The Economics of Low Carbon Cities - Kigali, Rwanda (2018) - International Growth ...

 
The Economics of
Low Carbon Cities
Kigali, Rwanda (2018)
Andy Gouldson, Sarah Colenbrander
and Andrew Sudmant, University of Leeds

Natasha Chilundika, University of Oxford

Lea de Melo, London School of Economics
and Political Science

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Funded by the International Growth Centre
The Economics of                                                                     Today
                                                                Low Carbon Cities                                                                    Today 10.1% of city-scale GDP – USD
                                                                                                                                                     301 million – leaves the local economy every
                                                                Kigali, Rwanda
                                                                                                                                                     year through payment of the energy bill.

                                                                                                                      mmyy
                                                                                                              ocnononoomy                                                       10.1% of
                                                                                                           ececo
                                                                                                    aleallee e
                                                                                                 c a c                                                                         GVA leaks
                                                                                               -s -ssc
                                                                                                     -
                                                                                                                                                                               out of the

                                                                                               yy
                                                                                         cciittiyt
                                                                                        c
                                                                                                                                                                               economy

                                                         Tomorrow

                                                               Investing
                                                             0.6% of 0.4%
                                                           Investing  GVA
                                                                                                                                                                                Leads to...
                                                             p.a. leads to...                                                                                                     Leads to...

                                                                                                                             Energy
                                                         0.6% of GDP or $17 million could                                    reductions in the energy bill of 1.5% of GDP p.a. or savings of $203m in 2032
                                                         be profitably invested, every year
                                                                                                                             Financial Viability
                                                         for ten years, to exploit                                           6.9 years for measures to pay for themselves
                                                         economically attractive energy
                                                                                                                             Employment
                                                         efficiency and low                                                  new jobs and skills in low carbon goods and services
                                                         carbon opportunities.
                                                                                                                             Wider economic benefits
                                                                                                                             reduced energy expenditure, improved energy security, extra GDP
                                                                                                                             Wider social benefits
                                                                                                                             improved energy access, better indoor air quality, less congestion

                                                                                        Potential to reduce greenhouse emissions relative to business as usual
                                                                                                Potential to reduce CO2 emissions
                                                            Business as
                                                            usual in 2032
                                                           2000                   2025                   39.0% GHG reduction                                             42.5% GHG reduction
                                                                                     24.2% CO2 reduction                         25.1% CO2 reduction          45.4% CO2 reduction            46.6% CO2 reduction

                                                                                                  Through exploitation of                                               Through exploitation of
                                                                                                      profitable options                                                  no net cost options
                                                                                      After cost-effective            After cost-effective                       After cost-neutral              After cost-neutral
2   The Economics of Low Carbon Cities: Kigali, Rwanda          The Economics of Lowinvestments  in Kigali,
                                                                                      Carbon Cities: the city.Rwanda investments in the                       investments in the city.          investments in the     1
                                                                                                                       electricity sector.                                                       electricity sector.
Table of Contents                                                                                                     Figures

The Economics of Low-Carbon Cities:             1   Sector Focus – The Buildings Sector                     33        Figure 1: Indexed energy bill, energy use,                Figure 15. Indexed energy consumption, energy
                                                    The Impacts of Business as Usual Trends                 33        and carbon emissions                                  6   bills and emissions in the manufacturing,
Table of Contents                               2   The Potential for Carbon Reduction –                                                                                        construction and non-fuel mining industries in
                                                    Investments and Returns                                 35        Figure 2: Emissions from Kigali under three               Rwanda between 2000 and 2032.                  42
Figures                                         3   Options Appraisal – Residential Sector                  36        different investment scenarios, indexed against
                                                    Options Appraisal – Commercial and                                2018 emissions, between 2000 and 2032                 7   Figure 16. Full-time equivalent employment by
Tables                                          4   Public Sector                                           38                                                                  industrial sub-sector in Kigali in 2012.      42
                                                                                                                      Figure 3: Indexed energy use – total, per capita
Executive Summary                               5   Sector Focus – The Industrial Sector                    40        and per unit of GDP.                                 24   Figure 17. Annual revenue by industrial
Introduction                                    5   The Impacts of Business as Usual Trends                 41                                                                  sub-sector in Kigali in 2012.                        43
Our Approach                                    6   The Potential for Carbon Reduction –                              Figure 4: Indexed energy prices and
Findings and Recommendations                    7   Investments and Returns                                 43        total energy bill.                                   25   Figure 18. Trips by mode share in Kigali
                                                                                                                                                                                between 2000 and 2032.                               45
Findings and Recommendations                    6   Sector Focus – The Transport Sector                     44        Figure 5: Indexed emissions – total, per unit
The Economic Case for Low Carbon,                   The Impacts of Business as Usual Trends                 45        of energy, per unit of GDP and per capita.           25   Figure 19. Indexed energy consumption, energy
Climate Resilient Investment                    6   The Potential for Carbon Reduction –                                                                                        bills and emissions in the transport sector in
Policy Refections                               9   Investments and Returns                                 46        Figure 6: GHG emissions by sector in Kigali,              Kigali between 2000 and 2032.                  46
                                                    Options Appraisal                                       47        2000 to 2032                                         26
Chapter 1. Introduction, Context and                                                                                                                                            Figure 20. Emissions from the transport sector
Objectives                                     10   Sector Focus – The Waste Sector                         50        Figure 7: Emissions from Kigali under three               under three different investment scenarios, indexed
Cities and Climate Change                      10   The Impacts of Business as Usual Trends                 51        different investment scenarios, indexed against           against 2018 emissions, between 2000 and 2032. 47
Rwanda                                         11   The Potential for Carbon Reduction –                              2018 emissions, between 2000 and 2032.               27
Kigali                                         12   Investments and Returns                                 52                                                                  Figure 21: Waste production by type in Kigali,
Objectives                                     13   Options Appraisal                                       53        Figure 8: Domestic electricity generation (MW)            2000 to 2032                                         51
                                                                                                                      in Rwanda by fuel type, 2000 to 2032.
Chapter 2. Our Approach                        14   Chapter 6. Discussion                                   54        Projections are based on planned investments.  29         Figure 22: Carbon emissions (ktCO2e) from the
Baseline Analysis                              14   Financial barriers: Improving access to capital         55                                                                  waste sector in Kigali between 2000 and 2032. 52
Data energy use by industry is not available        Removing non-financial barriers                         56        Figure 9. Emissions factor of grid electricity in
at the city scale in Rwanda                    15                                                                     Rwanda, 2000 to 2032. This emissions factor               Figure 23. Emissions from the waste sector under
Identification and Assessment of Measures      16   Chapter 7. Conclusion and                                         includes the effects of imported electricity.        29   three different investment scenarios, indexed
Assessment of the Scope for Deployment         23   Recommendations                                         58                                                                  against 2018 emissions, between 2000 and 2032. 52
Aggregaton of investment needs and                                                                                    Figure 10. Emissions factor of electricity in
mitigation potential                           23   References                                               59       Rwanda between 2000 and 2032 under two                    Figure 24: The fuel properties can be used to
                                                                                                                      investment scenarios.                                30   determine the typical calorific values / densities
Chapter 3. The Key Findings                    24   Appendix A. Workshop Participants                        59                                                                 of most common fuels. Source: Defra (2013).          64
The Impacts of Business as Usual Trends        24                                                                     Figure 11. Energy use by fuel type in the buildings
The Potential for Carbon Reduction –                Appendix B. Emissions factors                           60        sector in Kigali between 2000 and 2032.           34      Figure 25: The fuel properties can be used to
Investments and Returns                        26                                                                                                                               determine the typical calorific values / densities
                                                    References                                               61       Figure 12. Indexed energy consumption, energy             of most common fuels. Source: Defra (2013).          64
Chapter 4. Sector-Specific Results             28                                                                     bills and emissions in the buildings sector in Kigali
                                                    Appendix C. Additional information                                between 2000 and 2032.                              34    Figure 26: Emissions factor for each scenario,
Sector Focus – The Electricity Sector          29   on the electricity sector                               64                                                                  2015-2032.                                           65
The Impacts of Business as Usual Trends        29   Electricity sector                                      64        Figure 13. Emissions from the buildings sector
The Potential for Carbon Reduction –                                                                                  under four different investment scenarios, indexed        Figure 27: Energy generation (TWh) under
Investments and Returns                        30                                                                     against 2018 emissions, between 2000 and 2032. 35         each scenario between 2000 and 2032.                 65
Options Appraisal                              31
                                                                                                                      Figure 14. Energy use by fuel type in the
                                                                                                                      manufacturing, construction and non-fuel mining
                                                                                                                      industries in Rwanda between 2000 and 2032.
                                                                                                                      Energy use data is not available at the city-scale. 41

2                                                                The Economics of Low Carbon Cities: Kigali, Rwanda   The Economics of Low Carbon Cities: Kigali, Rwanda                                                                  3
Tables                                                                                                                   Executive Summary

Table 1. Energy generation by scenario (MW)        17    Acronyms                                                        Introduction                                              Our Approach

Table 2. Key technology-specific values (2015-2032       BRT                Bus Rapid Transit
averages)                                       18                                                                       When is economic development, sustainable                 We start the analysis by collecting data on levels and
                                                                                                                         development? Embedding environmental                      composition of energy use in Kigali. We do this for the
                                                                                                                                                                                   electricity, housing, commercial, transport, industry
Table 3. League table of the cost-effectiveness of
                                                         CO2-e              Carbon dioxide equivalent                    stewardship in policymaking is critical in                and waste sectors. Primary data was provided by a
low-carbon scenarios in the electricity sector.    31                                                                    all cities and countries of world, but may
                                                                            emissions. This figure includes                                                                        number of government agencies including the Ministry
Table 4. League table of the carbon-effectiveness of                        all greenhouse gas emissions                 be especially important in Rwanda, where                  of Infrastructure (MININFRA), the Rwanda
                                                                            (including methane and NOx)                  both the economy and the population are                   Transport Development Authority (RTDA), and
low-carbon scenarios in the electricity sector.   31
                                                                            as CO2 equivalent emissions.                                                                           Rwanda Energy Group (REG).
                                                                                                                         growing rapidly. But for decision-makers
Table 5. League table of the cost-effectiveness of       GWh                Billion watt hours                           to act, they need a credible and locally                  For each of these sectors, and for the city as a whole,
low-carbon measures in the residential sector.     36                                                                                                                              we examine the influence of recent trends, for example
                                                         KtCO2e             One thousand tonnes of CO2                   appropriate evidence base.
                                                                                                                                                                                   in economic growth, population growth, consumer
Table 6. League table of the carbon-effectiveness of                        equivalent emissions                                                                                   behaviour and energy efficiency. These historical
low-carbon measures in the residential sector.    37                                                                     This study provides an evidence base for Kigali and
                                                         kWh                Kilowatt hour                                examines whether there is an economic case that can       trends inform ‘business as usual’ baselines that project
                                                                                                                         be used to secure low-carbon and climate-resilient        future levels and forms of energy supply and demand,
Table 7. League table of the cost-effectiveness of       LFG                Landfill Gas                                                                                           as well as future energy bills and carbon emissions,
low-carbon measures in the commercial and public                                                                         investments in the city. By providing prioritised lists
                                                                                                                         of the most cost- and carbon-effective measures that      to 2032.
sector.                                            38    MININFRA           Ministry of Infrastructure
                                                                                                                         could realistically be promoted across the housing,       Based on extensive literature reviews and stakeholder
Table 8. League table of the carbon-effectiveness of     MtCO2e             One million tonnes of CO2                    commercial buildings, transport and waste sectors         consultations, we compile lists of the low-carbon
low-carbon measures in the commercial and public                            equivalent emissions                         within the city this report serves as a resource for      measures that could potentially be applied in domestic,
sector.                                           39     MW                 Million watts                                This report presents results from modelling updated       commercial and public buildings, transport, electricity
                                                                                                                         from 2018 data, details of the methodology and a          and waste sectors in the city. The industry sector was
Table 9. League table of the cost-effectiveness of       REG                Rwanda Energy Group                          discussion of the opportunities for carbon abatement.     excluded at this stage due to the lack of locally specific
low-carbon measures in the transport sector.       48                                                                    In addition to providing a static ‘snapshot’ of the       data. We assess the performance of each measure
                                                         REMA               Rwandan Environmental                                                                                  by conducting a realistic assessment of its costs and
                                                                            Management Authority                         opportunity for cost- and carbon-effective measures
Table 10. League table of the carbon-effectiveness of                                                                    in Kigali today, the models behind the analysis           likely lifetime savings, and we consider the scope for
low-carbon measures in the transport sector.      49     RTDA               Rwanda Transport                             presented can be updated to provide a means for           deploying each one in Kigali in the period to 2032.
                                                                            Development Authority                        this report to be a ‘living document’ that can remain     These appraisals were subjected to a participatory
Table 11. League table of the cost-effectiveness of                                                                                                                                review in expert workshops to ensure that they are as
                                                                                                                         useful in the future.
low-carbon measures in the waste sector.            53   RWF/tCO2-e         Rwandan Francs per tonne                                                                               realistic as possible and to consider the key factors that
                                                                            carbon dioxide equivalent                                                                              shape the potential for their deployment. The results
Table 12. League table of the carbon-effectiveness of                                                                                                                              are presented in league tables of the most cost- and
low-carbon measures in the waste sector.          53     tCO2-e             Tonnes of carbon dioxide                                                                               carbon-effective measures that could be adopted
                                                                            equivalent emissions. This figure                                                                      both in each sector and across the city as a whole.
                                                                            includes all greenhousegas
                                                                            emissions (including methane                                                                           We draw together the results from our assessment and
                                                                            and NOx) as carbon dioxide                                                                             the expert review to determine the potential impact
                                                                            equivalent emissions.                                                                                  of the combined measures across the different sectors
                                                                                                                                                                                   of the city as a whole. This allows us to understand the
                                                         UNEP               The United Nations                                                                                     scale of the development opportunity, the associated
                                                                            Environment Program                                                                                    investment needs and paybacks, as well as impacts on
                                                         USD/tCO2-e:        United States dollars per tonnes                                                                       energy supply and demand, energy bills and carbon
                                                                            carbon dioxide equivalent                                                                              emissions in the different sectors in the city.
                                                                                                                                                                                   In all parts of this process, analysis is guided by
                                                                                                                                                                                   modelling approaches and lessons learned from similar
                                                                                                                                                                                   city scale analysis completed by the team over the last
                                                                                                                                                                                   8 years. Including this most recent analysis, the team
                                                                                                                                                                                   from the University of Leeds have completed similar
                                                                                                                                                                                   analysis in more than 20 global cities, leading to 18
                                                                                                                                                                                   academic publications, and media attention ranging
                                                                                                                                                                                   from the New Climate Economy, the New York Times
                                                                                                                                                                                   and the Economist.

4                                                                   The Economics of Low Carbon Cities: Kigali, Rwanda   The Economics of Low Carbon Cities: Kigali, Rwanda                                                                 5
Findings and Recommendations

The Economic Case for Low-Carbon, Climate-
Resilient Investment
We estimate that Kigali’s GDP was RWF 2.1 trillion                                                                                                                We predict that a continuation of business as usual                                                        After examining the potential costs and benefits                                                                                                      – 42.6% through cost-neutral investments that could
(USD 2.4 billion) in 2018, and if trends continue                                                                                                                 trends in the period to 2032 will see the total energy                                                     of the wide range of energy efficiency, renewable                                                                                                        be paid for by re-investing the income generated
we forecast that GDP will grow to RWF 9.5 trillion                                                                                                                ill for the city increase by 167% from 2018 levels to                                                      energy and other low-carbon measures that could                                                                                                          from the cost-effective measures. This would require
(USD 11.9 billion) by 2032. We also find that the total                                                                                                           RWF 720.8 billion (USD 828 million) in 2032, a                                                             be deployed across different sectors in the city, we                                                                                                     net investment of RWF 1.2 trillion (USD 1.4 billion),
energy bill for Kigali in 2018 was RWF 220.1 billion                                                                                                              trend shown in figure 1. Total energy use in Kigali will                                                   find that – compared to business as usual trends –                                                                                                       generating annual savings of RWF 152 billion (USD
(USD 252.9 million), meaning that 10.1% of Kigali’s                                                                                                               rise by 130% in the same period. With continued                                                            the city of Kigali could reduce its carbon emissions                                                                                                     174 million), paying back the investment in 8 years
GDP is spent on energy.                                                                                                                                           economic growth, this would mean that energy bills                                                         by 2032 by:                                                                                                                                              and generating annual savings for the lifetime of
                                                                                                                                                                  will consume an estimated 7.7% of the GDP of Kigali                                                                                                                                                                                                                 the measures
                                                                                                                                                                  in 2032. We also predict that, in a business as usual                                                      – 39.0% through cost-effective investments that would
                                                                                                                                                                  scenario, total carbon emissions from Kigali will                                                             more than pay for themselves on commercial terms
                                                                                                                                                                  increase by 122% from 2018 levels by 2032, while                                                              over their lifetime. This would require investment
                                                                                                                                                                  emissions per capita will increase 33%.                                                                       of RWF 780 billion (USD 918 million), generating
                                                                                                                                                                                                                                                                                annual savings of RWF 115 billion (USD 132
                                                                                                                                                                                                                                                                                million), paying back the investment in 6.9 years
                                                                                                                                                                                                                                                                                and generating annual savings for the lifetime of
                                                                                                                                                                                                                                                                                the measures.

Figure 1: Indexed energy bill, energy use, and carbon emissions.                                                                                                                                                                                                             Figure 2: Emissions from Kigali under three different investment scenarios,
                                                                                                                                                                                                                                                                             indexed against 2018 emissions, between 2000 and 2032.

300                                                                                                                                                                                                                                                                          250%                                                                                                                                                                                                                                                 Baseline
                                                                                                                                                                                                                                                      Total emissions
                                                                                                                                                                                                                                                      Emissions per                                                                                                                                                                                                                                                               Cost-effective
                                                                                                                                                                                                                                               267%
                                                                                                                                                                                                                                                      unit energy                                                                                                                                                                                                                                                          221%   Cost-neutral
250
                                                                                                                                                                                                                                               230%
                                                                                                                                                                                                                                                      Emissions per unit
                                                                                                                                                                                                                                               222%   GDP                    200%
200                                                                                                                                                                                                                                                   Emissions per capita

150
                                                                                                                                                                                                                                               133%                          150%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           135%
100
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           127%

 50                                                                                                                                                                                                                                                                          100%

    0                                                                                                                                                                                                                                          1.2
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6                                                                                                                                                                                                     The Economics of Low Carbon Cities: Kigali, Rwanda                     The Economics of Low Carbon Cities: Kigali, Rwanda                                                                                                                                                                                                                    7
Policy reflections

We find that the waste sector contains approximately       While the impacts of the cost-effective investments               Development and climate action can be mutually             At the same time, Kigali has a tremendous
60% of the cost-effective emissions savings potential in   will reduce overall emissions relative to business as             supportive. Indeed, results from this analysis suggest     opportunity to avoid ‘lock in’ to high energy use and
Kigali, with the remaining potential being distributed     usual trends, they do not stop overall emissions from             that achieving the goals set in Rwanda’s Vision 2020,      emissions from these sectors if actions are taken today
among the domestic sector (3%), the commercial and         rising in absolute terms because of ongoing growth                Economic Development and Poverty Reduction                 before large investments supporting the business-as-
public sector (2%), the electricity sector (19%) and the   (even if that growth is more energy-efficient and less            Strategy II (EDPRS) and the targets of the Sustainable     usual pathway are made. The buildings and vehicle
transport sector (17%). The step change in the cost-       carbon-intensive). With exploitation of all cost-                 Development Goals, can be significantly supported          stock that exist in 2015 will be little more than one-
effective and cost-neutral scenarios between 2015 and      effective options, by 2032 emissions would be 35%                 by actions that also address climate change.               quarter of the building and vehicle stock that will
2018 reflects large-scale investments coming online        above 2018 levels. These measures will also save                                                                             exist in 2032 at current rates of growth. Actions to set
in the transport and waste sectors.                        RWF 118.6 billion (USD 173.2 million), in energy                  High-level results from this analysis reveal that there    Kigali on a more sustainable path include investments
                                                           expenditure each year, thereby reducing the energy                are many economically attractive opportunities to          in public transport, supporting truly low-carbon
The waste sector is so significant for two reasons.        bill in 2032 from a projected 7.7% of GDP to 6.2%.                promote a more sustainable and climate-friendly f          technologies (such as electric motorbikes),
Firstly, as in many other Least Developed Country          With the exploitation of all cost-neutral measures, the           orm of development in Kigali, which would also             investments in geothermal electricity generation
cities, waste is a much larger share of emissions than     city’s emissions rise by only 27% above 2018 levels.              improve the economic competitiveness of and reduce         and spatial planning.
in higher income contexts. Secondly, the low-carbon                                                                          energy bills in the city. The scale of the opportunities
measures in the waste sector generate electricity, which   Investment in emissions savings can buy Kigali                    demonstrates that accounting for climate change in         While we hope that Kigali can use these findings to
displaces high-carbon electricity from the grid and        much needed time to search for, adopt and lock in                 urban planning can be attractive in commercial terms,      inform future development plans, we recognise that
thereby avoids emissions from two sources. It is           permanent reductions in emissions. We can measure                 above and beyond the immense benefits of reducing          the presence of such opportunities does not mean
important to note, however, that emissions are growing     this with the Time to Reach BAU Emission Levels                   the future impacts of climate change.                      that they will necessarily be exploited. By providing
much more quickly in each of the other sectors of the      (TREBLE) point, which compares the time taken                                                                                evidence on the scale and composition of these
economy investigated in this analysis. Actions in these    in years for emissions with investment in low-carbon              Results at the economic sector level demonstrate           opportunities, we hope that this report will help to
sectors is therefore critical to avoid a future of high    measures to reach the level that would have been                  that the case for action is not restricted to any one      build political commitment and institutional capacities
emissions, and expenditure on energy, in Kigali.           realized without such investment under the BAU                    area of the economy or concentrated in a small number      for change. We also hope this report will help Kigali
                                                           scenario in a reference year, in this case 2025                   of actions. Instead, the opportunity for action is         to secure the investments and develop the delivery
                                                           (Gouldson et al., 2015). If all cost-effective options            contained in a large number of actions in all sectors.     models needed for ambitious climate action. Some
                                                           are implemented, the TREBLE point relative to                     Some of these actions could have a major effect on         of the low-carbon and climate resilience measures
                                                           2032 in Kigali will be 13.4 years. If all cost-neutral            emissions, for example, land-fill gas utilisation at       could be commercially attractive whilst others may
                                                           measures are implemented, emissions will only reach               Kigali’s landfills. Others of these actions, such as       only be viable with public investment and/or climate
                                                           their 2032 business as usual level in 14.3 years.                 electric motorbikes and clean cookstoves only have         finance. Many of the opportunities would benefit from
                                                           This can give policymakers time to build the political            a small effect on energy use and emissions each time       the support of enabling policies from government.
                                                           momentum and the technical, financial and                         they are purchased. But if policies could promote
                                                           institutional capabilities necessary for more ambitious           their widespread adoption these actions have massive       We stress that economic cost considerations alone
                                                           changes to urban form and function.                               potential to help address climate and development          should not shape the transition to a low-carbon
                                                                                                                             challenges, and lead Kigali towards a low carbon           development model in urban Rwanda. Decision-
                                                                                                                             future.                                                    makers should also consider the issues relating to the
                                                                                                                                                                                        equity, inclusivity and broader sustainability of each
                                                                                                                             Future emissions growth will increasingly come from        measure. However, we understand that the presence
                                                                                                                             the transport, residential, commercial and industrial      of a compelling economic case is often necessary for
                                                                                                                             sector making the major sources of emissions in Kigali     decision-makers to consider the broader case for action.
                                                                                                                             will look increasingly similar to those of middle-income   We therefore hope that this evidence base on the
                                                                                                                             economies. Consequently, while investments in waste        opportunities for climate action helps to mobilise
                                                                                                                             produce the largest impacts today, investments in          political will for and public interest in ambitious
                                                                                                                             buildings and transport will have the largest impact       climate action in Kigali.
                                                                                                                             in the near future.

8                                                                       The Economics of Low Carbon Cities: Kigali, Rwanda   The Economics of Low Carbon Cities: Kigali, Rwanda                                                                9
Chapter 1. Introduction,
Context and Objectives
Cities and Climate Change                                                                                                     Rwanda

The influence and impact of cities cannot be                Cities’ share of global emissions is high and rising fast,        Rwanda is a small, landlocked country in East Africa.        The Government of Rwanda has committed to
overstated. More than half of the world’s population        but their institutional capacity and socio-economic               With a population of 12 million people in an area of         mainstreaming environmental sustainability and
lives in urban areas, and up to 70% of production and       dynamism also mean that cities are uniquely positioned            26,338 km2, it is the most densely populated country         climate resilience into both productive and social
consumption takes place in cities. Cities are the places    to tackle climate change. This is particularly true in            in Africa. Population density is likely to increase:         sectors, as outlined in the National Strategy for
where many of the world’s institutions and much of          countries experiencing rapid population and economic              Rwanda’s population grew by 2.9% in 2014 and is              Climate Change and Low Carbon Development
its infrastructure are located, and where many of the       growth, where massive investment in infrastructure                expected to more than double from 12 million today           (Republic of Rwanda, 2011). This document
world’s major social, economic and environmental            provides an opportunity to reduce the energy intensity            to 26 million by 2050 (Republic of Rwanda, 2011).            recognises that even where substantial co-benefits
challenges are created, experienced and sometimes           of social and economic activities. It is often suggested                                                                       to climate action are available, action is likely to be
tackled. Cities are also the places where many              that preparing for climate change at an early stage               The Rwandan economy achieved real GDP growth                 constrained by lack of finance and capacities. To
international and national policies and plans must          of development is more effective and economically                 of about 9% per annum between 2000 and 2014                  remedy this, Rwanda has established an innovative
ultimately take effect. Global action frequently relies     attractive than replacing or upgrading established                (World Bank, 2014). In the past decade, this growth          basket fund – the National Environment and Climate
on urban action – our common future depends to a            infrastructure. Mainstreaming climate objectives                  has translated effectively into poverty reduction, largely   Change Fund (FONERWA) – to finance climate
large degree on the way that we develop, organise,          into planning processes has the potential to reduce               through a doubling in household-level agricultural           actions, and has built strategic public-private
live and work in cities.                                    bills, increase energy access, improve air quality, ease          production (World Bank, 2014). Despite these                 relationships to finance climate action and build
                                                            congestion, create jobs and mitigate the impacts of               impressive achievements, the incidence of poverty            relevant capacities (Nash and Ngabitsinze, 2014).
Energy will play a pivotal role in the future               climate change.                                                   remains high with 45% of the population living below         The National Strategy has also informed the Economic
development of cities. Currently, activities in cities                                                                        the national poverty line in 2011 (World Bank, 2014).        Development and Poverty Reduction Strategy
consume 67-76% of all energy and are responsible            Focusing on Kigali, this report considers the ways in                                                                          2013-2018 (Republic of Rwanda, 2013), which guides
for 71-76% of all carbon emissions (UNEP, 2012).            which the relationship between energy, water and                  The scale of the development challenge is evident from
                                                                                                                                                                                           national planning and budgeting. The Rwandan
Some estimates suggest that 10-18% of all income            development could be changed in a rapidly growing                 the low levels of access to modern energy and clean
                                                                                                                                                                                           Environmental Management Authority (REMA)
that is earned in cities is spent on energy (Gouldson       city with pressing development needs. The report                  water. Currently, 25.8% of Rwandans do not have
                                                                                                                                                                                           has been designated the lead authority on climate
et al., 2015). Despite its costs and impacts, modern        reviews the cost- and carbon-effectiveness of a wide              access to an improved water source, while 83.2% do
                                                                                                                                                                                           change, and is mandated to coordinate national
energy is critical to human wellbeing. It enhances          range of supply and demand measures options that                  not have access to electricity even for lighting purposes
                                                                                                                                                                                           action on climate change (Fisher et al., 2014).
quality of life and enables economic activity. Increasing   could be applied to energy and water use in Kigali.               (NISR, 2014). Biomass still accounts for 85% of
energy supplies and improving energy access facilitate      It then considers whether there is an economic case               national energy consumption, followed by petroleum           Rwanda’s leadership on climate change is particularly
development. The challenge is achieving sustainable         for major investments in these options across the city,           at 11% and electricity at 4% (AfDB, 2013). The               impressive considering that the country has among
and affordable energy provision – how can cities            and whether these investments have the potential to               government has set increasingly ambitious targets            the lowest levels of per capita emissions in the world.
transition to energy efficient, low-carbon development      shift the city to a lower-carbon, more climate-resilient          to improve access to both water and electricity. The         Rwandans are estimated to emit 0.1 tonnes of carbon
paths?                                                      development path.                                                 original version of the national strategy document,          dioxide equivalent (tCO2-e) per person from energy
                                                                                                                              Vision 2020, established two policy goals that were          consumption and 0.6tCO2-e per person when
                                                                                                                              subsequently revised upwards. Originally, Vision 2020        emissions from land use change are incorporated
                                                                                                                              set an aim for 35% of the population to have access          (Republic of Rwanda, 2011). For reference, the global
                                                                                                                              to electricity and 60% to have access to improved            average is 4.6tCO2-e from energy consumption
                                                                                                                              sanitation facilities by 2020. These targets were revised    (EIA, 2012), while people in OECD countries emit
                                                                                                                              in 2012 to 70% and 100% respectively. In both versions       an average of 12.7tCO2-e per capita (OECD, 2015).
                                                                                                                              of Vision 2020, a target of 100% access to clean water
                                                                                                                              was established (MINECOFIN, 2012).
                                                                                                                              While Rwanda’s economic growth is rapid, future
                                                                                                                              development and poverty alleviation remains
                                                                                                                              vulnerable to climate variability and climate change.
                                                                                                                              Rwanda’s population is largely rural and depends
                                                                                                                              on rain-fed agriculture; tea and coffee comprise a
                                                                                                                              large proportion of Rwanda’s export earnings; and
                                                                                                                              hydropower generates half of domestic electricity
                                                                                                                              (Republic of Rwanda, 2011; AfDB, 2013).

10                                                                       The Economics of Low Carbon Cities: Kigali, Rwanda   The Economics of Low Carbon Cities: Kigali, Rwanda                                                                 11
Kigali                                                                                                                        Objectives

Rwanda remains predominately rural, with 19.9%              Advancing climate change may add to this challenge.               What is the best way for a city to pursue low-carbon,      This research is supplemented by an economic
of the population living in urban areas (NISR 2012).        Rising temperatures are anticipated to increase                   climate-resilient development path? It is important        assessment of supply and demand measures in the
With a population of 1.5 million people (Bower,             the risk of malaria transmission in Rwanda (Ermert                to demonstrate the local benefits of climate action in     water sector. Water and sanitation are among the basic
Buckley, Murray & Wainer, forthcoming), the capital         et al., 2013). Flooding and drought – and their                   order to mobilise political commitment and engage          infrastructure services that are fundamental to human
city – Kigali – accommodates 13% of the population          socioeconomic impacts – will be more frequent, less               a broad range of actors. When a country faces pressing     development, and the foundation on which human
and is easily the largest city in Rwanda (NISR, 2012).      predictable, and have larger impacts on public health,            development needs, it is also necessary to identify        settlements are built and function (Satterthwaite,
Located in the heart of the country, Kigali is comprised    infrastructure and food security (Byamukama, 2011).               interventions that do not entail significant opportunity   2014). Failure to provide these services increases
of three districts: Gasabo in the North, Nyarugenge         Rwanda already struggles with climate variability:                costs and may ideally free up resources for more           people’s vulnerability to climate variability and natural
in the West and Kicukiro in the South (KCC 2011).           in the recent past, major flooding events occurred in             socially and economically productive investment.           disasters: for example, the urban poor have to buy
A host of successful government programs, including         1997 and 2006-2009, and major droughts occurred                   Despite Rwanda’s commitment to climate action,             water from vendors at greatly inflated prices during the
a plastic bag ban, improved public waste disposal           in 1999 and 2005 (SEI, 2009).                                     decision-makers are hindered by the absence of a           dry season and experience higher risk of waterborne
and beautification initiatives, have earned Kigali a                                                                          credible and locally appropriate evidence base to          disease during floods. Investing in infrastructure to
reputation as one of the world’s cleanest cities (UN-       Two ‘master plans’ have been developed to                         guide policy and investment.                               ensure access to cheap, reliable and safe water therefore
Habitat 2008). In recognition of these achievements         conceptualise future growth in Kigali. The first,                                                                            supports climate resilience and human development.
the city was awarded the UN-Habitat Scroll of Honour        completed by Oz Architecture (2007), emphasises                   This study aims to provide such an evidence base for
Awards in 2008.                                             a need for graded density: lower density in suburban              Kigali, and to use this to examine whether there is an     This research is intended to inform policymaking and
                                                            areas (40 residents per hectare), and higher density if           economic case that can be used to secure large-scale       programme design both within individual sectors and
The population of the city doubled between 2000             the central business district (250 residents per hectare).        low-carbon and climate-resilient investment in the         at the city scale. By identifying the most cost- and
and 2010. This rapid urban expansion, coupled with          The report also emphasises the need for walkable                  city. To do this, we map broad trends in energy use,       carbon-effective measures, we aim to help government
rising affluence and vehicle ownership, has put public      communities and urban development around existing                 energy expenditure and carbon emissions in Kigali,         departments, development agencies, industry and civil
services and infrastructure under increasing stress.        transit nodes to maximise connectivity. The Kigali                and examine the implications of ‘business as usual’        society organisations to design climate strategies that
Between 2005 and 2011 the stock of private cars more        Master Plan 2013, developed by Surbana International              development in the city. This provides a macro-level       exploit the most economically attractive measures.
than doubled, leading to rising congestion (NISR,           Consultants, also emphasises the need for urban                   context to explore the value of low-carbon measures.       This evidence base has the potential to underpin
2012), while dependence on wood and charcoal fuel           density, for example by requiring a minimum of                    We also provide prioritised lists of the most cost- and    national applications to international climate funds,
has led to high levels of particulate air pollution in      16 storeys for new developments in the central business           carbon-effective measures that could realistically be      development banks and other financial organisations,
Kigali and the emergence of a ‘heat island’ effect in the   district, and the need for multimodal transit system              promoted across the housing, commercial and public         thereby helping to unlock and direct large-scale
city (Henninger 2013). Over the period between 2000         based around existing transit nodes. Surbana                      buildings, transport and waste sectors within the city.    investment into low-carbon development.
and 2015, emissions from transport rose at the fastest      International Consultants (2013) have also introduced             On this basis, the aim is to consider whether there is
rate of any sector (8.9%), followed by the buildings        a long-term plan for a bus rapid transit (BRT) system.            an economic case for major investments in energy
sector (8.1%) and the waste sector (6.4%). Critically,      We hope that this research helps to inform urban                  efficiency, renewable energy and other low-carbon
and expenditure on energy rose more than tenfold            planning in Kigali, ensuring that the Rwandan capital             measures across the city, and whether these
within fifteen years.                                       can support the country’s low-carbon, climate-resilient           investments have the potential to shift the city on
                                                            development strategy.                                             to a lower-cost, lower-carbon development path.
Looking forward, continued economic growth offers
the hope that Kigali will build upon its human
development gains. More than 87% of Kigali residents
are below 40, and are therefore either a member of, or
are soon to join, the workforce. As with cities around
the world, population density permits more efficient
provision of basic services and creates opportunities
for local businesses to collaborate and innovate. At
the same time, poorly managed urbanisation can lead
to urban slums and their associated economic, social
and environmental problems.

12                                                                       The Economics of Low Carbon Cities: Kigali, Rwanda   The Economics of Low Carbon Cities: Kigali, Rwanda                                                               13
Chapter 2. Our Approach

Baseline Analysis                                                                                                             Data on energy use by industry is not available
                                                                                                                              at the city scale in Rwanda.
We start by collecting data that enable us to understand    Data on electricity consumption in Kigali by private              Data on electricity prices were obtained from the         These baselines allow us to estimate future levels and
the levels and composition of energy and water supply       customers (excluding industry) and public sector                  Statistical Yearbooks published in 2013, 2014 and         forms of energy supply and demand, as well as future
to, and demand in, Kigali. We do this for a range of        customers were obtained in personal communications                2015 and data from the Management of Energy Utility       capital costs, household bills and carbon footprints.
different sectors including the energy sector on the        from the Rwanda Energy Group. Annual per capita                   Corporation Limited for 2017 (EUCL). Data on the          We compare all future activities against these
supply side and the commercial and public, residential      consumption of kerosene, charcoal and fuelwood were               price of charcoal and fuelwood were obtained from the     baselines. The baselines are reviewed by stakeholder
and transport sectors on the demand side. We also           held constant at 52L, 194kg and 366kg respectively,               Global Environmental Facility, the Biomass Energy         workshops including representatives of government
evaluate the waste sector as it both generates              while the number of households using these fuels                  Strategy, the Rwanda Natural Resources Authority          bodies, industry and research institutions. The list
greenhouse gas emissions, and has the potential to          were obtained from the Integrated Households                      and academic sources. Data on the prices of kerosene,     of participants is included in Appendix A. More
generate energy.                                            Living Conditions Survey in 2006, 2011 and 2015.                  LPG and gasoline were obtained from the Biomass           detailed explanations of the data sources, methods
                                                            Commercial and public consumption of fuelwood                     Energy Strategy, the World Bank, United Nations           and assumptions used to develop the baseline scenario
Data from the Rwanda Environment Management                 and charcoal in Kigali was projected to increase at a             agencies and regional newspapers such as The New          are presented in Appendix B.Some of the measures
Authority and Bloomberg New Energy Finance were             constant rate, based on levels of consumption in                  Times and The Independent. Nominal energy prices          interact with each other, so their performance depends
used to calculate historical generation, capacity factors   2009 and 2020. All liquefied petroleum gas (LPG)                  were converted into real energy prices at 2014 levels     on whether/to what extent another option is also
and generation efficiency. The baseline scenario was        consumed in Rwanda between 2003 and 2007 was                      using a consumer price index. An annual increase of       adopted. For example, the carbon savings from
developed based on planned capacity expansions,             assumed to have been consumed in Kigali, and city-                2% in real terms was assumed for all energy prices        increasing use of bicycles depends on the impact on
investment costs and anticipated technical losses           scale data were subsequently available for 2009 and               from 2018 to 2032.                                        modal share of other forms of transport. To take these
through 2017/18, drawn from the Ministry of                 2020. Historical growth rates between 2010 and 2015                                                                         interactions into account, we calculate the impact
Infrastructure, Japan International Cooperation             were projected to continue through to 2032 at the                 For each of these sectors, and for the city as a whole,   of each measure if adopted independently with
Agency, and the Rwanda Environment Authority.               same rate.                                                        we examine the influence of recent trends in, for         business as usual conditions in energy supply. These
                                                                                                                              example, economic growth, population growth,              calculations underpin the figures in the league tables,
Planned infrastructure investments in Kigali are            The composition of waste was assumed to remain                    consumer behaviour and energy efficiency. We then         our prioritised menus of different options. When we
drawn from the Kigali City Master Plan and Rwandan          constant through 2032: food waste (67%), paper waste              develop ‘business as usual’ baselines based on the        are determining the potential savings across a sector
Transport Development Authority. Transport mode             (16%), garden waste (7%), industrial waste (4%), wood             continuation of these trends and the impact of planned    or across the city economy, we calculate the effect of
share in Kigali in 2011 was drawn from a revealed           waste (3%), textiles (2%) and plastics/metal (1%). Per            investments through to 2032. The target year of 2032      each measure on the potential energy savings of other
preference dataset, while the number of trips per day,      capita waste production is expected to rise from 1.8 kg           was chosen in consultation with stakeholders based        measures to develop realistic assessment of their
average vehicle speed, occupancy rates, travel time         per day in 2011 to 2.0 kg per day in 2030. Waste                  on national and city-level plans. National goals and      combined impacts. For example, any energy savings
and walking distances by travel mode were drawn             disposal methods were drawn from the population and               plans are currently structured around Vision 2020,        from passive cooling schemes in buildings reduce the
from a hierarchical multimodal transport model.             housing censuses of 2002 and 2012. The cost of waste              but such a short time period does not offer an adequate   mitigation potential of more efficient air conditioners.
The number of trips by private transport is assumed         disposal was drawn from the Kigali City Master Plan,              timeframe for significant climate action or meaningful
to grow in proportion to vehicle ownership, and the         and the characteristics of landfills serving Kigali from          economic returns. The year 2032 was therefore
number of trips by bus is assumed to increase with          academic sources.                                                 selected so that the findings in this report align with
the expected number of buses (in other words, we                                                                              the Kigali Transportation Master Plan (City of Kigali,
assume occupancy for vehicles is held constant).                                                                              2013a) and can inform the implementation of longer-
The proportion of trips made on foot and by heavy                                                                             term, city-scale master plans (for example, City of
transport was held constant, and trips by motos was                                                                           Kigali, 2013b).
considered the residual.

14                                                                       The Economics of Low Carbon Cities: Kigali, Rwanda   The Economics of Low Carbon Cities: Kigali, Rwanda                                                              15
Key baseline data and assumptions

 Activity               Projection method                                       Key data                                Activity                        Projection method                                        Key data in 2014

 Energy prices          Data on electricity prices were obtained from the       Grid electricity: RWF                   Electricity generation          Data on existing and historical electricity generation   Rwandan electricity grid
                        Statistical Yearbooks published annually by the         158.0/kWh (residential)                 and emissions factor            is drawn from BNEF (2015) and REMA (2014).               emissions factor 2018:
                        National Institute of Statistics Rwanda (NISR,                                                  estimates                       Plans for new generation and investment costs
                        2013, 2014, 2015a). Data on the price of charcoal in    RWF 149.0/kWh                                                           though 2017/18a are drawn from MININFRA                  0.39 tCO2e/MWh
                        2000 and 2005 were obtained from GEF (2005).            (industrial)                                                            (2011), JICA (2015) and updated through
                                                                                                                                                                                                                 Rwandan electricity grid
                        Data on the price of fuelwood in 1995 and 2004                                                                                  consultation with members of the ministry.
                                                                                                                                                                                                                 emissions factor 2032
                        were obtained from Safari (2010). Data on the price                                                                             Technical and non-technical losses are assumed to
                                                                                                                                                                                                                 estimate (excluding losses):
                        of biomass energy, LPG and kerosene in 2008 were        Diesel:                                                                 fall from 23% in 2014 to 15% by 2017 following
                        obtained from the Biomass Energy Strategy                                                                                       MININFRA (2011). Capacity factors and the                0.41 tCO2e/MWh
                        (MARGE, 2009a). Data on the price of LPG in             RWF 919/L                                                               efficiency of generation are calculated based on data
                        2010 was obtained from Kazoora (2010). Data on                                                                                  from REMA (2014) and BNEF (2015). Electricity
                        the price of kerosene were obtained from Mukaaya                                                                                demand through 2032 is drawn from JICA (2015).
                        (2008), Businge (2015) and – assuming that pump         Gasoline:
                        prices for gasoline were equal to those for kerosene                                            Buildings sector                Data on electricity consumption in Kigali by private
                        between 2000 and 2004 – the World Bank (2015a)                                                                                  customers (excluding industry) and public sector
                                                                                RWF 989/L
                        Data on the price of charcoal and fuelwood in 2013                                                                              customers were obtained from REG. Electricity
                        were obtained from Drigo et al. (2013).                                                                                         consumption was projected to continue increasing
                                                                                                                                                        at the same rate through to 2032, i.e. 11.2% and
                        Nominal energy prices were converted into real          Charcoal:                                                               16.1% per annum for private and public sector
                        energy prices at 2014 levels using a consumer price                                                                             customers respectively.
                        index from the World Bank (2015b). An annual            RWF 166.9/kg
                        increase of 2% in real terms was assumed for all                                                                                 Per capita consumption of fuelwood and charcoal
                        energy prices from 2015 to 2032.                                                                                                was obtained from Drigo et al. (2013). Households
                                                                                                                                                        depending primarily on charcoal for cooking
                                                                                Fuelwood:
                                                                                                                                                        consumed 194kg/pp/pa, while households
                                                                                RWF 81.3/kg (residential)                                               depending primarily on fuelwood consumed 366kg/
                                                                                                                                                        pp/pa. The average numbers of households using
                                                                                                                                                        charcoal and fuelwood respectively as their
                                                                                                                                                        preferred cooking fuels were obtained from the
                                                                                Kerosene:                                                               Integrated Households Living Conditions Survey
                                                                                RWF 1,010/L                                                             (NISR, 2006, 2011, 2015b). Data on national
                                                                                                                                                        demand for LPG between 2003 and 2007 was
 Exchange rates         The annual exchange rates between Rwandan               USD 1.00 =                                                              obtained from MARGE (2009), and we assumed
                        francs and US dollars between 2000 and 2005 were                                                                                that all LPG would be consumed in Kigali at this
                        obtained from the CIA World Factbook (CIA,              RWF 870                                                                 time. Data on consumption of LPG in Kigali in
                        2005). The annual midpoint exchange rates                                                                                       2009 and 2020 under BAU conditions were
                        between 2006 and 2015 were obtained from                                                                                        obtained from Drigo et al. (2013).
                        OANDA (2015). The current exchange rate was
                        obtained from www.xe.com at 12 noon GMT                                                                                         Data on kerosene consumption per household was
                        23/05/18.                                                                                                                       drawn from Lights for Life (2015), which estimated
                                                                                                                                                        that a household depending on kerosene lamps
                                                                                                                                                        would use around 1L per week. Data on the number
                                                                                                                                                        of households using kerosene as the primary lighting
                                                                                                                                                        source was drawn from the Integrated Household
                                                                                                                                                        Living Conditions Surveys (NISR, 2006, 2011,
                                                                                                                                                        2015b).
                                                                                                                                                        Commercial and public consumption of fuelwood
                                                                                                                                                        and charcoal in Kigali in 2009 and 2020 was
                                                                                                                                                        obtained from Drigo et al. (2013). Using the
                                                                                                                                                        GROWTH function in Excel, we prepared a
                                                                                                                                                        baseline where consumption of charcoal was
                                                                                                                                                        expected to increase at 6.9% per year and
                                                                                                                                                        consumption of fuelwood expected to decrease at
                                                                                                                                                        1.7% per year.

16                                                                The Economics of Low Carbon Cities: Kigali, Rwanda   The Economics of Low Carbon Cities: Kigali, Rwanda                                                                   17
Activity            Projection method                                       Key data in 2014                        Activity                        Projection method                                       Key data in 2014

Industrial sector   Data on employment numbers and annual revenue           .3                                      Waste sector                    Information on the characteristics of the landfills     In 2014, Kigali generated
                    of individual firms were drawn from Gathani and                                                                                 serving Kigali was drawn from Bazimenyera               880,155 tonnes of waste.
                    Stoelinga (2013). This report provides an overview                                                                              (2012a). Waste composition, production per capita
                    of manufacturing at a national level; firms                                                                                     and disposal methods were drawn from                    Waste composition:
                    manufacturing within Kigali were identified                                                                                     Bazimenyera (2012b), UNEP (2013), and the               Food: 67%
                    through online research. The following firms were                                                                               Rwandan population and housing census’ of 2006          Garden: 7%
                    included in Figures 4 and 5: Coffee Business                                                                                    and 2011 (NISR 2006, 2012). Cost of waste               Paper: 6%
                    Centre, Rwacof, Rwanda Trading Company,                                                                                         disposal was drawn from the Kigali City Master          Wood: 3%
                    Rwashoscco, Minimex, Sosoma, Bakhresa Grain                                                                                     Plan, City of Kigali (2013). Waste composition is       Textiles: 2%
                    Milling, ICM (one third of operations), Sorwatom,                                                                               assumed to remain constant through 2032 and to          Industrial: 4%
                    Premier Tobacco Company, Bralirwa (soft drink                                                                                   rise from 1.8 kg per capita per day in 2011 to 2.0 kg   Plastic/metal: 1%
                    processing); Inyange, Skol Brewery, Kigali Cement                                                                               per capita per day in 2030.
                    Company, Ameki Color, Ruliba Clays, Safintra,
                    Simaco/Afrifoam, Tolirwa, Uframetal, Uprotur,                                                   Emission factors                Emission factors were obtained from the IPCC Emissions Factor Database (2015)
                    Anik Industries, Kigali Steel and Aluminium                                                                                     and DEFRA (2014). All estimates of emissions from biomass were based on the
                    Works, Suku Paper Works, Sulfo Industries,                                                                                      default value of fraction of non-renewable biomass for Rwanda, as calculated in
                    Aqua-San Rwanda, Roto Ltd, Société de Rwandaise                                                                                 CDM (2010) – i.e. 98%.
                    de Chaussure, Manumental, Mutara Enterprises,
                    Rwanda Foam and Utexrwa. Where a range was
                    provided for number of employees or annual
                    revenue, the midpoint was used.
Transport sector    Mode share in Kigali in 2011 is drawn from SSI          Mode share 2011:
                    (2011a) revealed preference dataset. The number of
                    trips per day, average vehicle speed, occupancy         Walking: 9%
                    rates, travel time and walking distances by travel      Private vehicles: 24%
                    mode are drawn from SSI (2011b), hierarchical           Heavy vehicles: 4%
                    multimodal transport model. Planned                     Mini-bus: 28%
                    infrastructure investments in Kigali are drawn from     Moto-taxi: 16%
                    the Kigali City Master Plan, City of Kigali (2013),     Bus: 18%
                    RTDA (2012) and through consolation city and
                                                                            Business-as-usual
                    national government officials. To forecast travel
                                                                            mode share (2032):
                    demand in 2032 as estimate of total trip demand is
                    drawn from SSI (2011b). The number of trips by          Walking: 9%
                    private transport is assumed to growth                  Private Vehicles: 36%
                    proportionately to the rate of growth of vehicle        Heavy Vehicles: 4%
                    ownership (5.8%) and the proportion of trips made       Mini-bus: 16%
                    on foot and by heavy transport is held constant. The    Moto-taxi: 25%
                    number of trips by bus is assumed to increase with      Bus: 10%
                    the expected number of buses (holding occupancy
                    constant) and trips by motos is estimated as the
                    residual.

18                                                            The Economics of Low Carbon Cities: Kigali, Rwanda   The Economics of Low Carbon Cities: Kigali, Rwanda                                                                   19
Identification and Assessment of Measures                                                                                     Electricity sector

Lists of energy efficiency, small-scale renewable energy    Some of the measures interact with each other, so
                                                                                                                              Through an iterative participatory process, involving members of the Rwandan Ministry of Infrastructure,
technologies and other low-carbon measures that could       their performance depends on whether/to what extent
                                                                                                                              Bloomberg New Energy Finance, and energy developers in Rwanda, scenarios were refined to outline six
potentially be applied in the electricity, commercial and   another option is also adopted. For example, the
                                                                                                                              alternative pathways for the electricity sector through 2032 in Rwanda. Each scenario produces a minimum
public, residential, transport and waste sectors in the     carbon savings from increasing use of bicycles
                                                                                                                              of 4500 GWh in 2032 with 1036 MW of dispatchable supply.
city were collected through stakeholder consultation,       depends on the impact on modal share of other forms
review of grey and academic literature, and previous        of transport. To take these interactions into account,            For details of energy generation in 2032 under each scenario, see Table 1.
Climate Smart City studies.                                 we calculate the impact of each measure if adopted
                                                            independently with business as usual conditions in
We include both technological and behavioural               energy supply. These calculations underpin the figures
measures in our analysis. The long lists of all potential   in the league tables, our prioritised menus of different          Table 1: Energy generation by scenario (MW)
measures are drawn from extensive literature reviews,       options. When we are determining the potential
and then we review these to remove any options that         savings across a sector or across the city economy,
are not applicable in a Rwandan context. The outputs        we calculate the effect of each measure on the potential
form our shortlists of measures for each sector. These      energy savings of other measures to develop realistic                                                                  JICA
                                                                                                                                                                   Thermal
shortlists are not necessarily exhaustive – some            assessment of their combined impacts. For example,                 Technology          Baseline                        low      Solar 1   Solar 2   Geothermal 1     Geothermal 2
measures may have been overlooked, while others                                                                                                                    Scenario
                                                            any energy savings from passive cooling schemes in                                                                     cost
may not have been included due to the absence of            buildings reduce the mitigation potential of more
data on their performance.                                  efficient air conditioners.                                        Hydro               285.15          113.15          293.15   285.15    190.15    190.15           173.15
Drawing on extensive literature reviews and                 The options appraisals are then reviewed in                        Solar               10.75           10.75           10.75    60.75     260.75    10.75            10.75
stakeholder consultations, we determine the net present     stakeholder workshops to ensure that they are as
value of each measure on the shortlists, using a real                                                                          Peat                145             195             145      145       145       145              95
                                                            realistic as possible. Lists of all of the measures
interest discount rate of 5%. We consider the capital,      considered in the analysis and a detailed explanation              Natural             203.6           253.6           278.6    203.6     203.6     128.6            128.6
running and maintenance costs of each measure,              of the data sources and assumptions used during                    gas
focusing on the marginal or extra costs of adopting         the options appraisal is presented in Appendix C.
a more energy efficient or lower carbon alternative.                                                                           Diesel              73.3            73.3            313.75   73.3      69.3      45.3             45.3
We then conduct a realistic assessment of the likely
savings of each option over its lifetime, taking into                                                                          Geothermal          0               0               0        0         0         100              200
account installation and performance gaps. As                                                                                  Imports             493.5           493.5           3.5      493.5     493.5     493.5            493.5
each measure could be in place for many years,
we incorporate the changing carbon intensities of                                                                             Sources:
electricity (based on planned investments in the                                                                              NEF (2015), AFDB (2013), MININFRA (2011), REMA (2014), JICA (2015) and stakeholder consultation.
electricity sector) and assume an average annual
rise of 2% in real prices (including energy).

20                                                                       The Economics of Low Carbon Cities: Kigali, Rwanda   The Economics of Low Carbon Cities: Kigali, Rwanda                                                            21
Table 2: Key technology-specific values (2015-2032 averages)                                                                    Commercial and public sector

                                                                                        Operating and                            Measure                 Costs                                        Savings
                                                     Capital cost
 Technology       Capacity factor                                                       maintenance costs
                                                     (USD million/MW)                                                            Building                The incremental costs of improving new       The economic savings are based on avoided
                                                                                        (cents per KWh)
                                                                                                                                 energy                  commercial and public buildings in a         investment in, and energy consumption
 Hydro            0.75                               4.00                               0.80                                     efficiency              moderate efficiency scenario cost USD        by, air conditioners. We assume the cost
                                                                                                                                 – training              886/m2. These are sub-Saharan Africa         of a 5kW air conditioner is RWF707,143,
 Methane          0.85                               3.70                               8.80                                     workshops               wide estimates, refined by climate zone:     i.e. proportionate to those of a 3.5kW air
 gas                                                                                                                                                     we consider Rwanda to fall into the zone     conditioner. The total number of air
 Solar            0.16                               3.00                               0.00                                                             of “Only cooling (low and moderate           conditioners by 2032 is based on cooling
                                                                                                                                                         cooling demand)”.                            needs of 5W/m2. This is low level of cooling
 Peat             0.42                               3.20                               5.50                                                                                                          reflects Kigali’s temperate climate. Total
                                                                                                                                                                                                      amount of retail, office and hotel floor space
 Natural          0.85                               3.00                               0.50                                                                                                          is based on projections from the City of
 gas                                                                                                                                                                                                  Kigali’s Master Plan.
 Diesel           0.61                               3.00                               27.00                                    More efficient          Incandescent bulbs cost RWF 630.62.          Incandescent bulbs have an average input
 Imports          –                                  case specific                      7.50                                     lighting                Compact fluorescent lamps (CFL) cost         power of 60W and a life span of 1,200
                                                                                                                                                         RWF 2,541. CFL tubes cost RWF 4,109.         hours. Compact fluorescent lamps (CFL)
Sources:
                                                                                                                                                         Light emitting diodes (LED) cost RWF         have an average input power of 14W and a
NEF (2015), AFDB (2013), MININFRA (2011), REMA (2014), JICA (2015) and stakeholder onsultation.                                                          22,671. LED tubes cost RWF 44,521.           life span of 10,000 hours. CFL tubes have
                                                                                                                                                         The price of a subsidised CFL bulb is        an average input power of 25W and a life
                                                                                                                                                         RWF 200. We assumed that CFL bulbs           span of 8,000 hours. Light emitting diodes
                                                                                                                                                         and tubes would entirely replace             (LED) have an average input power of 10W
                                                                                                                                                         incandescent options by 2030 without         and a life span of 50,000 hours. LED tubes
                                                                                                                                                         policy interventions. We assume 0% LED       have an average input power of 8W and a
                                                                                                                                                         market penetration in Kigali in 2015.        life span of 40,000 hours.
                                                                                                                                 Solar panels            A 250Wp solar panel cost RWF 276,000, so     Solar panels are assumed to have a
                                                                                                                                                         we assumed a 2.5kWp solar panel cost ten     conversion efficiency of 14.5% and life span
                                                                                                                                                         times as much. We assumed 3,000 could be     of 20 years.
                                                                                                                                                         deployed by 2032.
                                                                                                                                 Solar water             A 300L solar water heater has an average     Installing 12,000 solar water heaters would
                                                                                                                                 heaters                 cost of US$1,600. The subsidy for a 300L     save 23,328MWh per year. We assumed
                                                                                                                                                         solar water heater is RWF 279,000, less      this was based on equal deployment of
                                                                                                                                                         an application fee of RWF 30,000. We         200L and 300L solar water heaters, i.e.
                                                                                                                                                         assumed 3,000 could be deployed by           a 300L solar water heater would save
                                                                                                                                                         2032, in light of scope for substantial      2,332.8kWh per year. We assumed a
                                                                                                                                                         uptake in the hospitality industry.          lifespan of 15 years.
                                                                                                                                 Street lighting         There are three levels of power required     Traditional sodium high pressure bulbs
                                                                                                                                                         in Rwandan street lights:                    have a lifespan of 10,000 hours. LED bulbs
                                                                                                                                                                                                      have a lifespan of 50,000 hours. Street
                                                                                                                                                         – 15 poles with low wattage: 150W bulbs     lights are turned on for 12 hours per night.
                                                                                                                                                            will be replaced with 80W LED bulbs
                                                                                                                                                         – 6251 poles with medium wattage: 250W
                                                                                                                                                            bulbs will be replaced with 120W LED
                                                                                                                                                            bulbs
                                                                                                                                                         – 800 poles with high wattage: 400W bulbs
                                                                                                                                                            will be replaced with 200W LED bulbs

                                                                                                                                                         Fixtures and lamps for high pressure
                                                                                                                                                         sodium bulbs cost USD 250, with an
                                                                                                                                                         annualised replacement cost of USD 14.4.
                                                                                                                                                         Fixtures and lamps for LED bulbs cost
                                                                                                                                                         USD 475, with an annualised replacement
                                                                                                                                                         cost of USD 7.2.

22                                                                         The Economics of Low Carbon Cities: Kigali, Rwanda   The Economics of Low Carbon Cities: Kigali, Rwanda                                                                23
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