The Quiet Energy Revolution in Laos

In reading recent newspaper articles, you might be forgiven for thinking that energy in Laos is all about the Xayabouri Dam, and the related issues of putting a very large dam on the mainstream of the Mekong River. But in fact, very quietly and with very little fuss or international controversy, a quiet energy revolution is taking hold in Laos.

Laos is far from being a rich country, but its government has already electrified 70% of the population and by 2020 that figure is scheduled to be as high as 90%. Despite similar levels of poverty, Sub-Saharan Africa in comparison only averages 30% electrification. This achievement is made all the more remarkable by the very low level of urbanisation (just 33%), a difficult and traumatic history, and the population spread extremely thinly across the nation (just 23 people per square kilometre).

Electrification is not just being achieved through large dams _ there are relatively few of those at the moment _ but through a variety of innovations. Now 20,000 households have power from solar home systems, installed by impressive local companies such as Sunlabob or funded largely by the World Bank. And though only 11 Megawatts of power have been installed by small hydropower (typically less than 5 MW in size) the government is planning for 650 MW in coming years, supporting it through innovative investment incentives. Currently more than 50 such projects are at the memorandum of understanding phase, with the government permitting 35-year investment terms and various profit tax incentives.

The Lao government is far-sighted in realising that green technology is vital for developing the nation while preserving the region. It has committed to renewable energy meeting 30% of national energy demand by 2025 and is on course to achieve that.

As a least-developed country, Laos will have full access to the EU Emissions Trading Scheme, allowing it access to the very valuable market for carbon emissions reduction (CER) credits for carbon trading. And with CERs currently worth as much as three times the value of VERs, the voluntary market, this will grow to become a substantial source of funding for renewable energy projects for decades to come.

There are challenges, of course, but the government is rapidly adapting policies to be more pro-investment, pro-green technology, and the regulations are starting to catch up with the opportunity for Laos to develop in a low-carbon, clean way.

Even with biofuels, an often controversial area, Laos is innovating and not looking merely at jatropha to meet 10% of its fuel needs by 2025. Instead it is looking to a range of feedstocks including locally indigenous stone jatropha, a useful softwood timber tree suitable for furniture production that conveniently drops its seeds and so reduces harvesting labour requirements. Furthermore, it thrives in poor soils above 300 metres in altitude, land of which Laos has an abundance.

With so few people, just 6.3 million people, but such majestic mountains, green development is not merely an option but a necessity.

Laos is now open to new technologies, fresh approaches, and innovative investments. Companies and organisations wanting to install green technologies will find willing and able local companies to partner with and sympathetic local officials.

But development requires a partnership, between the donors and deliverers and institutions and financing agencies. The region needs to realise more fully that the development of Laos in a clean way affects us all; that we are all stakeholders in this important project, but if we get it right we benefit all significantly. A Lao forest does not know that the carbon dioxide it absorbs came from Thailand, nor does it know that the oxygen it produces goes back there too.

And as people come to Laos, talk with innovative companies such as Sunlabob, or meet with research organisations such as Lao Institute for Renewable Energy (LIRE), expect to be pleasantly surprised by how advanced their thinking is and how keen and realistic they are to partner with outside companies and financiers to deliver a clean future for Laos.

In the recent election campaign in Thailand, a common refrain was the importance of working together to build the future. That applies not just within Thailand, but within this region. Parts of northern Thailand are farther from Bangkok than Vientiane, and now is the time to partner in the quiet revolution that is bringing clean development to Laos. And it is time to make the Mekong the symbol of all that unites Laos and Thailand and not all that divides it.


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