Reaching New Markets

• By Andy McClure
• Oct 01, 2002

"Win-win" situations in sustainable development terms -- whereby sound environmental and social performance is far more profitable than "business as usual" -- may still be hard to come by. This article presents one such situation: investment in environmentally sound technologies in low-income countries. Specifically, it highlights ways and means by which United States and Canadian industry associations can engage in renewable energy and waste management technology development in low-income countries.

Introduction

Lack of access to appropriate energy and water services is a major social and environmental concern (see Box 1), especially in Africa and Asia. In addition, it hampers economic development in the affected areas and ultimately adds to the global pollution abatement and humanitarian relief bills. Efforts for reversing this situation (that is, for shifting to modern, environmentally sound technologies) have too often been framed around official development aid programs, with little or no involvement from the private sector. In turn, business has typically been reluctant to invest in markets that are perceived to be unstable and unlikely to deliver significant profits.

A growing group of investors is proving the above assumption wrong. Indeed, provided that the key macro-economic determinants are in place, investment in environmentally sound technologies in low-income countries can be very profitable. One of the determining factors of success, these investors report, has been access to expert advice on both available technology and financial options. The United Nations Environment Programme (UNEP see Box 2) and various national agencies (notably, Natural Resources Canada) have made such expert advice available and are committed to further developing these services.

Accurate Information

Solar and wind energy projects make good technical sense in many parts of the world (see Box 3). In many of these instances, they also make good economic sense -- but the key question remains "how do I know in which project to invest?" In the past, independent, site-specific information to assess the technical, economic and environmental potential of a given renewable energy project was difficult to get or simply not available. UNEP's Solar and Wind Energy Resource Assessment (SWERA) project has been conceived to fill this gap (see Box 4).

Similarly, there is no shortage of investment and technology transfer opportunities for water supply and sanitation in low-income countries. At the recent World Summit on Sustainable Development, water supply and sanitation were highlighted as areas deserving of particular focus, due to the high costs associated with lack of clean water (see Box 5). The difficulty here is determining which is the most economic and efficient technology for a particular situation. UNEP offers tools for making these assessments.

UNEP is one of the partners that manage Sanitation Connection (SaniCon), an environmental sanitation Internet-based network (www.sanicon.net) that offers access to up-to-date technologies, institutions and financing of sanitation systems around the world (see Box 6). SaniCon provides an overview of treatment technologies with a focus on low cost and environmentally sound options. For example, a recent area of focus for investment has been upgrading or augmenting the efficiency of existing water treatment facilities instead of building new ones and incorporating small-scale, environmentally sound alternatives as opposed to building large facilities. In addition, adapting existing technologies to local needs offers vast opportunities for development and investment in developing countries.

Other assessment tools are offered through UNEP's Sustainable Alternatives Network (SANet), an initiative supported by the Global Environment Facility (GEF). SANet can assist business managers in making informed decisions regarding investments in cleaner technologies. On its Web site (www.SustainableAlternatives.net), SANet offers databases on tools and information and real-life business cases to assess technology alternatives. It also provides a database of expert advisors with proven records that enables users to interact with them directly. The databases aim to address the uncertainties at all stages of the investment decision-making process. In addition, selected proposals that meet a set of criteria and conditions may receive limited financial support for due diligence that may be required to secure mainstream financing.

Getting Involved

UNEP's Energy Unit and the Secretariat for the Global Programme of Action for the Protection of the Marine Environment are active in developing countries in efforts to promote sustainable energy and sanitation projects, respectively. North American industries and industry associations should become more engaged in multilateral efforts to educate governments and entrepreneurs around the world about the availability, benefits and affordability of existing technologies in these fields. UNEP's Regional Office for North America is also looking to develop user-friendly guides to North American export credit sources and risk guarantors, making investment in North American technologies even more attractive.

The benefits to the developing world of greater engagement by North America in the spread of renewable and sustainable energy and sanitation technologies lie in access to some of the most advanced technologies, expertise, financing and services. The benefits to the North American renewable energy and sanitation businesses lie in access to a large and growing market for their products and services. Partnering with a multilateral institution like UNEP offers North American companies an excellent means for reaching out to the rest of the world. For more information about UNEP, UNEP's Sustainable Energy Unit, UNEP's Regional Office for North America and the UNEP Secretariat for the Global Programme of Action for the Protection of the Marine Environment, see the following Web sites:

• www.unep.org
• www.uneptie.org/energy/home.html
• www.rona.unep.org
• www.gpa.unep.org/

Box 1: access to energy and water services -- some hard facts

Energy

An estimated two billion people (that is, about 35 percent of the world population) have no access to affordable, modern energy supplies UNDP, 2000. Supply to the privileged rest is based on non-renewable energy sources, to the tune of almost 90 percent of the total. Such strong reliance on non-renewable energy sources is the single most important human-caused contribution to climate change -- the mitigation costs of which have been estimated at 0.1 to two percent of the gross domestic product (GDP) in industrialised countries by 2010 IPCC, 2001.

Water

Over one billion people still lack access to safe drinking water and some 2.4 billion lack access to improved sanitation WHO / UNICEF, 2000. Indeed, the continued use of untreated water remains one of the greatest environmental threats to health and more than five million people die every year from avoidable water-related diseases UNEP, 2002. Ultimately, this results in adverse, albeit poorly quantified, impacts on economic productivity in low-income countries (ibid.).

Box 2: UNEP's mission and present priorities

Mission

"To provide leadership and encourage partnership in caring for the environment by inspiring, informing and enabling nations and peoples to improve their quality of life without compromising that of the future generations."

Present priorities

environmental information, assessment and research, including environmental emergency response capacity and strengthening of early warning and assessment functions;

enhanced co-ordination of environmental conventions and development of policy instruments;

fresh water;

technology transfer and industry; and

support to Africa.

www.unep.org www.unep.org

Box 3: IPCC renewable energy potential estimations

Wind

While global wind power potential is estimated at around 20×10⁹ megawatts (MW) per year, supply levels in 2000 reached 13×10³ MW only IPCC, 2001. This means that less than one percent of the global wind power potential is being used -- and this estimate is believed to be a conservative one that undervalues the total global potential.

Solar

Estimations of solar energy potential based on available land in various regions give a minimum of 1,575 and a maximum of 49,837 electric joules (EJ) per year IPCC, 2001. Current global energy use accounts for less than 25 percent of the lowest estimation.

Box 4: Solar and Wind Energy Resource Assessment (SWERA)

Goals

to accelerate and broaden investment in solar and wind energy projects in developing countries through good quality, site-specific information;

to identify solar or wind energy resource potential in 13 pilot countries in three regions.

Outcomes

consistent, reliable, verifiable and accessible global renewable energy resource data for international and national investors and other stakeholders;

increased awareness among key stakeholders and decision makers of the potential solar and wind energy resources;

increased capacity to plan solar and wind energy projects at the local, provincial, national and regional levels; and

reduced uncertainty associated with investment and development decisions for solar and wind energy projects.

swera.unep.net/

Box 5: Water and Sanitation

For many of the world's poorer populations, one of the greatest environmental threats to health remains the continued use of untreated water:

· Two billion people are at risk from malaria alone, with 100 million people affected at any one time, and one to two million deaths annually.

· About four billion cases of diarrhoea and 2.2 million deaths annually: this is the equivalent of 20 jumbo jets crashing every day.

· About six million people are blind from trachoma.

CSD 1997a, WHO and UNICEF 2000

Box 6: What is Sanitation Connection?

Sanitation Connection is an Internet-based resource that was conceived as a way to bring together a number of ongoing initiatives in sanitation information management.

The site is structured around the following themes:

· Policies and Strategies · Urban

· Finance and Economics · Rural

· Technology · Coastal Settlements

· Health and Social · Environment

You can also

· Search the list of resources,

· Go to the information by topic,

· Send a request or feedback to the Help Desk or

· Visit GPA/Sanitation Connection Links page for GPA relevant information.

www.sanicon.net/

References

CSD (1997a). Comprehensive Assessment of the Freshwater Resources of the World. Report of the Secretary-General. United Nations Economic and Social Council.

UNEP, 2002: Global Environment Outlook 3. United Nations Environment Programme. Nairobi

IPCC, 2001: Climate Change 2001: mitigation. Intergovernmental Panel on Climate Change. Geneva

WHO / UNICEF, 2000: Global Water Supply and Sanitation Assessment 2000 Report. World Health Organization and United Nations Children's Fund. Geneva and New York

UNDP, 2000: World Energy Assessment -- energy and the challenge of sustainability. United Nations Development Programme. New York.

This article originally appeared in the October 2002 issue of Environmental Protection, Vol. 13, No. 9, p. 18.

This article originally appeared in the 10/01/2002 issue of Environmental Protection.