Enhancing Gross National Happiness through Climate Change Adaptation Projects in Bhutan Potential CDM Rural Electrification Project for Clean Energy, Better Living and Sustainable Growth Dan Turell Room (Bella Center) Copenhagen, Denmark 11 th December 2009 Department of Energy Ministry of Economic Affairs & Bhutan Power Corporation Ltd. Japan International cooperation Agency
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Enhancing Gross National Happiness through Climate Change Adaptation Projects in Bhutan
Potential CDM Rural Electrification Project for Clean Energy, Better Living and Sustainable Growth
Dan Turell Room (Bella Center)Copenhagen, Denmark
11th December 2009
Department of EnergyMinistry of Economic Affairs
&Bhutan Power Corporation Ltd.
Japan International cooperation Agency
Clean Energy, Better Living and Sustainable Growth
� Located in the Eastern Himalayas� Area – 38,394 Sq. Km� 72% under vegetation cover� Population ~ 700,000 � Altitude range from 100 – 7500 m
above mean sea level
Bhutan �Salient Features
Where is Bhutan?
above mean sea level
Why Rural Electrification?Hydro Power (clean renewable energy) - recognized backbone
of Bhutanese economy� Contribution to NR > 45%� Contribution to GDP > 22%� Developed 1488 MW (7,159 MU) of 24,760 MW feasible� Per Capita Consumption > 1300 kWh� Net Power Surplus (82% Export)But;But;� > 50% have access to electricity (rural)� Over 70% of population dwell in rural areas� Bio-mass domination (1.2 million m 3̂ per annum
consumption) for lighting, cooking and heating� Fossil fuels import increasing
Why Rural Electrification?Ø Access to modern energy as basic human needs - vital tool for
addressing poverty alleviation (MDG)Ø Socio-economic development policy – GNHØ Socio-economic Development
- Improving living conditions - Improve the indoor hygiene and health- Better education and social security- Provide livelihood and other income generating activities
Ø Environment protectionØ Environment protection- Bhutan largest per capita consumer of fuel wood at 1.2
tons. - At least 60% of our land under forest cover – Mandate by
ConstitutionØ Less dependence on fossil fuels
- Provide clean reliable and affordable access to energy- Avoid global and local environmental pollution- Mitigate GHG emissions
Energy today is at heart of every economic, environmental and developmental issue and is directly linked with the development challenges – poverty alleviation, climate change, environmental and food security. Globally it is recognized that we will not be able to meet the MDG and the development needs of the poor without increasing their access to energy. It is also recognized that without shift to cleaner energy supplies it will be impossible to adequately tackle climate change. While energy services, by themselves, are not sufficient to eradicate extreme poverty, they are necessary for creating the conditions for economic growth and improving social quality. Our socio economic development is guided by Gross National Happiness, propounded by His Majesty the 4th King and the development policy underscores that the development cannot be pursued on the premise of economic growth only but has to take place in conjunction with the emotional and spiritual well being of the people. Environmental sustainability is an integral part of the GNH. Significant milestone reflecting our commitment to environmental conservation and sustainable development is the inclusion of a separate article in our Constitution which reiterates the national mandate to maintain at least 60% of our land under forest at all times to come.
Energy Sector Mandate
üMeet the energy requirements of the Country both for household consumption and industrial demand –Sustainable development
üEnhance national revenue through export of electricity – economic self reliance
History/Status of Rural Electrification
4395144691
88642
50,000
60,000
70,000
80,000
90,000
Nu
mb
er
of
Ho
use
ho
lds
Households Electrified
Cummulative
Estimated DataHistorical Data
About 50% access to Electricity
About 50% yet to have access to Electricity
6
12717
57789778
16418
43951
12717
18495
28273
0
10,000
20,000
30,000
40,000
~6FYP 7FYP 8FYP 9FYP 10FYP
Nu
mb
er
of
Ho
use
ho
lds
Five Year Plan
Electricity for All
RE Target: ü As per vision 2020 – electricity for all by 2020
ü The Integrated Rural Electrification Master Plan 2005 – roadmap to achieve electricity for all by 2017
Objective of RE: Provide equitable distribution of clean, affordable and reliable electricity to all rural households to alleviate poverty, stimulate socio-economic development activities and conserve forests.
all by 2017
ü New Government has embarked – electricity for all by 2013
ü By end of 2013, all rural households will be electrified through extension of grid (on-grid) and provision of Solar PV systems/micro hydels (off-grid).
ü Total households to be electrified - 43,951 HHs Ø40,257 HHs under On-grid Ø3,694 HHs under Off-grid
Cost and Status
ü Investment over US$88 million to electrify over 44,000 rural households in last 5 decades
ü Now, over US$ 138 million to electrify balance within next four years
ü About 55% secured through loan
ü ADB, JICA, Austrian & the Royal Government of Bhutanü ADB, JICA, Austrian & the Royal Government of Bhutan
Challenges and Constraints
Challenges are multi-dimensional:
Financial:
� Scope – 3 times the RE over 5 decades
�EIRR = As high as 30%
�FIRR = Negative
�Cost per HHs = Above US$ 3,500
9
�Cost per HHs = Above US$ 3,500
�Difficult to access concessional
loan/grants
� Increasing domestic supply at
subsidized rate
Challenges and Constraints
Technological:
Mountainous Terrain & transportation 50% falls under protected area Balance RE works are in difficult areas (access and cost-wise)
Challenges and Constraints
Scattered and low density settlements
Opportunity �CDM Project
Replace
Replace the existing fossil & non-renewable biomass usage fuel by Renewable Energy by Rural Electrification
<45MW thermal
Replace
Renewable Energy
=
1. Type I �Renewable Energy Projects, I.C
2. Type I �Renewable Energy Projects, I.E
Opportunity �CDM Project
Small Scale Methodology AMS I.C & I.E
Baseline:
� Over 1,716 villages without access to electricity
� Conventional fuels – fuel wood, kerosene, diesel, LPG, candles for
cooking, heating lighting, and other purpose.
� Source of electricity mainly generated by hydro power plants and
“carbon neutral”
13
“carbon neutral”
� Preliminary estimate (Anthropogenic emissions of GHG) > 15,000
tCO2/annum
Additionality:
� Investment Barrier
� Technological Barrier
üJICA assisting us to realize the project �complex and difficult!
üBenefits �reduce GHG emission and revenue stream to make RE financially viable
üA successful realization of this project as CDM could provide a break-through model for other developing countries to replicate
üNeed financial support and technical assistance to make this initiative a success story
Conclusion
a success story
Tashi Delek!üPursuit to enhance the Gross National Happiness
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