POWERING CITIES OF THE FUTURE
Sustainable Energy Solutions for the World's Varied Communities
Keynote address by Vijay Iyer
Director, Sustainable Energy Department

Good morning ladies and gentlemen. Greetings also on behalf of Robert Zoellick, President of the World Bank. He sends his best wishes for this Summit. He is deeply committed to finding sustainable energy solutions for cities worldwide. I am honored to deliver the opening keynote at this Summit on this compelling theme of “Powering the Cities of the Future”.

I welcome the opportunity to address this distinguished group of experts and decision-makers. The program is impressive and diverse -- from energy efficiency and smart grids this morning, to clean power and energy policy in the afternoon, and going on to examine the role of natural gas tomorrow. It promises to be a stimulating discussion of rich substance.

Sustainable energy provision is of great importance to every city—indeed to every community—in this land—from California to the New York Island.

It is also at the top of the agenda around the world…from my home town in India, to the exploding mega-cities in emerging economies, and for the thousands of African villages without electricity.

I would like to touch on three themes today:

• Access to energy.
• Urbanization and energy
• And lastly, U.S. cities, and how they can provide leadership to the world.

Let me start by saying that energy is the best example there is of a local issue that has global implications.

Seen from outer space, America’s cities form a network of bright veins of light on the global landscape. It is evidence of America’s prosperity, ingenuity and industry. But shifting on this outer space view from the U.S. to Africa, we see only the dim outline of a continent.

In sub-Saharan Africa in particular, home to 840 million people, more than two-thirds—580 million—have no electricity. In some countries electrification is less than 10%. People live in darkness after sunset. Or make do with kerosene and candles to light their homes. This is not only inefficient and expensive, but also causes health and fire hazards.

The 48 countries of Sub-Saharan Africa have a generation capacity of 78 gigawatts, about the same as California and Oregon combined. If we exclude South Africa, the total falls to 30 GW, roughly the same as the installed capacity of North Carolina.

Energy poverty like this cripples economic growth and development prospects.

Where people don’t have access to reliable electricity, their ability to earn a livelihood or even live a healthy life is sabotaged. The World Bank carried out a study of the impacts of a month-long power blackout in Zanzibar. It found that incomes fell significantly. And more importantly, the incidence of low birth-weight babies born in local hospitals rose by almost 20% during that period.

The bad news is that, without immediate action on many fronts, the number of people in sub-Saharan Africa without access to modern energy services will grow by almost 70 million by 2030. Most of this growth will be in the cities. As energy poverty actually rises, the booming growth of cities in Asia, Latin America, and some African countries will pose a compelling and parallel challenge for energy security.

In India, for example, power generation requirements driven by rapid population and economic growth, are expected to reach one terawatt---or one trillion watts---by 2050. That represents a six-fold increase from its installed power capacity today.

These are big challenges. But they can be big opportunities too if handled properly. For Indian companies, the energy growth means more jobs and greater prosperity. And because most of India’s power plants to address this growth are yet to be built, it has options that many countries do not.

For Africa and India, and others in the developing world, meeting this demand for power is a necessity. A necessity to achieve a level of economic development, with food security and jobs, that we here in Washington take for granted.

I have visited over 30 countries in Africa. I have met energy ministers, business leaders and planners. I can tell you that the African continent needs a lot of investment capital for electrification. Much much more than past or current flows. Certainly renewable energy has a role to play. Africa is rich in hydropower potential, geothermal, wind and solar. To take hydropower alone – this has been exploited only only to the extent of about 7% of its 45 gigawatt potential. And hydropower is the only renewable energy source that is currently deployed at large scale in other regions of the world. But such expansion requires a lot of money, and most African countries—even if many of them have achieved growth rates of over 5% in recent years—will require investment from outside. China, India and some Middle Eastern countries are investing heavily -- over $1.1 billion in energy every year in recent years. But much more is needed.

We know about oil in Angola, Nigeria, Gabon and Algeria, but Africa also has 8% of the world’s proven natural gas reserves in the Gulf of Guinea countries. By capturing and using just the flared gas Africa could—in theory—double the electricity supply. We need to find a way to make that happen, to connect the dots that create the right incentives for a breakthrough. Technology, knowledge and expertise from the developed world –in addition to capital – is needed for this breakthrough. A breakthrough that will provide affordable, clean and reliable electricity to Africa’s poor.

The World Bank is helping many of these countries develop their energy resources, and financing transmission and distribution as well. We do this through using our loans and guarantees to leverage capital from private and public sources. Although our total lending for energy annually was just over eight billion dollars last year, we helped countries and projects leverage almost double this amount from private sector and other donor sources. We also enable the gathering of knowledge and best practice for developing state of the art solutions to energy problems.

I see many opportunities for private sector investors in Africa’s energy sector…just as there were in Asia and Latin America years ago, when those regions had less of their own capital to invest than they do today. Energy markets and demands will only grow and grow, and business leaders here need to recognize and sieze this opportunity to bring cutting edge solutions. With the energy challenge being now so closely tied with the climate challenge, there is even more need for innovation, new technology and business models to be applied.

Which brings me to my second theme: urbanization, energy and the climate.

Between now and 2030, the population of cities in developed countries will stabilize at about one billion.

But in developing countries—including those in Africa that I just mentioned—the urban population will double from two billion in the year 2000 to four billion in by the year 2030. And these cities are projected to triple their built-up area by 2050 as well. The buildings and transit systems that will be built in these mega cities across the world will be around for the next 50 to 100 years. So much of these future cities are not yet built!

These trends have major implications on the energy front. Today, cities account for over two-thirds of global energy consumption. Buildings alone account for over 40% of global energy use. By 2030, with 60% of the world’s population, cities will account for three-quarters of the world’s energy consumption as well as three-quarters of the world’s carbon dioxide emissions.

And here is the kicker: fully 81% of increased demand for urban energy over the next two decades will be from cities in developing countries. This is a huge challenge. But I say that this growth trend is also a unique opportunity. I say this because if we shape the cities of the future by learning from the cities of the present, we can influence the outcome very positively.

The UN Framework Convention on Climate Change calls for a limit to global warming to 2 degrees Celsius, with developed countries to take the lead in cutting greenhouse gas emissions.

While developed countries need to do their share in reducing emissions, the developing countries also need to share in this effort to cut their future greenhouse gases. We have already seen this kind of collective action in the global carbon markets in which Japan and the European Union have helped emerging economies transition to a low carbon path by leapfrogging and adopting state-of-the-art clean technologies. The dirty choice of development is avoidable or can at least be minimized.

This is why it is essential for US cities—including those represented here in this hall, from California to New York Island—and the cities of Europe, Japan, Australia, to engage as one in this global…urban…energy and climate challenge effort.

Cities are vulnerable to climate change. Many of the world’s—and America’s—most economically important cities are located in coastal areas. Miami, New Orleans and New York are exposed to sea level rise, storm surges and coastal flooding, just like Shanghai and Kolkata.

The total global costs of adaptation to climate change through the year 2050 are estimated at a staggering 70 to 100 billion dollars annually. The World Bank’s 2010 study on the Economics of Adaptation to Climate Change estimates that 80% of these costs are in sectors closely related to cities, including water supply, coastal zones, and infrastructure.

City leaders and mayors know that there cities are exposed, and many more of them are acting on that knowledge. At the same time, energy is a challenge, because cities in the developing world are simply growing so fast. The list of cities with more than 10 million inhabitants, now at 27, keeps getting longer. The boundaries and dimensions of urban, peri-urban and rural areas are also slowly disappearing.

High economic growth rates do not automatically translate to energy access. India has grown over six percent a year for almost a decade, but it still has nearly 400 million people without electricity and many more who suffer from chronic brownouts and blackouts. Many of these unserved or under-served are in the towns and cities.

Which brings me to my final point: the role of US cities.

I am here to tell you that the United States and its cities have an important role to play. And valuable lessons to share that can help developing countries deal with these challenges.

US expertise, drawn from its experience in city planning, in renewable energy development, and energy efficiency, is a tremendous resource. It is a resource that can be mobilized to solve urban development problems in ways that deliver green growth. Growth that is economically and environmentally sustainable. This kind of engagement will also deliver benefits to U.S. cities and companies.

On energy efficiency and smart grids, for example, California is a world leader. Not only has California kept its per capita electricity consumption flat for the past 30 years, it is now below the US national average by more than 5,000 kilowatt hours per year.

California’s leadership on clean energy has a long history that was boosted by Governor Arnold Schwarzenegger. He raised the bar for climate targets and low-carbon transport fuel standards, launched a green building initiative and implemented an ambitious renewable portfolio standard.

Many U.S. cities have California-style low-carbon roadmaps. Their experiences can provide the best kind of leadership for cities in developing countries. That wil;l be credible as it is leadership by example of having produced results.

Portland, Oregon is another great example. Ten years ago, Portland replaced 13,000 traffic lights with LED or light emitting diode signals. They saved 4.9 million kilowatt-hours (kWh) a year—an 80% reduction in energy usage—and cut their annual CO2 emissions by almost 3,000 tons. Last year, the mayor of Lima, Peru launched a project to do the same in his city of nine million people, with support from the Clinton Global Initiative.

The US Department of Energy's Solar Decathlon is going on this week at the National Mall. This showcases American ingenuity and innovation. Through actual life size models of zero energy houses... students and researchers are showing cost-effective homes that combine energy-efficient construction and appliances with renewable energy systems. These designs minimize energy demand and save valuable dollars. They incorporate strategic lighting, can harvest rainwater, and recycle waste water.

Then there is the C40 Initiative. Ten U.S. cities have signed on to the C40 Cities Climate Leadership Group, a worldwide organization of 40 cities working together to address climate change. Chicago, Philadelphia, New York, Los Angeles and other US cities have joined hands with the likes of Shanghai, Mumbai, Lagos, Sao Paulo and Mexico City. These 40 cities account for 8% of the world’s people, 21% of global GDP and 12% of emissions. The C40 group is chaired by New York City Mayor Michael Bloomberg. Last June, World Bank President Robert Zoellick and Mayor Bloomberg signed a partnership agreement to adopt a consistent approach to city-led climate action plans and strategies.

What does this partnership do? By aligning their energy plans with consistent standards, city leaders help potential investors—including lenders like the World Bank—to assess local projects in clean energy and energy efficiency using uniform parameters of risk and return, thus increasing the likelihood of financing.

Specifically, the Bank and the C40 have agreed:

• to pursue a common approach to measure and report on city GHG emissions
• allow verifiable and consistent monitoring of emissions reductions
• and identify actions that result in the greatest emission reductions

These are important and encouraging steps and show the potential for what more can be done. A wider spectrum of activities is possible to improve the efficiency of cities’ use of energy and water, reduce and recycle waste, and thus help cities become cleaner and greener. Better land use planning, mass transit systems, energy efficient street lighting, efficient codes for heating and lighting of buildings have huge potential. Such integrated city planning recognizes the reality that greater urban density can also results in lower energy consumption.

At the World Bank we are doing a number of things and deploying several instruments to help in this global effort.

One example is the Clean Technology Fund, set up with the support of the US and other countries a few years ago. The fund supports transitions to cleaner energy systems and energy efficiency. A good example is capital finance for public transport systems in major cities around the world, including Bogotá, Cairo, Mexico City, Manila, and Ho Chi Minh City to name a few. These systems take cars off the road and have both energy savings and health benefits. The fund is also co-financing investments in energy efficiency for municipalities and by setting new standards for electrical appliances like refrigerators and air-conditioning.

Another example is the Energy Sector Management Assistance Program, or ESMAP, a trust fund and knowledge initiative supported by Australia and several European countries. The ESMAP enables countries to learn from and exchange knowledge on issues of interest and secure capital for piloting new ideas and supporting innovation. ESMAP gathers expertise from the US and other developed country settings as well as developing country examples and produces user friendly toolkits and diagnostic methods for example to help city managers find solutions to energy challenges. These tools have already been deployed in cities in the Philippines, Turkey, Vietnam, and Indonesia. Another example is when South Africa’s utility Eskom approached the World Bank a few years ago for help in dealing with crippling energy shortages. We helped them understand and follow the model of energy efficiency standard performance contracts for buildings, which was pioneered here by New York and Texas to conserve power. They emulated this example and got good results.

These and other programs in the World Bank that, like the C40 Cities Climate Leadership Group, are developing solutions and practices that can be rapidly scaled up across the world. Many of the solutions are already being implemented in many of our partner developing countries, often complemented by World Bank loans to support important projects.

Right now, Shanghai is developing a plan to transform itself into a low-carbon city, and it is studying US experience. It has received advice from New York’s energy-efficiency leaders on standard offers to retrofit its commercial buildings. Its leaders are looking at Seattle’s example of a “density bonus” in which builders of green, energy-efficient buildings can get, in return, city government approval to add extra floors—and earn extra rents.

Shanghai is innovating too and teaching other cities a thing or two. They have recently launched a downtown car license auction system, in which you pay for the privilege to drive your car into the city at congestion time. It is an approach using market forces that have been successful in reducing traffic and emissions in Singapore, making it one of the most environment-friendly cities in the world.

These examples demonstrate the impact of exchanges among city leaders, managers and technical experts across countries, continents and income scales. The learning is not just one way. It is South-South as well as North-South, and South-North.

Many of the practical problems of life in communities are handled at the local level. Energy is one of these, along with transportation, water supply and sanitation. Bringing together leaders of local, city and community governments and private sector, as this Summit is doing, will originate solutions that make sense at the local and the global levels. The World Bank plays the role of a convenor too. It is a convenor of policy makers, energy experts, financial specialists and civil society with a view to produce practical solutions that work. And that are acted upon.

Such efforts are much in demand today and in this Summit you have an opportunity to understand and apply this effort. Each of you has specific expertise or experience that is part of the solution and is needed somewhere else. You are developing and have deployed world-class solutions in your cities. Right here in Washington DC a green energy future is taking shape through innovative policies and solutions, ranging from strict building energy conservation codes, to simple but visionary actions like solar powered parking meters.

These local solutions need to go global. They will deliver private benefits but also global goods. These are win-wins and they are urgently needed. I hope that you take this opportunity seriously and partner the World Bank and each other in tackling the challenge of sustainable energy for all.

Thank you.