Resources Radio. If you have a minute, we'd really appreciate you leaving us a rating or a comment on your podcast platform of choice. Also, feel free to send us your suggestions for future episodes. Resources Radio is a podcast from Resources for the Future. RFF is an independent nonprofit research institution in Washington, DC. Our mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. Learn more about us at rff.org.
The views expressed on this podcast are solely those of the participants. They do not necessarily represent the views of Resources for the Future, which does not take institutional positions on public policies. Resources Radio is produced by Elizabeth Wason with music by me, Daniel Raimi. Join us next week for another episode.