Fairness and transparency in climate funding: workshop in Bangkok

I had the pleasure to take part in a workshop titled “Fairness and transparency in climate funding: taking into account the needs of the poorest populations” in Bangkok on May 11th, organized by Nexus – Carbon for Development. The event gathered some 50+ people to discuss the challenges and possibilities for pro-poor projects in the carbon markets. Specifically, we focused on two key themes:
1)    Could official development assistance (ODA) be used to leverage private investments into pro-poor carbon projects?
2)    How could carbon projects demonstrate their pro-poor benefits and should these be valued in the market? 
The aim of the event was not only to raise a discussion on the issue, but also consider producing a common statement on the two questions. The presentations and workshop material will shortly be available from Nexus.

ODA was strongly seen as one possible route for leveraging private investments into pro-poor carbon projects. This rested on several key notions. Firstly, pledged donor commitments for climate change investments will currently reach only half (c. USD 100 bn) of what is estimated to be required (c. USD 200 bn) by 2020. The private sector thus has a large gap to fill, but how can these investments be geared towards projects with pro-poor development impacts? Second, pro-poor projects often have difficulties in reaching carbon markets due to high upfront costs, transaction costs and knowledge gaps in e.g. the technologies employed. A majority of workshop participants saw that ODA has a strong role in facilitating private investment into carbon projects and would be crucial especially at their commencement. Nexus presented their regional project incubator approach, which through economies of scale could assist pro-poor projects in their initial stages. What Nexus is struggling with at the moment is achieving that necessary grant funding to support their activities and building a track record for such project incubators.

The other discussion centered on valuing the pro-poor benefits of carbon projects. While greenhouse gas emissions reductions are monetized on the market, there are no standardized indicators for measuring sustainable development benefits. In the case of the clean development mechanism (CDM) this has largely led to the situation where investments are geared towards those sectors (i.e. industrial gases) and regions (i.e. China, India, Brazil) where the most emissions reductions potential lies. The question we asked was: how could this be turned around to foster investment in pro-poor projects? Should there be a standard for pro-poor carbon projects and how would this be calculated? Several project developers (especially those working in projects with development impacts – such as cookstoves, biogas and water filters) wished for a pro-poor standard to differentiate themselves in the carbon market and thus be able to charge a premium for their higher value projects. However, several questions remained over how specifically to design and calculate such a standard and what implications this could carry. Would it result in a “greenwashing” of projects to claim pro-poor benefits? Does this area call for intervention, or could such issues be solved by the market?

For me the greatest contribution of the workshop was the various discussions I had with project developers working in the region. The amount of barriers pro-poor carbon projects face is huge and some actors had given up on the idea of carbon markets being able to deliver pro-poor projects. Thus organizations like Nexus have a large amount of work to do. At the same time there was enthusiasm in workshop participants for shaping carbon market approaches to becoming more transparent and equitable.

The growing middle class of Laos

Last Saturday I went to see Bodyslam, a famous Thai rock band, at a big stadium built quite far outside of the city centre (more like in the middle of nowhere at the end of a dark road) for the purpose of SEA games in 2009. The concert itself was good and well organized. What was very eye-opening however was to see the huge crowd of a growing middle class generation. There were thousands and thousands of young people, dressed up like young people in any western country would do. No signs of the traditional sin- skirts whatsoever. Of course you see these young people in central Vientiane, too, but seeing this mass of them made me realize what a huge impact they could and would have on the future development of this country.

Obviously this generation wants the same clothing, same gear and other equipment as any other teenager and twenty-something in Europe, Japan, Australia, North America etc. This generation of urban Lao people will not settle for anything less and they’ll grow up in such a different country than their parents grew up in. This group of urban young middle class is also growing due to urbanization. Many young people decide to move to Vientiane for a job to find their way to the middle class. In practical terms this growing middle class will demand electricity for the housing and electrical appliances and gasoline for vehicles (The number of vehicles in Vientiane has doubled in just one year!). They will demand modern housing, modern shopping possibilities, they will want to travel and they will demand any other entertainment and services we have in the west.

At the same time there is a huge number of people still living in poverty, both in rural and urban Laos. Outside of the stadium you could see the striking contrast of ‘the haves’ and ‘the have-nots’ as people were collecting bottles and paper for their living. It makes you think about the drivers of development in Laos and if there is any chance that in the future the wealth would be more evenly distributed among people. Laos is a country rich in natural resources which, in theory, could take this country and most of its people out of poverty. In reality, of course, things aren’t as straightforward.

Xayaburi dam discussed widely

FFRC organized a mini-seminar called "Large-scale Dams and Energy Development in the Mekong Region" on Monday April 2nd in Tampere. Dr. Jyrki Luukkanen gave an introduction to the event and FFRC's work in the Mekong Region. Following, Mr. Kirk Herbertson from the NGO International Rivers gave a talk on dam development focusing on the the anatomy of the mainstream Xayaburi dam. The event ended with an open discussion on the future of energy development in the region at large.

The topic of Xayaburi dam was also discussed at a seminar organized by Siemenpuu Foundation on April 3rd in Helsinki titled "Development Policy and the Corporate Social Responsibility in the Mekong: Finland, Pöyry Corporation and Xayaburi dam project". The seminar included presentations from Marko Keskinen, a water researcher at Aalto University; Mika Pohjonen, representative of Pöyry; Kirk Herberston from the NGO International Rivers; Pekka Puustinen from the Finnish Ministry of Foreign Affairs; Mira Käkönen, chair of Siemenpuu Foundation and Otto Bruun from Friends of the Earth. The presentations can be downloaded from: http://www.siemenpuu.org/english/mekong_in_finland/

The event by Siemenpuu Foundation was covered by the Finnish national public broadcasting company, Yle. The event was covered in the evening news. The reportage (in Finnish) can be found from http://areena.yle.fi/video/1333477022501 at 09.42 minutes.

Thoughts on fieldwork in Laos 21.2–15.3.2012

The atmosphere was excited and somewhat anxious on February 21, when we first landed on hot and sunny Vientiane. Still the mission of our trip was clear in our heads. After spending a good part of the winter familiarising ourselves with the focus group discussions already collected in the FFRC's INES project, we had now come to Laos for a month to gather further data for our Master's theses. The theses are written as part of the INES project and, in line with its objectives, they address the interlinkages between energy and livelihoods. More specifically, one concentrates on the adaptation and resilience of livelihoods towards environmental changes, considering also whether access to electricity can enhance adaptation capacity. As for the other, it examines how electricity is adapted as part of people's energy and livelihood related knowledge system. To help us answer these questions, we interviewed experts from several organizations and conducted a week of fieldwork in the rural district of Fuang in Vientiane Province, a 3-hour ride from the nation's capital.

Fishing in the Nam Lik reservoire.

During the fieldwork we visited five villages within a 20 km radius of the district capital where we stayed. Two of them were located along the river Nam Lik and were affected by a nearby dam. In the third village lived people who were resettled there after Nam Ngum II dam project forced them to leave their previous homes. The last two villages were located in the mountains and were inhabited by Hmongs, one of the numerous ethnic minorities in Laos. On our field trip we were accompanied by Mr. Saithong Phommavong, who served not only as an interpreter but also as an invaluable guide to the region.

In each of the villages four interview sessions were arranged: one with the village head man, one with a focus group of 4–6 persons and two with individuals of different backgrounds. The themes of the interviews were livelihoods, environmental change, energy and future development. The interviewees were reached through the village head man and a district official, who chose suitable people according to our criteria. We were particularly interested in hearing the views of women and people who defined their livelihood as poor or sufficient. In addition to interviewing, data was gathered through ethnographic observation.

Though the data we collected in the villages is waiting to be analysed in detail, some observations can already be stated. Concerning environmental change, we noted that the Nam Lik dam had not affected people’s livelihoods as extensively as we expected. Still the quality of the water had deteriorated and it could not be used for bathing or household purposes anymore. The smell of the water was striking. The quality of fish was worse, too. Moreover, most of the villages had already experienced frequent unseasonal weather conditions in past years and were worried about storms. In the resettlement village we also saw some of the effects that environmental change in the form of a major dam project can have on people’s lives. Some people had adapted their occupations to the new conditions but others trying to go on with only rice cultivation were more unfortunate.

Regarding energy and livelihoods, all of the villages we visited were connected to a grid. Even the poorest in the villages had access to electricity. If they did not have their own meter, they shared one with their neighbour. From the livelihood point of view, electricity proved to be most widely utilised in activities located at home, such as in weaving and in cooking. We did, however, also come across some less popular but interesting uses of electricity, such as fish raising. The most common service provided by electricity was, by far, lighting.

Focus group in the Hmong village of Nong Por.

All in all, the fieldwork was an educating experience. We got to explore rural Laos, gain new insights on our research themes and learn research skills that can only be acquired through practice. We are truly grateful to FFRC and especially the Mekong team for providing us with this wonderful opportunity. Last but not least, we would like to thank all the people we met during our fieldwork for the kindness that they received us with.

Heidi Tuhkanen and Riikka Yliluoma

COOL dissemination workshop in Phnom Penh, 28 Feb 2012

A research project Adequacy of Climate Change Mitigation Initiatives in Laos and Cambodia: Comparing Options and Analysing Obstacles in Local Context (COOL) investigated the implementation of four climate initiatives in Cambodia and Laos. The initiatives were Clean Development Mechanism (CDM), Reduction of emissions from deforestation and forest degradation (REDD), Voluntary Carbon Markets, and Energy and Environment Partnership (EEP).

Dissemination of the research results were organized in Laos and Cambodia in February 2012. The second of the COOL workshops took place on the 28th of February at the Sunway Hotel in Phnom Penh, Cambodia. Registration for the event started at 7.30am!! It was organized together by the Climate Change Office of the Ministry of Environment of Cambodia and Finland Futures Research Centre’s team. It gathered a large audience as a bit more than 150 people attended the seminar.

We were also honoured to have welcome remarks from H.E. Mark Gooding, Ambassador of the UK to Cambodia, on behalf of the European Union. Opening remarks were given by H.E. Dr. Mok Mareth, Senior Minister of Environment. There was a real big world feeling to the event with camera’s flashing and professional video-recorders and TV-cameras being moved around the room during the first remarks. We felt like this would probably be the first high-level event for the new logo of FFRC (check it out from the bottom of www.mekong.fi). However, as usual, our honoured guests had other commitments and had to leave after their remarks. Most of the reporters left with them. Luckily the other participants stayed, so I think they were honestly interested in what we had to say.

The first half of the day consisted of presentations on the CoP-17 in Durban: what had been agreed on, what was Cambodia’s position in the negotiations, how EU and Oxfam felt about the outcome, and what will happen next. However, after the lunch break our team finally got to work.

Hanna Kaisti started with an overview of the COOL project, introducing the team, scope of the research, and its objectives. Try Thuon and Otto Bruun started presenting the actual case studies with a look into REDD+ in Cambodia and Laos. The topic seemed to of interest to the audience and many questions followed after their presentation. After that Visa Tuominen (that’s me) was up with a presentation on the Energy and Environment Partnership, which was followed by the last coffee break of the day.

In the last session Hanna Kaisti gave her presentation on Voluntary Carbon Market’s. Even though the day had been long, interesting questions and comments were voiced. A comment from the audience pointed out that some NGOs find themselves in a difficult situation. On the other hand donors are not willing to provide official development assistance (ODA) for getting a certification which can bring in hundreds of thousands of euros for the organisations. But neither private investors are making the investments as they lack the tools to evaluate these kind of projects.

This is not a thoroughly thought idea, only from the top of my head: perhaps financing for these kind of risk-investments, that in the best case scenario mitigate climate change while bringing sustainable development and results for poverty reduction, could be provided by multilateral development finance institutions. They have the sufficient know-how on both climate change mitigation and development cooperation. They also have knowledge on suitable finance mechanisms and funds combined with the capability to make risk-assessments on these kind of projects. And, they have the mandate both for development finance and climate finance. Still, another really interesting question is: how well do climate change mitigation and pro-poor development go hand-in-hand?

But now I’m just getting carried away. Our successful event was given a good end by Mira Käkönen’s presentation on CDM and CDM projects in the region. Overall, I have to say we did quite well. The event also managed to gain visibility in the local press. On the right you can find the story published in The Cambodian Daily. Click on the image to enlarge.

The presentations are available on our website.

China´s Challenging Economic Growth Process: New Insights about Greener Economy

It is good to remember what happened in 2006. The 6^th Plenium of the 16^th Central Committee of the Communist Party of China (CPC) concluded on October 11, 2006 with the commitment to establish a harmonious society by 2020. The obvious situation analysis in 2006 was that the present major social, economic and political trends are not leading to a harmonious society. Other interpretation is that current trends are not leading Chinese society to this goal fast enough.

Wing Thye Woo is an expert on the East Asian economies, particularly China, Indonesia and Malaysia. Woo has advised the U.S. Treasury Department, the IMF, World Bank and the United Nations. He has specialized in exchange rates, economic growth, regional economic disparity and financial sector development. Recently he presented very interesting situation and foresight analyses for China. Wing Thye Woo (2011) outlined in a recent BOFIT Discussion Paper an interesting analysis about China´s challenging future growth process. He noted that China is like a speeding car facing three potential failures.

Firstly, there is potential hardware failure from the breakdown of an economic mechanism, a development that is analogue to the collapse of the chassis of the car.

Secondly, there is a threat of a software failure from a flaw in governance that creates frequent widespread social disorders that disrupt production economy-wide and discourage private investment. This is a situation similar to a car crash that resulted from a fight among the people inside the speeding car.

Thirdly, there is potential for a power supply failure from hitting either a natural limit or an externally-imposed limit, a situation that is akin to the car running out of gas or to the car smashing into a barrier erected by an outsider agent.

China´s fiscal position can become vaguer because of the repeated recapitalization of the state banks. This can cause hardware failure to become a bigger problem for China. For software failure, outmoded governance structures of China can be problematic. This kind of problems may lead China to social disorder. The biggest source of power supply failure is China´s chronic trade imbalances and the physical constraints posed by China´s rapidly deteriorating natural environment. Both sustainable development and green economy are real big challenges in China. Financial Times reported in 2007 that “about 750 000 people die prematurely in China each year, mainly from air pollution in large cities”.

In July 2004 in Financial Times, Pan Yue, the deputy head of the State Environmental Protection Agency, summed up the situation in China: “If we continue on this path of traditional industrial civilization, there is not chance that we will reach sustainable development. China´s population, resources, environment have already reached the limits of their capacity to cope. Sustainable development and new sources of energy are the only road that we can take”.

Thus China´s “future roadmap towards sustainability” means also much to the Mekong River countries which are developing partnerships with China. As China, the Mekong River countries cannot in no way underestimate the challenges of green economy and renewable energy.

As recent UNEP Report “Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication” notes green economy is not any more an exotic discussion topic. It is necessary economic growth strategy to our common better future.  

Sources of information:

Wing Thye Woo (2011) China´s economic growth engine: The likely types of hardware failure, software failure and power supply failure. BOFIT Discussion Papers 8/2011. BOFIT – Institute for Economies in Transition. Helsinki: Bank of Finland. Web: http://www.suomenpankki.fi/bofit/tutkimus/tutkimusjulkaisut/dp/Pages/dp0811.aspx

Brookings Institution: Wing Thye Woo. Web: http://www.brookings.edu/experts/woow.aspx

UNEP Green Economy Web: http://www.unep.org/greeneconomy/

Know your power!

Mekong Energy and Ecology Network (MEE Net) organised, in cooperation with Finland Futures Research Centre and Chulalongkorn University, an international conference ”Know Your Power: Towards a Participatory Approach for Sustainable Power Development in the Mekong Region” in Bangkok on 18-19 January 2012. The aim of the conference was to examine the interlinkages between energy and development by analysing the multitude of actors, their roles and influence within the power sector. The conference was attended by researchers, NGO representatives, government officials, journalists and donors. The participants came from all the Mekong region countries, as well as from Europe, US and Australia.

Simultaneously and partly overlapping with the energy conference, MEE Net organised together with Thai Broadcasting Service a Mekong Energy Journalist Workshop to train journalists from the region to know and to report about energy issues, and to network with each other, and with conference participants. Journalists from Thailand, Laos, Cambodia, Myanmar, Vietnam and China attended this 5-day workshop.

In the Know Your Power conference there were more than 25 presentations given on different topics relating to energy in the Mekong region. One of them was researcher Chuenchom Greacen who discussed about power sector planning, taking Thailand’s official Power Development Planning (PDP) process as an example. She, together with her colleagues, had developed an alternative PDP for Thailand, “PDP2012” which showed that energy security in Thailand can be maintained without electricity imports, nuclear and new power plans.

Chom’s presentation, as well as all the other presentations can be downloaded from the MEE Net’s website http://www.meenet.org/

Informing and influencing development policy - SUMERNET meeting

The Sustainable Mekong Research Network (SUMERNET) is a programme funded by Swedish government that intends to build a long-term research network that informs and influences policy development on sustainable development issues in the Mekong region. The program was launched in 2005 and it is now in its second phase (2010-2012).

At the time when the program was established there was a generally acknowledged gap between the pro-development perspectives of governments in the Mekong region which were often supported by multilateral donor organisations and fuelled by trade liberalisation, and the perspectives of NGO campaigners, in many cases representing local resistance to specific development projects. Many development agencies voiced their concern that an integrated approach was needed, for a greater diversity of perspectives on development to be incorporated in regional planning and policy. SUMERNET was established to support and promote the use of scientific evidence in policy making, and thus contribute to sustainable development.

SUMERNET held its annual meeting in Bangkok 11-13 January, 2012, where also Finland Futures Research Centre was present, even though it is not formally a member of SUMERNET. The meeting focused on research that is informing and influencing development policy and planning in the Mekong region. In the research partner meeting the researchers, boundary partners and other stakeholders of SUMERNET’s 10 on-going research projects shared information on a number of critical development challenges in the Mekong region. The research projects fall under 5 research themes; Ecosystem services, Trans-boundary issues, Energy & climate change, Poverty and livelihoods, and Urbanisation. These research projects are being implemented by almost 30 national teams, comprising nearly 100 researchers across the Mekong region and Southeast Asia. They are under different stage of implementation but all are to be completed by the end of 2012.

For more details on SUMERNET and the research projects, please visit http://www.sumernet.org/

Focus Group Discussions in Laos

Last winter and spring a series of qualitative focus group discussions (FGDs) were conducted in Laos as a part of the INES -project. The aim was to provide data on rural and urban resources and livelihood strategies in Laos that would support climate sensitive and sustainable natural resource policies, food security and poverty reduction. Together 14 FGDs were conducted in 6 provinces and in Vientiane capital (the picture below from Hadkhor village in Luang Prabang province). The criteria for selecting FGD participants required that they are in charge of making daily decisions on energy and food consumption in their households. The FGDs were conducted in Laotian and were translated into English by Bouasavanh Khanthaphat, who also moderated the FGDs.

The questions were divided into 4 categories: livelihood and food security; change in livelihood condition; coping strategies; and household energy management. I’ve had the interesting task to examine the data from FGDs more closely and here are some findings.

Together 10 FGDs were conducted in rural villages (both on- and off-grid) and groups comprised both men and women. The main topics were coping strategies, livelihoods, energy consumption and changes in these. In on-grid villages people have more resilience to changes in the environment, livelihoods and weather patterns. On-grid villages usually have irrigation systems for rice paddies and more electrical appliances to ease the work. On the other hand good connections to other areas provide more earning and consumption possibilities. In recent years rural villages have faced many man-made environmental changes. Dam projects have had a negative effect on fisheries and plantation projects have accelerated deforestation. Non-timber products are more difficult to find these days.

4 FGDs were conducted in Vientiane capital and there were separate groups for both sexes. All the interviewees had migrated from rural areas less than 5 years ago. The most important reasons for migration were better job opportunities, but many interviewees also wanted to see and experience new things and city life. Livelihoods in Vientiane are not as dependent on environment as life in villages. Earned income is spent to food, to gather savings and to help relatives. The life in the city was not found to be as comfortable as expected, but most of the migrants were planning to stay in Vientiane.

Signs of integration.

I arrived in Vientiane a couple of weeks ago. The city greeted me with heavy rain and a thunderstorm. Obviously it was a very heavy thunderstorm as they said in the local newspaper the next day that two elephants had been killed in the outskirts of the city by the lightning (!?). Now the weather has improved though and we haven’t had any rain this week (so far). One can hope the rainy season is over. Wishful thinking?

It was great to come back to Vientiane- this time long term as I’m planning to stay here for the next year and a half. In comparison to other Asian capitals with millions of inhabitants and endless traffic chaos I must say Vientiane is a quite atypical Asian capital with a slow beat and almost a sleepy feeling (although the number of vehicles has increased a lot just during the past few years here as well).

A few signs of slight integration into the Lao way of life are probably 1) wearing a sin which is a traditional skirt Lao women wear and can be found in various colours and embroideries. Yesterday I got my first sin done and it’s a beautiful sin! 2) Walking under an umbrella, not because it’s raining, but because it’s sunny. The 3^rd step for me will be learning the language. On Monday I’ll start a 4 week crash course studying 3 hrs a day, 5 days a week. That will just be the beginning of it but I’m hoping I’ll get some basics. Luckily I have Dorn, Boua and Bouasy, plus night guards to practice with!

Work-wise I’ve so far mostly been fixing all kind of pratical issues related to the office and bureaucracy. Met some people from other organizations working in the same field, and on Wednesday I attended ERIA’s (Economic Research Institute for ASEAN and East Asia) ”1st East Asian Summit Energy Efficiency Conference” which was hosted by the Ministry of Energy and Mines of Lao PDR. The conference was held at Lao Plaza and there were probably around 200 participants from various countries around East Asia. It was interesting to learn how the East Asian countries with varying levels of economic development have coped with energy efficiency issues. The presentations of the conference elaborated the different energy efficiency policies some East Asian countries had implemented, which I hope other countries can learn from. The conference also draw scenarios on future energy demand in the region, which obviously is increasing due to economic development, as well as pointed out challenges and opportunities for energy efficiency. In most countries energy efficiency was important firstly because of energy security issues and economic development. On 3rd place was climate change. One of the presentations (by UN ESCAP) underlined also the social aspects of energy and energy efficiency and its importance for development issues. Energy efficiency was also seen as an important source of energy as improving energy efficiency will give more energy out of the same amountof primary energy. Lao PDR’s hydro power potential was highlighted during the conference and the country was recognized as “the battery of the region” having substantial reserves and potential to feed the region with renewable energy..

Phob kan mei! (see you soon)

Hanna