February 20, 2019

The Origin of the Painful Environmental Policies

For nearly ten years now, a series of programs have been implemented – some hitting hard on ordinary Rwandans such as increase on tax for used vehicles to cut emissions and phase out of the small mini taxis in favour of buses. Fuel pump prices also remain relatively high. The planned railway line to Kigali has provoked shifting regional geopolitical dynamics which are impacting on a lot of other things.  

During the same period though, Rwanda is building a 80MW geothermal plant in Gisagara district at US$365mn. There is a large solar plant operational in eastern Rwanda. Methane gas in Lake Kivu is another big source of energy for Rwanda – also coming to life in the last 10 years. Government has also set up a multi-billion Franc green fund to finance climate change adaptation projects.   

But where do these policies come from? In 2009, government assembled a team of experts to come up with policy alternatives for unique economy. Within a year, they handed government a 1000-page policy framework titled: The ‘Rwanda National Strategy on Climate Change and Low Carbon Development’.

The panel was led by Prof. Sir David King, a member of the Presidential Advisory Council (PAC) and former chief scientific advisor to the UK government. He has also advised the UN climate agency. In early December 2011, The Chronicles’ Fred MWASA spoke to Prof King, perhaps the only interview he has given to a local media. We are republishing the Q&A, because, a great deal of what is featured was hard to imagine at the time. But makes a lot of sense today.

Among the radical proposals in the document is that Rwanda be “decoupled” from fossil fuels as a strategy to cut the rocketing spending and save the environment.

Below is the excepts:

Q – From reading the report, one proposal strikes; that Rwanda should “decouple” itself from oil. That is like asking Rwandans to stop breathing…

[Laughs] What we are saying is that oil prices on the world market are already $120 a barrel from $40 in 2005, and almost certainly will get to $150 because the demand for oil is exceeding the ability to supply. Oil in Rwanda is the most expensive than anywhere else in the world, and the reason is you have to bring it from the port in say Dar es Salaam across the mountains into Rwanda. It is a very expensive commodity.

Oil can hit the ambitions of the Government of Rwanda very hard in trying to improve the welfare of its people because oil costs you so much in Rwandan foreign currency that you earn by selling coffee. You have to spend more by buying oil. So we are saying this growing oil dependence as the economy grows needs to be tackled rationally – not to stop the economy growing, but just to reverse; to allow the economy grow faster. We are saying let’s start keeping oil imports to a minimum.

(Editor; In 2008, like all previous years, Rwanda imported all of its oil-based products used for energy generation and transport, at a cost of US$210 million (2009 dollars). In 2013, the import bill grew to US$385 million. The cost of oil imports is on average 25% of total import costs. The demand for petroleum products is forecasted to grow at an average of 10% each year up to 2020.)

Q: How shall we get to that point?

This means looking at minimising road transport, optimising facilities for people to walk, cycle, and the use of other means of transport. Of course with transport of freight, you still need lorries, but you also need much better bus transport and facilities like that in Rwanda because that is much more efficient than cars that use more diesel and petrol…

Q: So, basically, what percentage of oil do you suggest Rwanda should be using to develop in time to come?

 What we are saying is that for every aspect of development, we need to take into account the reduction on the dependence on oil as the economy grows. Otherwise, the same applies to Britain when I was in the British government. In Britain today there is a heavy tax on cars that use a lot of petrol and zero tax on cars that use very little petrol. The same applies to Rwanda. In Britain, we are creating much better facilities to walk, to use bicycles – even in London now you find many people travelling by bus.

Q: Let me put it this way; Rwanda needs the oil so much in that it’s more like the human being needs to breath…

Nonsense! A human being needs to breath but we do not need to use oil. The whole point is that there are alternatives. Rwanda at the moment makes 40 percent of its electricity by burning oil. You don’t need to burn oil in Rwanda to make electricity. Rwanda has a massive resource of energy from geothermal. In Kenya, they are already mining geothermal electricity. We are convinced that the electricity needs of Rwanda can be met from geothermal completely by 2020. You also have methane from Lake Kivu; sunlight; you have the means of producing gas from farm waste – which is also being developed in Rwanda. All these alternatives mean Rwanda can leap into the future. In Britain and America, we are struggling to get to an economy that is not dependent on oil. In Rwanda, there is a greater opportunity to get there even more quickly.

Q: These ideas, as mentioned in the report, need a lot of money to implement. Where will the funding come from, because Rwanda is just struggling to even get financing for methane gas?

There is a new green climate fund which has been developed by the United Nations, and that fund should be available next year. I believe Rwanda would be among the very first developing countries to have access to that fund because of this report! Rwanda will be in a very strong position. Next year, there should be US$30billion in that fund. What we have done in this report is show that the transition to green growth and climate resilience can be financed from external sources.

Q: What numbers are we talking about in terms of funding requirement for all the projects…?

 The numbers will continually grow as the number of schemes develops, and we are talking about many, many millions of dollars. Globally, the world needs to stop using fossil fuels, and this fund is set up to assist the developing world to manage that process. The British government is contributing a lot of money towards the fund to assist the developing countries.

Prof Sir David King

Q: The report names three challenges to Rwanda’s development and oil prices are the second. That is very surprising…because we have much bigger problems than oil prices…

 There is nothing surprising! First of all this is a very carefully researched piece of work. The details are not in the report that you have because the whole part of the report is 1000 pages. It details the massive impact of oil prices on Rwanda’s GDP. Let me explain this way; the current financial crisis in the world – which is a major financial crisis – has been instigated by oil price increases, and in the rest of the world we may be suffering as well because of these price increases. But for a country like Rwanda, the impact is much greater.

If to import oil into Rwanda increases by a factor of four – making oil four times more expensive now, the government is faced with a massive drain on its foreign reserves. Where do you think it gets the dollars to import the oil? At the moment, you can get the dollars by exporting coffee and tea; but you can’t just export four times as much to buy the oil! As the oil price goes up in the future, it hurts your economy very badly!

Q: One of the ideas the report raises is increased taxes on vehicles. Remember already the high tax regime is forcing people to buy cars from Burundi and Uganda. It seems you want to have Rwandans not buying themselves cars as their incomes increase…

This is not simply taxing every car or every bus. Certainly not! This is what is called progressive taxation; such that you would have very little or zero tax on vehicles that use very little oil such as buses and taxis. The idea is to cut back on these very large vehicles that often only carry just one person and burn a lot of oil. Right! This is a progressive taxation not blanket taxation.

Q: …And do you have any numbers planned say; one percent, two percent…three percent? And where do we go from here anyway?   

Remember that this report is not for the Government of Rwanda, but by the Government because I had a team from different departments working with the President’s Office. The next step will be cabinet approving the report. It is a road-leading report. It is the first in-depth analysis that cuts right across all parts of government. It is the first in-depth analysis and agreement from government that has been achieved anywhere. It is a very progressive document. The object of the exercise is first and foremost to improve the wellbeing of the Rwandan people as we move forward in time. The decision on implementation will follow now. In the next five years, there will be decisions made on the detailed implementation.

Q: What are the timelines of the implementation – from which we could have an idea of when the last drop of oil will enter Rwanda?

I do not have any, and nor does anybody. The detailed analysis of the implementation is available. The next phase is implementation and the benchmarks are in the report. What I should emphasis in that in forty years, the whole world will not need oil. That period looks like it’s far away, but it’s not!

Q: What would you say the people of Rwanda should expect as a result of this report?

I would like to say that that this document is creating a predictable future for Rwanda – which the President and his entire team are working hard to attain. To have anything like this, and somebody suggests it is to the detriment of the Rwandan people, would be an insult to me. We have put in a lot of work to come up with the results contained in the document.  

About Prof. Sir David King

Prof. Sir David King is Director of the Oxford University’s Smith School of Enterprise and the Environment and a member of the Presidential Advisory Council (PAC) – is a diverse group of Rwandan and international experts who offer strategic advice and guidance to President Paul Kagame. He is a former Chief Scientific Adviser to the UK Government (2000-2007). He is also Science Adviser to President Kagame. The ‘Rwanda National Strategy on Climate Change and Low Carbon Development’ was developed over a period of nine months, from November 2010 to July 2011. It was handed to Government in October 2011.

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