Addressing energy trilemma

The concerns over irreversible damage of anthropogenic climate change have changed the dynamics of energy use globally and forced countries to reconsider the prevailing growth strategies and make a transition towards a less carbon intensive and sustainable energy. The UN Sustainable Development Goal (SDG) 7 has echoed the importance of sustainable energy and laid the foundation for universal adoption of sustainable energy policy with targets of ensuring access to affordable, reliable and modern energy by 2030 while doubling the rate of energy efficiency and increasing the share of renewable energy in global energy mix. However, the World Energy Council's (WEC) "World Energy Trilemma Index" based on energy security, energy equity and environmental sustainability serves as a reminder of what seems to be at stake with different countries on energy facades.

In economics, trilemma is known as 'impossible trinity' or 'unholy trinity' where it is impossible to simultaneously pursue three economic policies, i.e., maintaining a fixed foreign exchange rate, keeping free capital movement and having an independent monetary policy, but two of the three policies can be pursued together and achieved by a country. On the other hand, meeting the energy trilemma implies a country has to achieve energy security, energy equity and environmental sustainability simultaneously. With conflicting stakeholder interests and certain tradeoffs, the energy trilemma represents three interconnected problems. While energy consumers generally think about equity, i.e., affordability and reliability of electricity, they may not have any interest to know about the source of electricity, be it from fossil fuel or renewable energy. Similarly, policymakers may often consider access to electricity, i.e., number of consumers, but not always reliability. Such is the complexity of energy trilemma.

Bangladesh, with very poor performance on energy security and energy equity fronts, is one of the bottom-most countries in the Energy Trilemma Index 2017 and placed at 113th position among 125 countries. In fact, Bangladesh is not alone confronted with challenges. Despite being two of the top ten countries in the index, Germany and UK are on the negative watch list of WEC. The context of Bangladesh is, however, quite different. Major factors behind such a dismal position, among others, are that the energy had been neglected during the early part of last decade when almost no new generating capacity was added in any form, maintenance of age-old power plants was lagging and efforts to minimise transmission and distribution loss were not enough. Furthermore, renewable energy and energy efficiency were not on the agenda. Along with these, other factors include increased use of imported fossil fuels and limited success on renewable energy and energy efficiency fronts during this decade.

Now, what technical solutions are there to address this trilemma in the face of SDGs and the Paris Agreement? Energy efficiency is the most obvious and  probably the cheapest. It would not only reduce energy demand, but also help industrial expansion with the saved energy. This can be decisive in providing access to energy as well. While it is well-known that energy efficiency makes sense, its uptake is heavily reliant on policy. The good thing is that the draft energy audit regulation of Bangladesh is going through the government's approval process and the energy standards regulation for appliances is anticipated to be crafted soon. Once these regulations are in place, the challenge would be to implement the energy efficiency targets of the government, i.e., 15 per cent by 2021 and 20 per cent by 2030 respectively. To be fair, the previous target of 10 per cent energy efficiency has failed to deliver results up to the expectations. Notably, cost savings alone are often inadequate to stimulate the adoption of energy efficiency measures. Policymakers must align the interests of industry owners and consumers and implement a combination of energy audit regulation, energy efficiency standards and incentives. These must be accompanied by raising awareness across all industrial sectors to focus on greater energy efficiency.

It is also essential, for instance, to learn from experiences of other countries, particularly due to rebound effect of energy efficiency. The rebound effect is the energy savings achieved from using energy-efficient technologies which are being offset by overuse of energy, for example, buying an efficient car and driving it more than normal. Other rebound effect occurs when energy waste is being minimised by installing efficient technologies and the monetary saving is being used to maximise other utilities that consume more energy. With economic growth, there is an increased chance of rebound effect and therefore, target for energy efficiency as well as energy tariffs may be adjusted over time.

The other conduit to address the energy trilemma is to increase diversity in energy supply and electricity generation. Building on broad consensus for the transition in energy supply, the policymakers need to set clear and straightforward energy targets. In tandem, it is necessary to look into the instruments that can attract investment in the sector. Bangladesh can surely take advantages of diversity on the supply as solar has proven potential in the country and the ongoing wind resource mapping would help identify the feasible locations to install wind turbine. These would help address the crisis that at times stifles business and keeps homes in the dark and helps improve with regard to energy equity.

In addition, it is not just about providing energy access by renewables or reducing demand by energy efficiency; both the options can drastically cut down greenhouse gas emissions and other pollutions, improving environmental sustainability. Success on renewable energy and energy efficiency also have strong interlinkages with other social, environmental and economic benefits, such as, opening up job opportunities, diffusion of low carbon technologies, technological innovation, less air pollution etc.

Apart from harnessing renewable energy and energy efficiency, offshore gas exploration would be key to significantly reducing reliance on imports and thereby improving energy security. While it is likely to be challenging to address energy trilemma of Bangladesh, the most important factor is having a favourable mix of policy instruments along with a framework to track progress. Periodic review of the policies and adjustments based on progress would be crucial. While we cannot be complacent, we need to act fast in this regard.

Shafiqul Alam is International Climate Protection Fellow at Ecologic Institute, Berlin, supported by Alexander von Humboldt Foundation, Germany.