
Peace is breaking out on Capitol Hill? Can it be true? My guests this week, Tom Hart, the US executive director of the ONE Campaign, and Todd Moss, chief operating officer and senior fellow at CGD, discuss why President Obama’s Power Africa...
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A
Sam, welcome to the Global Prosperity wonkcast. I'm Lawrence McDonald. I'm pleased to have a guest with me in the studio today. Tom hart. He's the U.S. executive director of the ONE Campaign, the nationwide anti poverty movement. And Todd Moss, who's chief operating officer and senior fellow here at the center for Global Development. Tom and Todd, welcome to the show.
B
Thanks so much.
C
Thanks, Lars.
A
Our topic today is energy poverty in Africa and a new effort by the US government to address it through something called Power Africa. And before we get into that, Todd, I want you to unpack the problem for us a little bit with reference to your famous blog post about your new fridge.
C
Right. So, I mean, I knew in a vague sense that that power was a problem in Africa. People don't have access to power. I know that two thirds of Africans don't have access to any kind of modern electricity. Doesn't really mean very much when you say, you know, the average Ethiopian only has 52 kilowatt hours per year. It's just a number. But I've been looking at the numbers in the countries in President Obama's Power Africa initiative, and they range from Ethiopia at the bottom end at about 50 up to about 300 for Ghana. I thought, okay, that's interesting. But the next day I happened to be in a store buying a new refrigerator for my kitchen, a new, highly.
A
Efficient one, I'm sure, of course.
C
And I noticed that my fridge uses about 400 kilowatt hours per year. And I thought, this is kind of crazy that my fridge will use more power than a person would. And so I put it in a little graph. And it was an extremely popular blog post.
A
We also have some work here at the center by Vijaya Ramachandran in which she surveyed African firms. And if I recall correctly, the two big impediments that they identified were power and roads.
C
That's right.
A
That's the main thing. I think people oftentimes when they think about Africa, they think about maybe governance and ports or disease or war. But the thing that the small entrepreneurs came back with is we need electricity.
C
Yeah, that's right. I mean, if you're concerned about economic growth or job creation in Africa, which I think every single African leader is, and certainly the millions of Africans that are seeking jobs would put that high on their list. One of the top constraints, and in many countries the top constraint is the cost and reliability of electricity. It's just hard to run a business if you don't have power.
A
I want to come to the proposed policy piece of it that's our business here at cgd. But first, Tom, I want to bring you in and ask, why is one interested in this issue?
B
Well, I think the economic constraints that lack of energy provides is a big motivator for us as well. But let me talk about the other side of it, which is at the individual level, not having electricity in Africa means kids can't study after the sun goes down. So it impacts education. And something like 70 or 75% of schools have no electricity. It means that moms cook on open fires inside their homes for heat, light, and for cooking. The result of which, and this is what really hit one, because we've worked on the fight against AIDS and malaria and other communicable diseases for years. More people die of inhalation of toxic smoke in Africa than AIDS and malaria combined. So as we spend billions of dollars, and we should, at fighting these diseases, and yet there's still such huge health and education impacts on lack of electricity, we knew we had to get involved.
A
That's a very powerful way of explaining it. Todd, what's the solution here? What is Power Africa? Let me start there. So the Obama administration has recognized that this is a problem. He has announced that his legacy in Africa will be to greatly increase the supply of electricity, just as George Bush's legacy was to provide funding for HIV aids. It's an admirable ambition. How does the administration hope to go about that?
C
Yeah, well, the administration set some modest targets. They want to increase 10,000 megawatts of generation in the six identified Power Africa countries, and they want to increase access in those countries for 20 million households. Those are pretty big numbers. Not as big as I would have liked. Not as big as I think. We're going to talk about competing legislation on Capitol Hill that's a little bit more ambitious, but it's still a very, very good start. And what the Obama administration is doing is they're taking the tools in the US Government policy toolbox, which are spread across the federal government, and trying to bring them together in a coordinated manner to get a number of power deals done in a short period of time. And also to show that by bringing these tools together and engaging in a new way with the private sector, that a lot more deals could happen in the future beyond the administration's term. And just to highlight, you know, the big money, the headline figure is $7 billion. Most of that is the United States Export Import bank, which finances US Equipment going overseas, and the Overseas Private Investment Corporation, or opic, which makes investments in projects and Provides political risk guarantees for US Investors in infrastructure projects.
A
So the idea is to take a bunch of existing agencies that are kind of trying to do this in various ad hoc ways, set some targets, presumably go through an interagency process that involves banging some heads together and getting people to work harder, doing what they currently are trying to do anyway and achieving a little bit more. Is that a fair description of it?
C
I think it's a pretty good summary. I don't know.
B
And I got to say, there's nothing quite like having the President of the United States on the continent of Africa saying, this is an important issue. Let's not underestimate the value of highlighting this issue. The amount of attention that the United States government, that the Congress, companies, and indeed increasingly the public and African countries themselves are putting to energy now is tremendous. And so it is that symbolism and that sort of bully pulpit is worth quite a lot.
C
Yeah. You notice President, he announced it in June when he was in Tanzania, but he mentioned it just a few days ago in the State of the Union address as well.
A
So there's one more piece I think I want to bring in here, Todd, before we go to the policy piece, and that is the energy boom in Africa. While there's a huge problem with electricity, there have been these massive discoveries of hydrocarbons. Can you talk about that?
C
Sure. I mean, the $100 a barrel oil has meant that companies have been looking for oil and natural gas in lots of new places. A lot of that has been in Africa, and it's been surprisingly successful. If you go around the coast of Africa, virtually every country with a coastline has had a significant oil or natural gas discovery within the last two or three years offshore. Offshore. Within the six power Africa countries, every single one is either exploring or already producing natural gas.
A
And are they finding it offshore because it's more likely to be there or because the political risks of the exploration were lower offshore and therefore they looked offshore rather than looking onshore?
C
Yeah, I think there's a combination of political risk and geology. There are certainly what happened. What's interesting is that everybody knew about Nigeria. They've been producing oil and gas for a long time. But when you have one discovery. So in Ghana, they had the Jubilee field discovery. That one discovery provided all kinds of new geological information that then everybody started looking in adjacent blocks and starting to find it. So it has almost a cascading effect. And that's what we're starting to see. And I think also companies that maybe used to be a little bit nervous about Africa are Starting to see that actually they can do business in Africa and that they can make money while they extract these resources.
A
Okay, so you've got the potential of a lot of oil and natural gas coming online. Eager international market, happy to have this stuff shift out. But a whole lot of people in Africa that have no electricity looking at this energy coming out of the ground and saying something's wrong with this picture. We'd like to have power plants, we'd like to have electricity. Where does your policy idea come in for delivering on something that would be more ambitious than what President Obama has proposed? Todd?
C
Well, I think you put your finger right on the big political problem. It's very difficult. You're the president of Ghana or Kenya or Nigeria and they can see, they know that there's all of this natural gas being produced and it's going to other countries and yet the lights don't turn on in their own country or they're living with rolling blackouts. It's a tremendous political issue, but it's also a developmental issue because of the health and education effects that Tom mentioned and on the job prospects. So I think you're seeing really a perfect storm here where you've got the market is discovering all of these new resources just at a time where countries have decided that this is their top priority and where the United States is making a shift from traditional grant finance to more business oriented, low cost types of engagement and partnerships with countries. And that's power Africa and energy is sort of the nexus of those three things.
A
We're going to take a short break. When I come back, I really will deliver on the promise to have Todd unpack the policy problem. And before we started the show I said, so why are we working one on this? And Tom, you said, well, CGD's product development, we're marketing. So I want to come to the marketing piece of this as well. This is the Global Prosperity Wonkcast from the center for Global development, I'm Lawrence McDonald. My guests are Tom Hart from One and Todd Moss from CGD will be back in a minute. Welcome back to the Global Prosperity Wonkast. I'm speaking with Tom Hart of the One Campaign and Todd Moss from the center for Global Development. We're discussing energy poverty in Africa and the President Obama's push to to deliver power to Africa. And Todd, you have an idea you've developed together with colleagues here and with our colleagues at the One Campaign that would be more ambitious than I think you said. The power for 20 million people that the president has set out. That already sounds pretty ambitious to me. But you want to go further. What would that require in terms of changes in U.S. policy?
C
Yeah, well, I think setting ambitious targets is very useful. It's something that people can focus on. They can focus on the outcomes rather than just process. But I think that if the United States is going to play the role that it can play in helping to bring energy to the hundreds of millions of people that don't have it, then we need to modernize our policy tools and our instruments. And the one that we've really focused on is opic, or the Overseas Private Investment Corporation, which is the US Government's development finance institution. It really should be. It's doing a lot of great things, but it could be doing even more and not without. It doesn't require a lot more money, which is a key component. So we've talked about some of the issues that would help OPIC perform even better than it has. One is it's been operating on an annual authorization. It gets reauthorized only one year at a time. If you're trying to do a, a five year power project, that's not very good for your partnership. So they need multi year authorization. They're actually sitting on a lot of cash. They have a lot of resources. They don't need more resources. They actually just need a few more staff to put package deals together to get things done.
A
Let me get to it. When they invest in a project and bring investors together, then they make a profit off that. That's why they've got cash.
C
Exactly. And they actually pay those profits back into the U.S. treasury for 30 years in a row. They paid money into the U.S. treasury. It was about $250 million last year.
A
So this is a moneymaker for the U.S. government.
C
It is, but the point is not to make money. It's good that it operates at a profit, but I would rather see it operate at a tiny profit. $1 is fine, but some of those resources, it's nice to go and help contribute toward closing the US deficit with the 250 million. But what if they were allowed to retain, say 50 million extra a year? Even 25 million would be great. And they could add a few more staff, do a few more things and they could do a lot more deals.
A
In fact, we've done 25 million is not going to go very far in terms of building power plants. That's not what they need it for. They need it to pay the staff and the overhead and the travel so they can put together the Details bringing in the private sector money.
C
They've already got the capital and the systems in place for the investments. They just need people to make that happen. I know that sounds very minor, but that's actually the main sticking point.
A
Well, Elizabeth Littlefield, who is the head of opic, was here and we were asking what is the constraint? And she said that's the main constraint is I just don't have the staff to put the deals together.
C
You know, how many people they have in Africa? One. Right. So imagine if they could get that to 10. Right. They could do just do a lot more. So we're not talking about, you know, in the realm of the federal government, we're not talking about much, and we're actually just talking about allowing them to retain a little bit of their own earnings. And then the third piece is the controversial piece, which is really to deal with a carbon emissions policy that OPIC has. You know, in the United States, President Obama talks about all of the above as our energy policy. In the United states, we have 3,400 power plants that run on fossil fuels. Ghana has two. All right. Ghana would like to build a couple more. And opec, given the current policy, would not be allowed to participate in natural gas power plants, where Ghana would turn its own natural gas into power plant, into electricity for its people given this emissions rule. And so we think that some flexibility for very poor countries. We're not talking about letting OPEC invest in coal plants in Brazil. We're talking about natural gas in poor African countries. They should be allowed a little bit extra flexibility in how they implement that.
A
Well, even a climate hawk like me finds that persuasive.
C
Okay, well, I'm glad.
A
I know it's controversial. We'll come back to it again. But first I want to go to Tom, because during the break you said that you wanted to explain about the legislative process. And you know, the impression I think probably well deserved is that nothing gets through this Congress that they can't agree on anything. Is this another good idea that's going to fall victim to that dysfunctional Congress?
B
I really don't think so. We have yet to have a bad meeting on Capitol Hill on this subject. It is so the legislation that is complementary to Power Africa but really does go a bit further. Instead of 10,000 megawatts, it's 20,000. Instead of 20 million people, it's 50 million people. Both the White House and the congressional sponsors view their efforts as complementary. And it has been introduced by the ranking Republican and ranking Democrats in the House Foreign Affairs Committee, as well as the Africa subcommittees. It's got 44 co sponsors on both sides of the aisle. And it's quite tremendous when you see Republicans and Democrats say, yes, we want to do something good and powerful, potentially transformative, that does not have a negative impact on the federal budget and can really do something quite extraordinary.
A
So peace is breaking out on Capitol Hill. Can it be true?
B
I think if you keep under the race.
A
Can we bottle that sauce and sell it?
B
Well, look, the Hill is hungry to make progress on issues and to, you know, lean across the aisle and do things. And this is one area where we really believe that that's the case. So the Royce Engel legislation is moving pretty well.
A
What have you said? You said it a little fast for some of us. Royce.
B
This is Royce, the chairman and Engel, the ranking Democrat and the House Foreign Affairs Committee have introduced this legislation. And in the Senate, we are hopeful that companion legislation will come through soon. And look, and it's, we believe, just like President Bush's initiative on PEPFAR was complemented by legislation by Senator Kerry and Senator Frist creating a lasting bipartisan legacy around HIV aids, we believe all those components exist here.
A
So this is the next big thing that the US does in a bipartisan way that is sensible for Africa.
B
Well, I've been at this for 15 years, and when I see bipartisan, transformative, helping the poorest for no extra money, I see a winning combination.
A
One has this incredible network across the country. And some years ago, you'll recall, we gave one the Commitment to Development award here at cgd. And I was so impressed in you had these volunteers show up in their T shirts during the primaries, especially at every single campaign. So by the time the general election came round, and if I remember correctly, it was which election was it?
B
2008.
A
It was McCain and Obama. They all knew one because one had been there from early days in the small rallies with your T shirts on. Now you're bringing a bunch of the best of these volunteers to Washington to go onto the Hill and talk to their representatives about Power Africa.
B
Exactly. So in a couple weeks, we'll have around 200 of our top volunteers from almost every state in the Union, Power Africa. And this legislation is going to be their main focus. And like I said, we're very, very charged up to go and talk to members about this because every time we do, once you get over the initial raised eyebrows and question marks, people say begin to understand what their lives would be like without electricity and can't imagine trying to run A home, let alone a business without electricity. And so the recognition up on the hill from our volunteers and from the media has been tremendous.
A
Todd, I want to come back to the carbon cap because, you know, as you know, well, I'm preoccupied with climate. I find this totally persuasive. I'm not sure that others who are similarly involved in climate advocacy will feel the same. What's been the response from green groups that are concerned primarily about emissions?
C
Yeah, so I think the answer has been that we, you know, no one wants to fight climate change change on the back of the poor. And people, I think, believe that we could do this mostly with renewable energy. And I think, you know, OPIC certainly should be applauded for really pushing the envelope on renewable energy. They're making major investments in solar, wind, geothermal, and they've made a commitment to continue to do that. And that's something we would absolutely support and would want to see continue. But at the same time, I think that a lot of people have in their mind that the typical African who doesn't have access to energy lives in the middle of nowhere. And that's just not true. In fact, about 200 million Africans live in cities and towns, have no access to electricity.
A
Middle of nowhere being irrelevant. Because if you're in the middle of nowhere, what you need is a solar stove because we'll never get to run a line to you.
C
Exactly.
A
But if you're in a city, then why shouldn't you have utility scale power?
C
That's right. And you know, I think that solar lamps are a nice thing. They might give you a little bit of light, maybe you can charge your cell phone, but you're not gonna run a stove on that. You're not gonna run. You're certainly not gonna ever run an air conditioner. You're not gonna run a business on that, at least not yet.
B
Or your refrigerator.
C
Or your refrigerator. That's right. So that just gives you a very, very minimal amount of electricity. It's kind of like saying you're very poor. We'll set the threshold at a dollar a day. We'll give you a dollar a day. You know, there you go. I don't think very many people would be satisfied with that. But there is this good argument I think out there that people have made, which is, look, is there a cell phone comparison? We don't want to do the old cell phone. We don't want to do the old power line grid. We jump to cell phones, maybe we can have a jump to off grid renewables and Energy. And I think that in lots of places that will make sense. In lots of rural, remote areas, there will never be a grid built there. But at the same time, countries want to have large industrial zones. We've got African cities growing at about 3.5% a year. These are millions and millions of people living in concentrated areas that are looking for jobs that don't have access to electricity. And that electricity is going to be provided at least in the foreseeable future by natural gas. You know, in an old school, you know, old style, large scale grid. I think that's really unavoidable.
A
And the gas coming out of these new wells is going to get burned one way or another. It might as well be burned in Africa.
C
That's right.
A
So, Tom, do you have any last thoughts? We've got about one minute left. Maybe. I don't know if you want to speak to your volunteers who are coming to Washington. I flatter myself to think that some of them might listen to this. And if you have words for them or for anybody else who's interested in the issue of getting electricity to people.
B
In Africa, well, I, you know, our volunteers are fantastic and so committed to this and bringing a voice to an issue that hasn't been talked about much in D.C. we're just thrilled that in the last sort of six to eight months this issue has popped onto the scene. Obviously, those in Africa without electricity known about it for a lot longer, but we think there is a serious opportunity to do something transformative here and we can do it on both sides of the aisle. And we think that it can last much longer than just this administration who deserves credit for having gotten the ball started.
A
I guess if the carbon cap is adjusted and the ceiling on staffing is adjusted, Todd, then this thing could continue well past this administration. These are changes that could then be self perpetuating.
C
Yep, that's precisely the idea.
A
Final word from you.
C
You know, I think that this is, you know, the administration got off to a rough start in the first term and I don't think that they have a signature development issue really yet. I'm really pleased that they've doubled down on energy access. And I think that if they, if they follow through on the tools, they work closely with Congress to get this legislation passed, that this could be a very, very impressive and long lasting legacy for the United States and for the Obama administration in sub Saharan Africa, which is, after all, becoming increasingly important to us just at a time that we're losing a lot of our influence in that region. This will help, I think, in that regard as well.
A
Thank you both very much. Tom Hart, Todd Moss, thanks for joining me on the show.
B
Thanks for having us.
C
Thanks.
A
This has been the Global Prosperity Wonk cast from the center for Global Development. My guests today, Tom Hart of ONE and Todd Moss of cgd. And we've been discussing energy poverty in Africa, the administration's Power Africa Initiative, and a tweak to that that's been developed here. And at one that would help to really, in the short term, I guess, double, double the power for people in Africa. You can find the Wonkcast online on iTunes and on Stitcher. Just search for Wonkcast or CGD and sign up to hear a new interview every week. Until next time, I'm Lawrence MacDonald. Thanks for listening.
Date: February 19, 2014
Host: Lawrence MacDonald (Center for Global Development)
Guests: Tom Hart (U.S. Executive Director, ONE Campaign), Todd Moss (COO and Senior Fellow, Center for Global Development)
This episode delves into the issue of energy poverty in Africa and the U.S. government's response through the Power Africa initiative. It examines the scale of the electricity access problem, the economic and social impacts, recent African energy discoveries, and policy solutions aimed at accelerating electrification on the continent. The discussion also explores bipartisan legislative efforts in the U.S. to amplify Power Africa and the debate over environmental policy constraints.
Vast Electricity Access Gap:
Economic and Social Impacts:
Initiative Overview:
Policy Mechanism:
Presidential Attention & Symbolism:
Recent Discoveries:
Disconnect:
Policy Recommendations:
Legislative Momentum and Bipartisanship:
| Timestamp | Speaker | Quote | |-----------|---------|-------| | 01:55 | Todd Moss | “My fridge will use more power than a person would.” | | 03:34 | Tom Hart | “More people die of inhalation of toxic smoke in Africa than AIDS and malaria combined.” | | 04:39 | Todd Moss | “They're taking the tools in the US government policy toolbox... and trying to bring them together in a coordinated manner.” | | 06:36 | Tom Hart | “There’s nothing quite like having the President of the United States on the continent of Africa saying, this is an important issue.” | | 07:23 | Todd Moss | “Within the six Power Africa countries, every single one is either exploring or already producing natural gas.” | | 14:14 | Todd Moss | “Ghana has two [fossil fuel] power plants… OPIC… would not be allowed to participate in natural gas power plants… given this emissions rule.” | | 16:15 | Tom Hart | “We have yet to have a bad meeting on Capitol Hill on this subject... It's quite tremendous when you see Republicans and Democrats say, yes, we want to do something good and powerful.” | | 18:48 | Tom Hart | “Every time we [meet with representatives], once you get over the initial raised eyebrows and question marks, people say begin to understand what their lives would be like without electricity...” | | 19:47 | Todd Moss | “No one wants to fight climate change on the back of the poor.” |