Country Snapshot: Ethiopia

On 10 June 2015, Ethiopia became the first Least Developed Country to submit its INDC in which it sets out its bold plan to reduce its GHG emissions by 64% from its business-as-usual emissions by 2030. The INDC is based on the Climate Resilient Green Economy Strategy (CRGE Strategy), which is part of Ethiopia’s national development plan and conditional upon more than US$150 billion of funding. Although a very large sum, Ethiopia’s INDC has been applauded for being the most transparent of INDCs submitted thus far, and touches on climate, social and economic issues.

Announcing further in its plan:

Ethiopia requires substantial resources to limit the emission of its GHGs and to build resilience to climate shocks. To this end, Ethiopia has already committed significant resources to reduce GHGs and build resilience, including for the implementation of:

• Afforestation and land rehabilitation interventions;
• Generation and distribution of electricity from clean and renewable sources;
• Investment in improved transportation systems (e.g. railway) that utilize clean and renewable energy. These investments will be complemented by urban planning transition towards mixed use, compact, and polycentric cities, resulting in shorter distances travelled to reduce transport/traffic related GHG emissions.
• Several structural measures have also been put in place including the removal of fossil fuels subsidies.

In an effort to mitigate GHG emissions, Ethiopia’s plans include focusing on improving crop and livestock production and expanding its power generation from renewable energy. Similar to other African countries, Ethiopia has also submitted an INDC which incorporates its future middle-class ambitions (currently set for 2025) by highlighting and setting current, medium and long-term goals for adapting to climate change.

In November 2013 the Ethiopian parliament approved the new energy law proclamation 810/2013 9 (the Energy Proclamation) to liberate the energy sector by introducing the Ethiopian Energy Authority (EEA). The EEA is responsible for private energy investments in the country and sets prices for the private and state power distributors. Moreover, The EEA also issues licences, determines tariffs, sets performance standards and is responsible for negotiation of tariffs for fully off‐grid independent power projects. A Feed-In-Tariff Proclamation (2011), which is still draft form, is intended to apply to energy projects which are up to an installed capacity of 10 MW.

As of 2014, Ethiopia had 2,000 MW of installed power generating capacity, out of which 1,980 MW (99%) is generated from hydropower plants. Ethiopia’s national development plan, the Growth Transformation Plan (GTP: 2011-2015), promotes the Green Development Strategy with the aim of meeting the demand for energy in the country by providing sufficient and reliable power supply. The key aim is to diversify Ethiopia’s current energy mix by expanding into wind, geothermal and solar energy sources.

Although hydropower, with a total endowment estimate of up to 45,000 MW per annum, is the obvious source for Ethiopia to tap into, the country is leaning towards renewable energy projects which involve a shorter development period than hydropower. In May 2015, 102 x 1.5MW turbines went online in and around Adama and Nazareth making Adama II Wind Farm, with an installed generating capacity of 153MW, the largest wind farm in Sub-Saharan Africa. Ethiopia is set to replace itself at the top of that list when the Aysha Wind Farm Project turbines go online, which are expected to generate an additional 300MW of wind energy.

In July 2015. the Ethiopian Electric Power and the Corbetti Geothermal Company signed a Power Purchase Agreement for the 500 MW of clean geothermal power from the Corbetti geothermal source. Negotiations are currently on going for an additional 500 MW in the Tulu Moye and Abaya areas. The planned 1,000 MW Corbetti geothermal project with an estimated investment volume of US$4 billion will be built and developed in two phases over the 8 to 10 years. Upon completion, it would be Africa’s largest geothermal project.

The Energy Proclamation assigns certain powers and duties to the EEA regarding energy efficiency and conservation (EE&C), which are, amongst others:

• Formulate long-, medium- and short-term energy efficiency and conservation strategies and programs at national and sectoral levels and, based on periodic reports to be submitted, evaluate their implementation.
• Promote energy efficiency and conservation at national and sectoral levels.
• Issue an energy audit code, energy efficiency standards, energy efficiency labelling codes, a grid code, a customer service code, a technical inspection code, a quality service standard code, an electrical installation code for buildings, a technical standard code and other codes; and supervise their implementation.
• Cooperate with training institutions and regional and international forums for promoting energy efficiency and conservation, energy development and power trade.
• Establish energy efficiency testing laboratories and issue and implement testing procedures.
• Promote and coordinate energy efficiency and conservation research, development and demonstration and technology transfer activities.
• Collect, analyse, organise and disseminate information relating to energy efficiency and conservation.
• Where necessary, delegate part of its powers and duties to the appropriate regional executive organs and provide them with capacity building support.

To fulfil this mandate, the Energy Efficiency & Conservation Directorate (EE&CD) was created under the structure of the EEA. There are currently no national energy efficiency targets in place in Ethiopia.

In order to realise its vision, strategy, financing strategy, and institutional arrangements outlined in its CRGE, the government of Ethiopia established the CRGE Facility. The CRGE Facility is the Government’s primary financial vehicle to mobilise access and combine domestic and international, public and private sources of finance to support the institutional building and implementation of Ethiopia’s CRGE Strategy. The CRGE Facility provides a single engagement point where the Government, development partners, the private sector, civil society and other stakeholders can engage and make decisions about climate change issues, thus enhancing coordination and aid effectiveness, and reducing fragmentation.

The CRGE Facility consists of two windows. A Strategic Window, which exclusively provides support for implementation of activities that have been identified through a strategic process, and a Responsive Window that will provide demand-driven support for implementation and institution-building activities. The CRGE Facility aims to support and incentivise a programmatic approach to climate change activities, minimising the transaction costs and duplication associated with a project by project approach.

The CRGE Facility will use climate finance to complement other existing forms of investment to bolster Ethiopia’s core climate-compatible development activities (in areas such as food security, energy, infrastructure development and natural resources management), eventually leading to the full integration of CRGE with the Government of Ethiopia’s broader Growth and Transformation Plan (GTP). It is the Government’s intention that Ethiopia’s development partners will increasingly channel their bilateral and multilateral climate funds through the CRGE Facility.