I have some good news to share on the energy front from the experience of two tiny communities of 1,100 people on Nicaragua’s Atlantic coast. Results of a study published November 26 in Science Magazine  demonstrate that low-carbon rural energy services can be delivered at cost savings in cases where communities utilize isolated, diesel-powered, electricity grids.
The rural Nicaraguan communities of Orinoco and Marshall Point were dependent on the diesel micro-grid for their electricity. In 2009, they partnered with the national government and an NGO to implement energy efficiency measures including metering, prompting residents to reduce wasteful use of electricity. Compact fluorescent light bulbs were also introduced, as well as more efficient outdoor lighting, and replacement of part of the diesel power with biogas from dung.
After the government installed meters, energy use dropped by 28%, and people’s electric bills dropped proportionately. The NGO, blueEnergy , based in San Francisco, which offered the compact fluorescent light bulbs (CFL), was able to cut household energy use by another 17%. The net result was reduced burning of diesel, even though the community’s reduced energy needs allowed the local energy supplier to run its generators two extra hours each day, providing longer service to customers. In the month after the conservation campaign, energy costs per household had dropped by 37 %.
These conclusions emerged from calculations based on a marginal abatement cost curve, or MAC, an analytical tool developed in 2008 by McKinsey & Company. The same tool was used by a team of experts headed by the World Bank, studying Mexico’s climate challenges.
The study Low-Carbon Development for Mexico , showed that Mexico can reduce carbon emissions by 42% more than its target of 1,137 metric tons by 2030—477 million tons, to be precise—by decisive action on multiple fronts. It can achieve the reductions by moving in key areas such as improving bus systems, road and rail freight logistics, fuel economy standards, and vehicle inspection at the border, among others.
This is exciting news. It shows that significant—even dramatic—carbon reductions can be achieved by adjusting the use of existing technologies. Such adjustments can reduce costs too. The MAC curve can be used to analyze energy use in the community and pinpoint areas where investments would save the most energy and the most money for homeowners is something of a breakthrough. Until now, the model has been used mostly on a global or country-wide scale to target areas for carbon abatement. But now it has gone local. That means some of the world’s poorest communities could reduce their energy costs by local action which, multiplied worldwide, could produce a global change in reduced carbon emissions.
The study, on which I was working with Christian Casillas before I joined the World Bank in September, will (we hope) spur efforts elsewhere to build similar community-level carbon abatement and energy service tools. This could mean that communities often ignored or lumped together as “those billions without modern energy” could create their own locally appropriate development goals, and groups working with them could develop energy solutions at a price lower than the one they’re paying now.