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Research Report

Transforming the Power Sector in Developing Countries: A Strategic Framework for Post-Paris Action

Robert F. Ichord
Copyright Date: Oct. 1, 2016
Published by: Atlantic Council
Pages: 20
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Table of Contents

  1. (pp. 1-1)

    To achieve the goals of the 2015 Paris Agreement on Climate Change, the energy sector must be fundamentally transformed into a more efficient, lower-carbon system. Energy-related carbon dioxide (CO2) emissions of 32.2 gigatons (Gt) accounted for two-thirds of all CO2 emissions in 2014;¹ these emissions are projected to increase as incomes, cities, and populations—especially in developing countries—grow.

    The electricity sector will be especially critical, given its importance for our digital economies, the continued significant use of coal in power, and the expanding role of renewable energy technologies. The power sector is expected to see the most rapid growth...

  2. (pp. 2-4)

    The challenge of power sector transformation comes at a turbulent time in the global energy market. Governments and companies are struggling in the low and volatile oil-price environment. Forecasts of future energy markets are highly uncertain. Despite this flux, five basic factors are at play that will shape and define the key dimensions and central questions of the challenge.

    The role of non-OECD countries in the global economy and energy system is increasing. Their share of world primary energy demand has grown from 41 percent in 1980 to 60 percent in 2013, and is forecast to increase to 68 percent...

  3. (pp. 5-12)

    The following sections present a strategic framework to address the transformation challenges. The framework should be adapted to each country and its regional circumstances. Although the strategy is directed to developing-country policy officials who must chart their own future, it is relevant for a wide range of international public and private stakeholders.

    Strategic Element #1: Developing countries should build sound policy, legal, and regulatory frameworks and institutions to attract investment in the electric power sector. High priority should be placed on energy efficiency and development of rational tariffs, standards, and incentives for deploying more efficient technologies.

    Although developing a consensus...

  4. (pp. 13-14)

    The challenge of transforming the power sector in developing countries is huge and the post-Paris process needs to give special attention to this issue—these countries will constitute most of the future growth in electricity use with large consequences for greenhouse gas emissions. Reforms to electricity system structures and operating models will require adapting to each country’s environment in a way that optimizes reliability, affordability, and transparency while reducing investment risks and improving environmental performance. The economic feasibility of a significant shift away from oil and coal in developing countries’ energy generation mixes has considerably improved. Renewable- and gaspowered systems...