Energy demand in countries of Sub-Saharan Africa (SSA) is projected to increase drastically in the next decades. Against the backdrop of the Paris Agreement, a key question for developing countries is how to forego carbon-intensive development steps and thereby achieve sustainable development. To answer this question, this project will trace the most recent carbonization dynamics and analyze feasible climate change mitigation actions that can lower emissons without compromising economic development.
Results derived in DeCaDe can inform different stakeholders how to identify and address current challenges: First, African governments can learn how to improve their NDCs in the upcoming UNFCCC periodic review process; in particular, they will help to understand which policy instruments can be implemented, how this can be politically backed and how they can be made effective. Multilateral development banks, such as the World Bank or African Development Bank, and bilateral donors (e.g. BMZ) can use our results to identify key areas of future action. In addition, our results can also inform a broad range of policy makers how different – and potentially conflicting – goals in the Agenda 2030 can be managed. Academically, we will partially step on empirically uncovered ground.
The evaluation of distributional effects by energy price changes on households will rely partly on ex-ante micro-simulations to determine how different income groups are likely to be affected by climate measures. In particular, the results will provide information on whether a climate policy can be expected to be progressive or regressive, i.e. whether it will put a proportionally higher cost burden on richer or poorer households. The distributional impacts can also be analyzed along other socio-economic characteristics, such as household size, location, education etc. Ex-post evaluations of fossil fuel subsidy reforms will shed light on behavioral recations of households in response to energy price increases.
Preliminary results from a quasi-experimental setting on fossil fuel subsidy removal in Ghana indicates that households switch back from modern fuels (mainly LPG) to tradtional and transition fuels: Firewood and charcoal. The use of firewood and charcoal for cooking is associated with forest degradation and severe health issues through indoor air pollution, which predominantly affects women and children. These results provide a strong argument for complementary policies to accompany fossil fuel price increases in poor contexts. Such policies can include (1) compensation payments, for example cash transfers, (2) support for alternative fuels or improving energy effciency, and (3) policies to curb harmful second-round effects, for example through more effective forest protection policies. Further, our result show that the impacts of fuel price reforms are highly context-specific: Local supply and demand conditions cause great heterogeneity in the effects of price reforms even within Ghana. Therefore, complementary policies would need to be designed to take into account this heterogeneity. This probably generalizes to other developing countries where markets are fragmented and (fossil-fuel-based) transport costs high.