POST 01273E: CONTINUING THE DEBATE ON ENERGY FOR HEALTH: FINANCIAL INSTRUMENTS/SYRINGE MANUFACTURE AND ENERGY USE FOLLOW-UP ON POSTS: POSTS 01265E, 01269E 29 MAY 2008 ******************************************* Rowan Wagner takes the discussion a little further by posing questions about legitimizing energy expenses on health; he also identifies financing options to support energy expenditure on health. Terry Hart brings in project implementation experience and suggests documenting micro-credit and rural energy projects, and identifying financial models that could be extended for health/education services. Anthony Battersby adds a totally new dimension to the entire discussion by sharing facts about syringe manufacture and energy consumption. The attached ppt examines the resource depletion when it comes to production of syringes for immunization and curative purposes, and the carbon footprint of producing syringes. ----------- Dear Terry, Thanks - Though you cannot provide specific examples of resultant policy, this does provide an example that could be used to generate a case study or point of initial documentation for key governmental stakeholders (especially within health) looking at engaging in the strategic national planning process for energy security, especially low-resource countries where infrastructure is limited and require a more blended approach that utilizes new green technology (which often has cost implications). MORE THINGS TO THINK ABOUT IN TERMS OF POLICY Why is policy important? Policy is important because it outlines political commitment which may result in specific resource allocation and more importantly defined legislation. Why is legislation and resulting laws important? Legislating provides the framework that moves a psychological contract into a greater social realm between individuals, communities, society, etc. This legitimizes resource expenditure and provides a foundation of trust that can be utilized in not just public expenditures but also in the development of new investment vehicles that would provide more sustainability in the health sector (provided there is input from the sector). Let’s explore how this could work out using the information Terry Hart so kindly provided. IT Power India (ITPI), the Indian Ministry of Health and various NGO representatives are invited to attend a national forum on energy on the development of the next energy sustainability plan as part of a sector-wide approach in the national poverty reduction plan. After the presentation of the current situation, several medium and long-term benchmarks are agreed upon in terms of increasing access and use of renewable energy by solar and wind. ITPI during the recommendation phase has submitted a project idea, in which it will with local communities establish a solar grid in a district where the end users have agreed in return to sell back the extra energy generated to the state at a rate less than market in return for getting power for lighting, and the local health center(s) gets essential vaccine supply chain equipment. The state then has the right to sell the excess energy at market rates. Assumptions are made for return on investment (ROI) using DAILYS/QALYS, current energy prices, and forecasted need and future prices over time. Using this project the state could do the following in terms of financing this critical service that provides health delivery, reduces environmental impact and provides development impact (access to light in the evenings provides people more opportunity to study or work and clean energy reduces health problems from smoke or burning fuels for light and heat): § Direct budget allocation – which is heavily dependent on taxes § Finance through issuing medium-term/long-term bond § Provide a legal framework (laws) for the investment community that may provide tax breaks or other incentives to issue a financial vehicle such as a private bond, pooled fund, or direct investment to ITPI. The first mechanism is the traditional way most governments use after going through the process of reviewing policy papers and studies. It has several detractions, such as waste in terms of red tape, speed of payments and general public trust. The second mechanism is common in the US at least for public utilities, schools and some health infrastructure, and has proven better in terms of speed and accountability as bonds require ratings (often done through independent agencies) and legal guarantees in terms of minimal repayment and risk. In addition often bond issues can raise more specifically focused capital that cannot be rerouted due to political resource battles within the government. Its primary weakness is low rate of return for investors because of the low risk associated with governmental guarantees. The last can provide significant capital, but comes with a greater need for transparency and reporting as investors will require more accountability in terms of ROI and meeting actual deliverables. Though all three have strengths and weaknesses they still require legal foundations, and because most policy makers are not public health or medical specialists there lies the potential problem of health or education not being considered as critical especially in industry oriented sectors such as energy. Which health has a great stake in, because the needs of not only cold chains, but diagnostic equipment, computers in logistics chains, etc… Rowan ([email@example.com]firstname.lastname@example.org[/email]) Terry Hart responds to Rowan Wagner’s suggestions with regard to funding alternatives for energy projects. Hi Rowan, Many thanks for your innovative thinking. I like your proposed approach and would hope this could be taken up. As a pre-requisite, there is already a substantial amount of experience with numerous rural financing mechanisms, many of which are both sustainable and operating on a commercial basis. These need to be examined, and models and experiences analysed. For example, MFIs (micro finance institutions) through women’s groups, and group lending are turning out to be very successful with NPAs (non-performing assets) less than 1% in many countries. This provides a good framework for revenue collection for rural energy supply, and could include a cess to offset health service costs. Rural energy supply through battery/invertor packs (some with PV) has become a massive rural and expanding market. Consumer credit is being offered and could be packaged to support the rural health sector services. Mini-grids (localised grids) are often successful in many situations, with a host of variants being practised. Low economy versions include distribution of a light bulb each evening for 3-4 hours against a fee of a few rupees; bulbs are recollected at the end of the evening when the genset or power pack is shut down. Other mini-grids operate with consumer metering on a pay as you use basis. We are currently working towards a pay for energy through mobile phones similar to the phone top-up system. These techniques will reduce collection costs and ensure payments. There are multitudes of models to be considered, many of which can either have energy for health services integrated or revenues can be used to support health/educational costs. As you quite rightly mention, there are also other financial instruments that could be considered. Bonds as you mention could be one possibility. Much of this but not all goes hand in hand with policy revisions and legislation. An important part of this can operate from commercial drivers however. These tend to be the most successful and certainly the most sustainable. Yes I would strongly encourage any action which would facilitate a process to bring together appropriate financial instruments, policy and legislation where required. This could be an important stepping-stone to addressing a multitude of problems related to health service delivery. Best regards ([email@example.com]firstname.lastname@example.org[/email]) Terry ([email@example.com]firstname.lastname@example.org[/email]) ----------- SYRINGE MANUFACTURE AND ENERGY CONSUMPTION Another energy issue is the energy used to make syringes. In a paper presented at SIGN 2007 (a part of which is attached) I highlighted the fact that there are orders of magnitude difference in energy and climate implications between different syringe manufacturers for the same end product. For example if all the world's syringes (16 billion) were made by the most energy efficient manufacturer their manufacture would consume the equivalent of the electricity used by 250,000 houses in a year. Conversely the least efficient manufacturer's syringes would consume the equivalent of 3.25 million houses worth of electricity. A house worth of electricity = 4,300kWh. Best wishes Anthony ([email=FBA@COMPUSERVE.COM%20t]FBA@COMPUSERVE.COM%20t[/email]) Anthony Battersby FBA Health Systems Analysts +44 (0)1373-830322 ----------- Post generated using Mail2Forum (http://www.mail2forum.com) ##text##
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