The dilemma over the trilemma

Posted on 16 October 2013

Whether governments should subsidize energy costs for the world’s poorest consumers emerged as a point of heated debate at the World Energy Congress during the closing plenary session for 16 October as government ministers discussed how countries should coordinate energy policies to achieve the triple goals of security, sustainability, and equity in energy policy.

Ministerial delegates from India and Saudi Arabia argued in favor of providing energy at low prices to the poor while counterparts from developed countries and emerging economies warned against market distortions caused by subsidies.

“Government intervention is necessary so that costly power can reach even the poorest people,” said Pradeep Kumar Sinha, India’s Secretary of Power. “When you have poverty and import reliance you have no other choice.” India imports 80% of its oil and 20% of its gas. Vast areas of rural India are yet to be connected to the electricity grid. Alawaji Saleh, Saudi Arabia’s Deputy Minister for Electricity stated that his government needs to provide cheap electricity for “air conditioning which needs a lot of energy.”

This drew a comment from Switzerland’s State Secretary for Power Walter Steinmann to the effect that governments should not be spending money to keep inefficient buildings cool with inefficient air conditioners. “High prices inspire innovation,” argued Steinman, “In Switzerland you are only allowed to build energy efficient buildings.” Saleh responded that energy efficient buildings and air conditioners also require additional costs. “Who will pay for such improvements?” Saleh said.

Uruguayan Secretary of Energy, Ramon Mendez stated that the governments must participate in development of energy resources, but that their role must be limited to provide a “stable regulatory framework to attract foreign investors.” According to Mendez, Uruguay will achieve 90% reliance on renewable energy in two years. “The government has provided no subsidies for any energy investments,” he said.

The debate comes when the World Energy Council has promoted the concept of the “Energy Trilemma,” which examines how to provide energy equitably, securely and in an environmentally sustainable manner. But delegates from different parts of the world have put different emphases on the three prongs of the Trilemma depending on levels of economic development. “You cannot paint all countries with the same brush,” said India’s Sinha. “Each country is in a different location and at a different stage.” Brownouts and blackouts are common in India.

In Africa, 70% of the population has no access to electricity despite recent rapid economic growth. “In some parts of rural Africa, access to energy is limited to 1% or less,” said Elham Ibrahim, Commissioner for Energy and Infrastructure of the African Union. Uruguay’s Mendez commented, “We need to remember the 1.4 billion people on the planet whose energy use has not changed since the Middle Ages.”

 

This news story is based on the Closing session “Ministerial dialogue: Energy in transition” at the 2013 World Energy Congress.