RISE 2020 RISE REGULATORY INDICATORS FOR SUSTAINABLE ENERGY SUSTAINING THE MOMENTUM ABOUT ESMAP The Energy Sector Management Assistance Program (ESMAP) is a partnership between the World Bank and 18 partners to help low- and middle- income countries reduce poverty and boost growth through sustainable energy solutions. ESMAP’s analytical and advisory services are fully integrated within the World Bank’s country financing and policy dialogue in the energy sector. Through the World Bank Group (WBG), ESMAP works to accelerate the energy transition required to achieve Sustainable Development Goal 7 (SDG7) to ensure access to affordable, reliable, sustainable, and modern energy for all. It helps to shape WBG strategies and programs to achieve the WBG Climate Change Action Plan targets. 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RISE RISE 2020 REGULATORY INDICATORS FOR SUSTAINABLE ENERGY SUSTAINING THE MOMENTUM RISE 2020 – SUSTAINING THE MOMENTUM ii TABLE OF CONTENTS ACKNOWLEDGMENTS....................................................................................................3 WHAT IS RISE? ..............................................................................................................4 INTRODUCTION............................................................. 6 KEY FINDINGS...........................................................................................................7 POLICIES TO SUPPORT SUSTAINABLE ENERGY IN THE TIME OF COVID-19 ...........8 THE RISE METHODOLOGY ........................................................................................9 DEVELOPMENTS SINCE RISE 2018................................. 10 ELECTRICITY ACCESS: MAJOR PROGRESS OVER THE PAST TWO YEARS..............17 CLEAN COOKING: STEADY PROGRESS SINCE 2010................................................21 RENEWABLE ENERGY: SLOWED PROGRESS OVER THE PAST TWO YEARS ............26 ENERGY EFFICIENCY: A STRONG UPWARD TREND ACROSS ALL REGIONS...........30 REGIONAL BRIEFS.......................................................... 36 REFERENCES.................................................................................................................51 ACRONYMS AND ABBREVIATIONS.................................................................................52 1 RISE 2020 – SUSTAINING THE MOMENTUM 2 ACKNOWLEDGMENTS R egulatory Indicators for Sustainable Energy (RISE), 2020 - Sustaining the Momentum - was produced by the Global Energy and Extractives Practice of the World country financing and policy dialogue in the energy sector. Through the World Bank Group (WBG),  ESMAP  works to accelerate the energy transition required to achieve Sus- Bank Group. It benefited from the support and guidance tainable Development Goal 7 (SDG7) to ensure access to of Demetrios Papathanasiou, Energy Global Director; Ro- affordable, reliable, sustainable and modern energy for all. hit Khanna, Practice Manager, Energy Sector Management It helps to shape WBG strategies and programs to achieve Assistance Program (ESMAP); and Vivien Foster, Infrastruc- the WBG Climate Change Action Plan targets.  ture Chief Economist. The team is grateful for the constructive feedback provid- Regulatory Indicators for Sustainable Energy (RISE) is part ed by peer reviewers Vivien Foster, Ani Balabanyan, and of the Energy Data and Analytics Hub Program and was Husam Beides. Many World Bank colleagues, and exter- managed by a core team led by Elisa Portale and compris- nal partners offered formal and informal guidance during ing Daron Bedrosyan, Sharmila Bellur, Juliette Besnard, preparation of the report. The team is also grateful to the and Tigran Parvanyan. The following staff and consultants staff of World Bank’s Energy and Extractives Global Prac- performed the work on the four RISE pillars: tice, which contributed to the validation of information and data, country by country. §§ Electricity Access: Juliette Besnard and Paul Pulickal Mathew, with support from Raluca Golumbeanu and RISE is underpinned by individual data collection efforts Dana Rysankova in each of the 138 countries covered. The full list of those §§ Clean Cooking: Sharmila Bellur and Daron Bedrosyan, who provided information in each country is on the RISE with support from Yabei Zhang website (http://rise.worldbank.org). The team would like to particularly recognize the project managers of the firms §§ Renewable Energy: Tigran Parvanyan and Hong Yang, that led data collection activities across multiple countries: with support from Zuzana Dobrotkova and Pierre Alexander LaBua and Sylvana Bohrt (Greenmax Capital Ad- Audinet visors); Michel Layec and Rebecca Lamas (Stantec); Akram §§ Energy Efficiency: Muna Abucar Osman and Daron Al Mohamadi, Sara Ibrahim, and Maged Mahmoud (Re- Bedrosyan, with support from Ivan Jaques and Jas gional Centre for Renewable Energy and Energy Efficien- Singh cy); and Sanjay Dube and Sumedha Awasthy (International Institute of Energy Conservation). The team also received valuable support from Yadviga Semikolenova on the policy implications of the COVID-19 An editorial and design team comprising Steven Kenne- pandemic, and from Stephen Halloway at various stages dy, Duina Reyes, and Talar Manoukian raised the quality of the project development. and visual presentation of the final report. The online plat- form was developed by K.S. Sreejith, R. Narayanan, Rony The financial support of ESMAP  is gratefully acknowl- George, and Ram Prasad of Advanced Software Systems. edged.  ESMAP  is a partnership between the  World The communications process was led by Anita Rozowska, Bank  and  18 partners  to help low- and middle-income Nugroho Nurdikiawan Sunjoyo and Phillip Edouard Cor- countries reduce poverty and boost growth through sus- nell, with input and guidance on publication from Marjorie tainable energy solutions.  ESMAP’s analytical and advi- Araya and Heather Austin. sory services are fully integrated within the World Bank’s 3 WHAT IS RISE?  RISE—Regulatory Indicators for Sustainable Energy—is a has some room for improvement; and red for the lowest set of indicators intended for use in comparing the poli- scores (0–33), indicating that policy adoption remains at cy and regulatory frameworks that countries have put in an early stage. place to support the achievement of Sustainable Develop- ment Goal 7 on universal access to clean and modern en- By measuring the level and ambition of policy adoption in ergy. This third edition of the report captures policies and countries, the indicators can help policy makers bench- regulations that enhance sustainable energy in the form mark their own national energy framework against those of 31 indicators distributed among four pillars: access to of regional and global peers. By providing empirical evi- electricity, clean cooking, renewable energy, and energy dence of the support provided by policy frameworks, the efficiency. RISE database helps countries attract investment in their sustainable energy sector. The indicators, scored on a 0–100 scale, can be used to compare 138 economies that now account for 98 percent RISE is also a valuable resource for private investors and of the world’s population. A country’s overall score is an developers, who use it to carry out due diligence related average of its scores for the access to electricity1, renew- to new projects, products, and services. RISE scores are able energy, and energy efficiency pillars (the clean cook- intended to illustrate how close or far a country is from of- ing pillar is only scored for 55 access-deficit countries2). fering an attractive policy environment. They should not be The data in RISE 2020 cover the years 2010 to 2019 and construed as investment advice. are current as of December 31, 2019. The RISE data platform also includes a comprehensive li- Scores are grouped into three categories based on a “traf- brary of policies and regulations on sustainable energy in fic light” system:  green for the highest third of scores 138 countries. It highlights global, regional, and national (67–100), indicating a relatively mature policy environment best practices spanning the gamut of sustainable energy though still with room for improvement; yellow for the mid- policy making and offers regional profiles and country pol- dle range (33–67), indicating that the country has begun to icy profiles. Detailed information on methodology is avail- make serious efforts to develop a policy framework but still able on the website (http://rise.esmap.org/). 1 54 countries were surveyed for electricity access in 2019. Access deficit countries were selected if they had access rates under 90% or if there were over 5 million people lacking access to electricity in the country. Countries with no electricity access deficit were scored 100. 2 The clean cooking pillar is scored for 55 access-deficit countries (as identified in IEA, IRENA, UNSD, World Bank, and WHO, 2020) and is averaged into the overall score for those countries only. RISE 2020 – SUSTAINING THE MOMENTUM 4 The RISE framework Each of RISE’s four pillars rests on a set of indicators as shown in the figure below. FIGURE A. RISE’S PILLARS AND INDICATORS Pillar Indicators • Electrification plan • Framework for standalone • Scope of the electrification • Consumer affordability systems  plan ELECTRICITY ACCESS • Grid electrification • Utility creditworthiness framework • Utility transparency and • Framework for mini grids monitoring • Planning • Scope of planning • Standards and labeling • Incentives for clean CLEAN COOKING cooking solutions • Legal framework for • Network connection • Planning for renewable • Counterparty risk renewable energy and use energy expansion RENEWABLE ENERGY • Incentives and regulatory • Carbon pricing and • Attributes of financial and support for renewable monitoring regulatory incentives energy • National energy efficiency • Transport sector • Energy labeling system • Financing mechanisms for plannin • Energy efficiency • Carbon pricing and energy efficiency ENERGY EFFICIENCY • Incentives and mandates: entities monitoring • Building energy codes Public sector • Incentives and mandates: • Incentives and mandates: • Minimum energy Utilities Industrial and commercial performance standards end users Source: World Bank RISE 2018 5 INTRODUCTION Photo Credits: © World Bank KEY FINDINGS §§ Policy matters. Policies and regulations are critical for countries seeking to attract new investment and grow toward a sustainable energy sector in line with Sustainable Development Goal 7 (SDG7). RISE 2020 presents an inventory of sustainable energy policies and regulations in 138 countries §§ Globally, steady progress was made on sustainable energy policy in 2017–2019, but the pace was slower than in the past. Progress on policy related to renewable energy and energy efficiency slowed by half compared with 2015–17, whereas scores for electricity access and clean cooking maintained their advance and even accelerated during 2017–19. §§ Although the sustained global momentum toward electrification has brought significant policy improve- ments since 2010, most countries with deficits in access to electricity still have room for improvement in building robust policies. Frameworks to support mini grid and standalone systems have seen faster development since 2010 compared to on-grid electrification. Income levels have affected electrification policy efforts, with 67 percent of middle- and upper-income countries having adopted comprehensive access frameworks by 2019, compared with just 13 percent of low-income countries. §§ Although only 15 percent of the countries with deficits in access to clean cooking solutions have achieved advanced policy frameworks, those countries, including Ethiopia, India, Indonesia, and Kenya, represent more than half of the unserved population globally. While the period between 2010 and 2017 was notable for progress in upper- and lower-middle-income countries in Asia (Bangladesh, Cam- bodia, China, India, Indonesia, Mongolia, and Nepal) and Latin America (Guatemala), the period between 2017 and 2019 saw large improvements in low income Sub-Saharan Africa countries, notably Benin, Kenya, Nigeria, and Tanzania, which moved from the red zone to the yellow zone. §§ Renewable energy policies in the heating and cooling sector and the transport sector lag consider- ably behind those in the electricity sector, and the gap has widened. This is due to the historical priority of using renewable energy sources to produce electricity rather than to deploy them in other sectors. Despite overall progress in renewable energy policies, measures related to carbon pricing and monitoring, which are key to the use of renewables in heating and cooling and in transport, have gone relatively un- developed since 2010, with 50 percent of the surveyed countries still not having policies in place in 2019. §§ Historically, energy efficiency policies in heating and cooling, or HVAC, have been more developed than those in electricity and transport, with the latter scoring lowest globally. Approximately 75 per- cent of the surveyed countries have adopted minimum HVAC energy performance standards and labelling measures, with roughly 60 percent making them mandatory. §§ The countries that made the most rapid improvements were concentrated in Sub-Saharan Africa. Of the top ten performers in RISE 2020, nine were in Sub-Saharan Africa, including South Africa, Benin, and Sudan. Kenya, Kenya, Tanzania, and Chad had the largest improvements, increasing their RISE scores by more than nine points per year on average from 2017 to 2019. The increase was driven mainly by progress on electricity access and renewable energy, with Kenya also improving markedly on energy efficiency. 7 POLICIES TO SUPPORT SUSTAINABLE ENERGY IN THE TIME OF COVID-19 RISE 2020 monitors and assesses policy and regulatory support for sustainable energy to promote energy efficiency and the use of renewable energy while expanding access to electricity and clean cooking fuels. Marshalling policy data from well before the onset of the COVID-19 pandemic through December 2019, RISE 2020 reviews what governments have done to create an enabling environment for sustainable energy. The economic crisis brought on by the pandemic is affecting sustainable energy in ways that are only beginning to emerge. In response to COVID-19, several countries introduced country-wide lockdowns as well as energy-sector specific policies that are straining the energy industry and threatening access to energy just when it is needed most. With an addition- al 150 million people projected to be pushed into extreme poverty by 2021, the expected impact of COVID-19 on poverty de- creases the chances of meeting the access targets of Sustainable Development Goal 7 on universal access to modern forms of energy (World Bank 2020a). In many countries where utilities were already under financial duress, the COVID-19 crisis has exacerbated existing pressures and jeopardized utilities’ ability to provide essential services.3 In addition, low oil prices have reduced incentives to invest in clean energy, and more difficult financing conditions have constrained the development of capital-intensive clean energy solutions. In the short term, policies embedded in stimulus packages could support energy service providers and minimize mar- ket disruptions in the energy sector. Governments will need to help utilities recover from cash shortfalls and restructure their debt. As recovery progresses, broader energy tariff reforms can be undertaken, accompanied by measures to protect lower-income customers. Governments could then take the opportunity to implement structural reforms by phasing out fossil fuel subsidies and investing in digital, resilient, and clean energy infrastructure designed for financial recovery, long-term cost savings, and expanded access to electricity (IEA 2020a). Promoting sustainable energy through stimulus policies could also tamp down the likely spike in emissions of greenhouse gases as the global economy recovers, a phenomenon observed in the crisis of 2008–09 (McKinsey & Company 2020). Beyond challenges, the pandemic confronts energy policy makers with opportunities to build back better. Policy mak- ers have the opportunity to set new priorities and explore different trajectories to support a low-carbon recovery and acceler- ate the pace toward attaining SDG 7 (IEA 2020b). Short-term measures embedded in recovery plans are opportunities to set longer-term strategies and align policies on energy with SDG 7 targets over the next decade. The crisis underlines the need to continue strengthening the regulatory framework, including incentives for sustainable energy development to ensure a resilient recovery from COVID-19. It also highlights the need to adopt policies and regulations that mitigate the risk of global shocks while gradually withdrawing support for energy inefficient sectors (World Bank 2020). Countries must not lose sight of the need to invest in clean energy, which would create jobs across sectors, boost eco- nomic growth, and improve energy sustainability and resilience. Around $1 trillion per year over the next three years will be needed to ensure the full recovery of the energy sector (IEA 2020b). Government support, such as financial incentives for private investments in clean energy and digitalization, will be critical. The returns to such support would likely be immense. A large-scale shift toward electrification fueled by renewables between now and 2050, accompanied by a ramping up of energy efficiency, could more than triple global employment in renewable energy—from 12 million jobs in 2017 to 42 million by 2050. Solar photovoltaic (PV) technology, coupled with energy efficient buildings, appliances, and industrial processes, creates the most jobs per dollar of investment—up to 15 jobs per million (Ferroukhi, Casals, and Parajuli 2020). Options for governments to promote such investment include tax deductions, guaranteed lending, rebates, cash-for-replacement schemes, incentives for energy management systems, and programs for training and hiring energy managers (IEA 2020b). The pandemic also constitutes a mandate for clean cooking solutions—the benefits of which would extend beyond the immediate post-pandemic recovery. As COVID-19 is a respiratory disease, scientists expect that urban air pollution, coupled with inhalation of smoke from household cooking fires, may significantly sharpen the risk of dying from COVID-19 complications. It is therefore more important than ever to make clean cooking a policy and investment priority, especially in low-income countries. 3 Observed reductions in bill collections due to lockdowns are even more severe than observed reductions in demand. Sector-specific policies introduced by some countries (bill reductions, cancellations, or deferrals for all customer classes) have the greatest negative impact on utility finances in the short-term. RISE 2020 – SUSTAINING THE MOMENTUM 8 THE RISE METHODOLOGY RISE’s geographic coverage has expanded from 133 countries in 2018 to 138 in 20204. RISE 2020 now encompasses 98 percent of the global population. Its basic scoring methodology has not changed from previous editions. Clean cooking has been transformed from a pilot into a main pillar. Deficits in access to clean cooking, the most over- looked part of the sustainable energy agenda, affect 2.8 billion people worldwide. The RISE clean cooking pillar covers 55 countries that account for more than 93 percent of the countries with low access scores (IEA, IRENA, UNSD, World Bank, and WHO 2020).5 Four indicators measure the pillar’s policy frameworks: planning, inclusiveness, standards and labelling, and incentives to increase uptake. To capture recent changes in the energy sector, RISE 2020 refines the indicators and subindicators for all pillars, producing recalculations of the entire time series for all countries. The survey methodology for the electricity access pillar now captures more nuances in national policy design for electrification frameworks (grid and off-grid). The ques- tionnaire was updated to yield a better picture of how national electrification plans are drafted—taking into account the access target as well as the existence of clear licensing procedures for mini grid operators and consumers. Similar ques- tions shared between indicators (“framework for mini grids” and “framework for standalone systems”) were merged so that scores would better reflect sector realities. With respect to clean cooking, RISE 2020 incorporates questions within the three other pillars to capture policies that address the externalities of cooking practices on health and gender. With re- spect to energy efficiency, the questionnaire was refined from eleven indicators to two (eliminating “information provided to consumers about electricity usage” and “energy efficiency incentives from electricity rate structures”). With respect to renewable energy, some subindicators were modified (mainly to merge redundant questions). Because of these changes, scores from previous RISE reports cannot be directly compared with those in the latest edition. Measuring the quality and enforcement of policies remains challenging. RISE provides a record of the legislation, pol- icies, and strategies prevailing in a country over a specified timeline. As policies and regulations may exist without being enforced, a country’s RISE score reflects laws that have been enacted, without making a judgment on whether they are being implemented. RISE cannot fully capture the quality of policies and regulations, which is highly context-specific and may produce subjective assessments. Some policies may not be completely relevant for all countries given country-spe- cific strategies and political choices. One example is electrification strategies, where some countries have elected to rely only on publicly owned service providers or on grid expansion. Cross-pillar comparisons must be nuanced. The indicators included under the four pillars yield a holistic view of the state of regulation and policy making within each pillar. Comparing results across pillars reveals differences in the relative maturity of, say, energy access versus clean cooking or renewable energy versus energy efficiency. The RISE score is not the only precursor or indicator of SDG 7 progress or investment. RISE is intended to provide a record of laws, regulations, and policies that countries enact to support sustainable energy. The policy environment alone is insufficient, however, to attract investment or ensure progress toward SDG 7. It must be backed by strong institutions, open markets, access to finance, an open flow of information, and a strong private sector. Nevertheless, RISE can help explain trends in sustainable energy investment and SDG 7 outcomes. Except where otherwise noted, the figures in this report are based on RISE project data. 4 The 5 countries added are Albania, Bosnia and Herzegovina, Kosovo, Montenegro, and North Macedonia. 5 The 55 countries in the RISE clean cooking pillar are made up of 54 countries in the RISE electricity access pillar, plus China. For access-deficit countries, the overall country scores are the average of the scores for electricity access, clean cooking, renewable energy and energy efficiency. 9 DEVELOPMENTS SINCE RISE 2018 Photo Credits: © Getty DEVELOPMENTS SINCE RISE 2018 Since RISE 2018, the number of countries with advanced policy frameworks for sustainable energy has grown at a good pace. In 2017, 57 countries had built advanced policy frameworks for sustainable energy into their regulatory systems. By 2019, 65 countries had done so, including many emerging and developing countries such as South Africa, Ecuador, Jamaica, and Kenya. FIGURE 1. EVOLUTION OF RISE SCORES WORLDWIDE, 2017 VS. 2019 2017 2019 ≤ 33 ≤ 33 33 < x < 67 33 < x < 67 ≥ 67 ≥ 67 Source: World Bank, RISE 2020. But the pace of improvement from 2017 to 2019 was slower than that from 2015 to 2017. Compared with RISE 2018, the global average score has improved almost two points per year, whereas in the previous period annual average growth was around three points per year (figure 2). Nonetheless, from 2017 to 2019 the number of countries with advanced (green) policy frameworks rose from 41 to 49 percent, while the share of countries with undeveloped (red) policy frame- works fell from 21 to 17 percent. In 2019, 24 countries were still in the early stages of building a sound policy environment. FIGURE 2. GLOBAL PROGRESS ON REGULATION RELATED TO SUSTAINABLE ENERGY, WITH PACE OF GROWTH, 2015–17 AND 2017–19 Average Average Average +3.2 in RISE +1.9 in RISE 51 score / year 57 score / year 61 100% 90% 80% 35% 41% 49% 70% Share of countries 60% 50% 35% 40% 38% 30% 35% 20% 30% 10% 21% 17% 0% 2015 2017 2019 ≤33 33