Freeing the world of poverty is the predominant goal of the World Bank, one of the largest sources of funding and knowledge for developing countries. And one of the most important factors in achieving that objective is providing reliable and affordable electricity to the more than 1 billion people around the world who lack it now.
In this episode of the Columbia Energy Exchange, host Bill Loveless talks to Riccardo Puliti, the top energy official at the World Bank. As a senior director and head of the Energy and Extractives Global Practice at the bank, Riccardo leads a team of 400 professionals who develop policies and financing in these industries, with a portfolio of some $40 billion.
Bill and Riccardo met recently at his office at World Bank headquarters in Washington, two years after their first conversation on the Columbia Energy Exchange, when Riccardo was still new to the job. They talked about what’s happened since then, including stepped-up efforts at the bank to promote access to renewable energy in remote regions like Africa and Southeast Asia and to address the threats of climate change.
Always an optimist, Riccardo finds satisfaction in the progress that’s been made to expand access to cleaner types of energy, though he acknowledges more needs to be done. And he’s keen on the potential of new technologies like energy storage. But he also makes clear the bank’s concerns over climate change, whose potential impact is of growing concern to nations around the world.
Of course, he and Bill were meeting as the World Bank awaits a new president, following the resignation of Jim Yong Kim earlier this year and the Trump administration’s nomination of David Malpass, an official at the U.S. Treasury Department, to replace him. Will energy and climate policies change under the bank’s new leadership? Not surprisingly, Riccardo responded carefully, saying, “We have to wait until the new president comes and then see what kind of dialogue takes place.”
Prior to joining the World Bank, Riccardo was the managing director in charge of energy and extractive industries at the European Bank for Reconstruction and Development. He started his career at Istituto Mobiliare Italiano in 1987 before moving to Banque Indosuez and NM Rothschild where he worked in equity capital markets, always in the energy and infrastructure sectors.
Bill Loveless: Freeing the world of poverty is the predominant goal of the World Bank. One of the largest sources of funding and knowledge for developing countries. And one of the most important factors in achieving that objective is providing reliable and affordable electricity to the more than one billion people around the world who lack it now. Hello and welcome to the Columbia Energy Exchange. A weekly podcast from the Center on Global Energy Policy at Columbia University. From Washington, I’m Bill Loveless. Our guest today is Riccardo Puliti, the top energy official at the World Bank. As a senior director and head of the energy and extractive global practice of the bank, Riccardo leads a team of 400 professionals who develop policies and financing in these industries with a portfolio of some 40 billion dollars. Riccardo and I caught up recently at his office at World Bank headquarters in Washington two years after our first conversation oBill Loveless:n the Columbia Energy Exchange when he was still new at the job. We talked about what’s happened over that time including stepped up efforts at the bank to promote access to renewable energy in remote regions like Africa and Southeast Asia. And to address the threats of climate change. Always an optimist, Riccardo finds satisfaction in the progress that’s been made to expand access to cleaner types of energy. Though he acknowledges more needs to be done. And he’s keen on the potential of new technologies like energy storage. But he also makes clear the bank’s concerns over climate change, who’s potential impact is of growing concern to nations around the world. Of course, we were meeting at the World Bank as it awaits a new president following the resignation of Jim Yong Kim earlier this year and the Trump administration’s nomination of David Malpass an official at the U.S. treasury department to replace him. Will energy and climate policies change under the bank’s new leadership? Not surprisingly Riccardo responded carefully saying, we have to wait until the new president comes and then see what kind of dialogue takes place. Well, here is our conversation. I hope you enjoy it. Riccardo Puliti, welcome back to the Columbia Energy Exchange.
Riccardo Puliti: It’s a great pleasure Bill. Really great pleasure, I mean, you were first interview me so, I’m both grateful and I’m very interested in what we are going to talk to each other now.
Bill Loveless: Yeah, I am too and it’s good to see you again. Well, when we spoke two years ago, you were relatively new in this job.
Riccardo Puliti: You know, I was, I’ve been in the job for three months at that time. So, now it’s two years and three months.
Bill Loveless: Yeah.
Riccardo Puliti: I hope, I learnt something.
Bill Loveless: Well, how is it going?
Riccardo Puliti: I think it’s doing very, very well. I have to say, I found out that I have fantastic staff here at the World Bank. It is a difficult job because you have to make sure that your work in energy extractive is very balanced. You have many objectives. You have to think about access. You have to think about the energy transition, renewables, etc. You have to think about energy trading, regional connectivity. You have to think about the role of gas, the role of fuels in mainly in the work. You have to think about innovation. Energy is about innovation, I have to say, energy and extractives, if you think about as much mining, digitization of mining etc. So both sectors are sectors that have a high degree of innovation. So, actually, you have to make long term decisions while all the data that you have around you is changing continuously. It’s a beautiful and difficult job.
Bill Loveless: And the overriding consideration here at the bank is, is reducing poverty. I mean, I was reminded of that as I walked into the building. The dream as stated in the front of this building is to reduce or eliminate global poverty and the goal specifically is to reduce extreme poverty to less than 3% of the world’s population by the year 2030. There has been considerable progress made in recent years in address that goal but there are still ways to go. How does energy play into that?
Riccardo Puliti: I would say using the name of a very famous show in England. We are really in the thick of it. Really in the thick of it. I think that energy is key for human development from every conceivable viewpoint, you think about it. It’s key in economic development, in economic growth. It’s key to make sure that communities work together in a peaceful and useful way. So, I have to say it is really energy is really in the think of it. How do we try to do this? We try and I have to say as I was saying at the beginning of the interview, the very important role of innovation, of technical innovation, I think we have done certainly a lot of step forwards, a lot of step forwards are really due to the fantastic capacity of the energy industry to use digitization as I was saying earlier to use batteries, so electrochemical batteries. The ever reducing cost of renewables. In order to make sure that electricity is brought to all the people, to all the people possible and certainly to have good quality of electricity. I don’t mean that four hours per day but the dream and what we want to achieve and we are very determined on that is to achieve that everybody will have 24 hours of electricity. And we do it for human development. We do it for the young people in many of the countries where we work. And it is a difficult job. I can tell you. I respect my colleagues enormously because they travel with a smile in their face in countries we’ve been with fragilities with conflicts and they’re always try to make sure that projects are well designed, well implemented. So, I think this is our contribution to reducing poverty.
Bill Loveless: I read where you once said that when you speak of Africa, you’re really speaking of the World Bank and its work. Walk me through Africa a little bit in terms of what’s happening in terms of energy availability?
Riccardo Puliti: Okay. If you want today, there have been important improvements in terms of access. So, I think that there are around 700 million in Africa that do not have access. So, the number is reducing quickly. Of course, the number is also impacted by demography. So, the more people are born, the less, the number look important first in absolute terms. But I have to say, we are moving very, very quick. In terms for example of access, wherever I’ve hear on average, we were landing more or less a little bit less than one billion every year. Now, we are landing between 1.4 and 1.5 billion.
Bill Loveless: This is in Africa.
Riccardo Puliti: That is all over. But the vast majority is in Africa to be honest with you. The number is not in Africa only but it is very much on Africa where we concentrate with huge projects in Kenya. Projects, I have to say, in the northern part of Kenya close to Sudan. Nigeria, the north and the regions. So, very complex, very complex places where the World Bank is present. I have to say with a lot of courage. So, we are doing, we are increased by 50% annually the amount of money going to access. In terms of off-grid, I have to say, we pass from 200 million per year to around 400 million per year. So, we double that. So, we try to take advantage of all of available technologies in what concerns off-grid and mini-grid. Trying to make sure that rural communities, smaller towns have sufficient access to electricity.
Bill Loveless: So what a combination of large projects maybe traditional projects, power plants, base load power plants.
Riccardo Puliti: No, I’d say, if I may, it’s a very good question. Fantastic question. I have to say in terms of conventional power and large power plants certainly, we are in that area. But I have to say, it’s not an area where we very present. We think that the private sector can do it very well. These are big projects. They can negotiate with the governments. The governments give the right level of attention. So, I think we should not, we are not in a business of crowding out the private sector. I think where we are and where we have to be stronger and stronger is first of all off grid and rural electrification because of course, it is more difficult to get the private sector to go into that. Even though we have some good examples. And then where we are very present is regional connectivity. It’s electricity trading. It is about rules, payment systems and all the rest. Because you see, we should, I know, it is complex. But we should see the continent or regions of the continent, the African continent as homogenous. So, it is not necessary to be a large conventional power plant in every country so that everybody is happy. What we would like to foster is regional integration. We want to foster cooperation. So that what we have to build is least cost, first of all. We don’t have stranded assets at a certain point and we make sure that first there is a hard connectivity so that the high voltage lines are there but also that there are all the rules and policies and contractual arrangements for the transfer of electricity and for the payment of electricity. The payment is being a big problem for us. So this is something we are trying to really to impact.
Bill Loveless: Because at the end of the day, policy, reliability of banking, of regulation is all a policy, in these countries is policy.
Riccardo Puliti: It is policy. Policy, it is so important, as you know, Bill I come from the European union. Around 25 years ago, the European union came out with this concept of corridors. You had a transport corridors, you have energy corridors. So there, how can we foster mobility of electricity in this case but it is, if you look in a more often sense, it is really mobility of people at a certain point. How do we foster them? What are the regional plans? So there are regional plans in Africa. There are for example, there is the west Africa power pool. There is the South Africa power pool. The east Africa power pool. So it is important, these pools work very, very well. It is not only about building power lines, it is very much making sure that contractual arrangements are enforceable. That the policies for trading are clear for everybody and are well accepted. So that there could be a more efficient use of the resources and also have to say cheaper electricity and cheap electricity will help on the matter of access. For example in big cities, think about that.
Bill Loveless: Yeah. But what would be an example of a place where they really has been some incredible progress in terms of all of these objectives and also an example perhaps of a place where there is still a long way to go?
Riccardo Puliti: Listen, I can use the same example for both cases and I’ve used the example of west Africa power pool. And I have to say where most of the hard infrastructure is being built. But where there are, there have been in the past a lot of problems with the payments and then you know, it is not an easy matter because of course, there are always litigations in which one of the party say, I did not receive the right amount of energy on time and the other party say, well, I already not receive the payment. So making sure that the contractual arrangement on these trading are well set, well defined, accepted and then I use the most important one, enforceable that make sure that the trading is easier and avoids also the contraction of a multitude of large power plant that are there just because of a perceived sense of lack of energy security. And that save money today taxpayers, money that can be used in my sector for rural electrification or within countries to make sure that important things are connected to the capital and among them. So there is a lot of work to do on grids also.
Bill Loveless: Yeah, yeah. But you are seeing progress there.
Riccardo Puliti: I do see progress. Remember with these, I mean, I get to an age where I think, you see more things. Progress is never a kind of straight line that goes from the low to the high. Progress is always a line that goes up and down. There are moment of change of government where more attention is given to matter and less to another. But important thing is that I do see that the trend is a positive trend.
Bill Loveless: When you speak of innovation and there is a lot of focus on off grid distributed energy, small-scale energy, this sort of thing that brings to mind solar which has been a big factor for the bank to consider. And now storage has become that much bigger an interest of the World Bank. Tell me about that.
Riccardo Puliti: Listen we are so proud of having been able to spot storage at the very beginning. I don’t like to take credit for something that we didn’t do. That I didn’t do. So, around one year ago somebody in the staff of the global practice came to me and said, we usually land around $6 billion, $6-7 billion every year. Do you realize Riccardo that in the pipeline of the project pipeline for next year, we have $1 billion in electrochemical storage. And that was where I started. We realized that there was in the countries where we operate, so we are not talking about the United States or the European union. A big amount both in so called _____ [00:15:15] countries and other countries for storage to be used either in small systems in order to increase the amount of hours of availability of electricity or in larger more complex system in order to optimize the utilization of electricity. So, to produce less, to reduce the curtailment, the amount of electricity is produced and is not used because it cannot be stored. So, we saw that coming. We started working a lot, I have to say with many companies in Silicon Valley. We talk to them, we learnt a lot because at the end you’re always learning from the real innovators and we decided to have big program of putting $1 billion of our money plus three billion of concessional financial to accelerate the deployment of storage. And that’s what we are doing and I have to say it’s going very, very well. By the way now in the pipeline there are around three billion of new products including storage.
Bill Loveless: Yeah, and I’ve read with the bank, it intends to mobilize, to mobilize some $25 billion in commercial financing for cleaner energy. I would take it, this would be a big part of that or I think there is also even a bigger figure. I think, I hear…
Riccardo Puliti: The figure, it’s about enabling and mobilizing. So, the bank of course has a limit like every financial institution in terms of what we can do directly which is what we can land within projects. But of course, we can enable. Of course, we can work with governments to enable well designed policies and regulations that attract commercial banks, attract the private sector to make investments. Just for you to be aware on the 25th of February, so in a few days, we have a very, very big event in Cape Town and it’s a conference about renewables, batteries, how to accelerate the deployment. We have invited all the utilities in Africa. We have invited a lot of American and European companies. We love to do this. At the end, we are one world, I will say, let’s be honest. It’s not only an alliance of our craft, it’s a one world where we operate. And we try to make sure that investors feel comfortable to operate in the countries where we work, wherever they are in Africa and Asia, Latin America, every where and to make sure that they locally understand how to utilize batteries better, how to use them better and in this way foster the use both of grid and non-grid.
Bill Loveless: You mentioned the utilities but how do you reach these small rural areas, the villages of Africa where you know, there may not be power lines providing access to electricity where their best help is probably some rooftop solar. It seems that’s a big part of the challenge and one that requires a lot of your attention. How extensive is that reach going?
Riccardo Puliti: I would say the extend of that reach is quite important because we follow, religiously, I have to say SDG7 of the United Nations. So, extendable development goals and especially DS, suitable development goal number 7 which talks about renewables access and energy efficiency. So, this is a little bit our compass. We know where this is where we have to operate. I have to say off-grid is more and more important. The fact is that you will not find the same titles in newspapers, in every other thing on small access of grid. Because they are smaller projects by size. They require a lot of work. Both on the financing and on the enabling, because I would say enabling the right policies in order to make sure that enough resources both legal resources and financial resources from the government are used. It’s a big work. Sometimes it doesn’t make the headlines but I have to say, as I said at the beginning, the numbers for us are very good. We last here, we connected around 20 million people. And we increase our investment from on an annual basis from around 900 to 1.4 billion as I said, between 1.4 and 1.5. So, you can see there is a lot of work being done that. What we do twice per year, and that’s something I put in place and I love it very much. We meet with NGOs in the access area. We try to say what are we doing. Are we doing enough? Where we make mistakes because we do make mistakes. What we can do better and I have to say these are fantastic meetings. We talk about the access and we talk another thing which is very close to my heart which is not known, which is not wildly known but that’s clean cooking. And you can say why Riccardo clean cooking? I have to say clean cooking is fundamental. There are a lot of families, there are a lot of people that and this is a gender issue because at the end of the day, it is the woman in the house who does all of these and all the young girls. And it is really trying to find the best technology among the various technologies that can help to reduce the time for cooking, reduce the time to go and look for electricity, for water, for fuel of any kind. In order to make sure that there is more time for other things. And that’s really key for human development. I mean, I think it’s really key.
Bill Loveless: Right. Well, we have been talking a lot about Africa but of course the bank’s focus is global and much of it too is focused on southeast Asia. Tell me a little bit about what’s happening there.
Riccardo Puliti: Listen, southeast Asia is, we are really incredibly present. I have to say, we work with many projects in India. India is a country with really, I would say the full panoply of demands of needs and the full panoply of instruments that can address those needs. In India, we would say, I would say we are very proud of the work done on the rooftop solar. So, in the big Indian cities, we, I mean, I think some entrepreneurs probably private, they found out actually rooftop are very, very big and they could be used to collect electricity and actually they can not only be used to then be used in their particular commercial billing or big apartment block. It can be used to connected to the grid which actually we are doing very, very much with the Indian government. The Indian government devised a very, very powerful policy instrument. They devised some kind of incentives at the very beginning and now connected rooftop solar is a big business in India. So, you see, you have to think that there are more and more and more mega cities. We don’t know that phenomenon is going on all the time especially in Asia now that we are talking about Asia. So, it is necessary to think about access not only in a rural area but also big cities and this can be solutions. Bangladesh, of course, we have huge amount of work both on off grid as small grids power but also a lot of work on clean cooking as well. So, clean cooking is very important over there and we have a portfolio, believe it or not of $350 million of clean cooking projects. You know, it may look like a small number but in that kind of country, it is actually the biggest of all the institutions.
Bill Loveless: Now, thinking there is a lot of emphasis on promoting clean energy renewable energy and but many of the bank’s biggest borrowing countries are still interested in fossil fuels for power generation such as India, Indonesia, Vietnam. How does the bank interact with these countries in this important area?
Riccardo Puliti: Well, listen, I mean, this is a very important point you’re making. It’s a point about energy transition. I think there is in my opinion a widespread acknowledgment that we have to move and as fast as possible towards cleaner energy. It is true that in certain countries especially in Asia, they have to balance the demand, they receive from their cities and from their economy. With the move towards a quicker move towards this. So what we do? What we do we have continuous work together, continuous meeting where we explain what can be done and you know, we are talking about the role of batteries. If I put this battery in the system, I can reduce the amount of energy produced by for example in a system with a lot of gas, by gas fired power plant because I need to produce less which is very, very good from the viewpoint of climate change. And also by having more complex power systems, more digitization, more batteries, more integration of the systems and as I was saying before will reduce the need to build new plants. And better integration of renewables, better transmission lines and grids, interconnections will make sure that renewables that can be generated outside of the big cities, they can be integrated in the big cities and reduce. I mean, at the cost of repeating myself, think about the work in India which has a considerable fossil fuel fleet. Think about the what we are doing on rooftop solar. And by the way, I should not stop to rooftop solar. We have projects in China. We have projects in India about water solar. So, these are solar panels on reservoirs for example on coastal areas. So trying to have as quick as possible please as you would say in England, as quick as possible please to have cleaner energy possibly renewables in the system.
Bill Loveless: Right, right. But the bank hasn’t invested, it hasn’t supported much in the way of development in coal and fossil fuel plants in recent years.
Riccardo Puliti: No. The last project of the bank in coal was done in 2010 that was a very large project in South Africa with _____ [00:26:30] and the bank has not done other projects in coal. I have to say for me the reason is very simple is that little by little the economics are not there anymore. There isn’t, I don’t think it’s a matter of being ideological. It’s just that it is technology that little by little, a technology of the past. I mean, we are, I see cleaner coal. I see it all around all the efforts. But to be perfectly honest with you, I mean, I see my opinion far bigger progress in energy system integration, in batteries as I said, of course batteries with power. In renewables. So I think that we have to follow technical innovation.
Bill Loveless: You know, the bank has stepped up its commitments in the area of climate and its climate agenda. I mean, that was evident back in the international coal talks, international climate talks in Poland in December. You know, the major new set of climate targets for the years 21 to 2025. Tell me about that.
Riccardo Puliti: Yes, the bank has issued a new set of targets for example, to enable in the next few years, 36 gigawatt of renewables. In my opinion, it is very important that the bank put themselves in the middle of the international, in the global dialogue on how we can accelerate the energy transition. And I would like to repeat. I don’t find that there is any disagreement anywhere. There is a will to accelerate all of these. So, the word enabling is very, very important because it’s how we can influence, how we can provide good advice, how we can help on legal regulations, on policies to accelerate these energy transition. Of course, we will continue doing direct investments, indirect investments to make sure that the energy transition is at the top of our priority. But to be perfectly honest, I think it’s a combination of direct investment, indirect like for example, transmission lines that are most efficient, digitize smarter, less losses and also a lot of enabling, a lot of advice. So, this is where we are going.
Bill Loveless: Yeah, but I mean, it seemed that there was an exclamation point put on this agenda at that meeting in December. Just in terms for example of the money or the investment commitment the bank would make some double its current five year investments to about $200 billion in support of countries that take ambitious climate action and significantly a boost support for adaptation and resilience.
Riccardo Puliti: It is absolutely true. I think that the bank is, well not only the bank, I think all of the international community and of course the bank being an international citizen realize how climate change is impacting the way we live, the way we will think, the way we used to think. So it is very important to adapt, to be prepared to have all kind of investments, both hard investment and let’s say, more legal, political or policy investment to make sure that we can respond to this. I think, it’s very important to think about the future.
Bill Loveless: You know, since we last spoke, the Trump administration has announced that it would removed the United States from the Paris climate accord. Has that affected, has this change in policy in the United States affected your work in anyway?
Riccardo Puliti: Listen, the United States, I mean, it’s a very important member of this institution. They rightly enough, they make their choices where it is what they have to do. Dialogue is always happen. We are always trying to talk together. I think, I don’t have much more to add there.
Bill Loveless: Right, right. And of course, as we sit here, there is gonna be a change in leadership here at the World Bank with Jim Young Kim having announced his resignation and the Trump administration has announced, you know, its own choice for to head up the bank here. Do you anticipate any changes in policy on this very topics that we have been discussing, clean energy?
Riccardo Puliti: Listen, I think that we have to wait for the new president to come and then we will see, we will see what kind of dialogue will take place. But until that happens, I think it’s premature for me to say something that would be just talks. So nothing more than that.
Bill Loveless: Well, nothing is very much talked about these days. There is a price on carbon. As we talk about a lot here in Washington especially economists talk about a lot. But when you go around the world, how big a topic is this now?
Riccardo Puliti: It is quite an important topic. It is, you’re right Bill what you say. Cost of carbon has been a little bit left on a kind of economist talks. A little bit at that. But I have to say, it is actually substantial and very important. The World Bank has a price on carbon policy that we use when we analyze all our projects and we compare. I think it is very important to take into account all kind of local and global externalities when long term decisions are being made. It goes back to the very beginning of these interview. Energy and extractives but energy is a business that is really about making decisions now. About a long term future with the kind of set of data that you have. So, I think it is very important to project what could happen and take for example, the carbon pricing very much into account. And don’t think it is limited only to _____ [00:32:48] and all the rest. If you look at for example at the work of many groups. I’m thinking now about the oil and gas from climate, oil and gas climate initiative kind of group and you can see that they think about these as well. This is a group of oil and gas companies that are trying to, they are aware of transition, of energy transition. It’s here, it’s now and they think how can we make sure that the right choice are made during these transition and so they take into account these. Think that for example carbon pricing will be important for the CUS technology. So, carbon capture, utilization and storage. Many governments are working on that. Hydrogen could be impacted by this. So, when you look at the future, you have to analyze what are the assumptions that may make you choose one path instead of the other. But I repeat and this is really a word of optimism that I would like to say, I see that there is a global concern about the impact of climate change. That there is a need as we rightly say to work on adaptability, on resilience to use all possible instruments, to solve this problem. So, on this, I don’t see apart from a few people. But I don’t see disagreement that we have to move forward.
Bill Loveless: You remain the optimist.
Riccardo Puliti: I am strongly optimistic. I will always remain optimistic, I think we have to work to make it happen from access. We discuss Africa, we discussed Asia to clean cooking, to new technologies. Developing them, go to and for accelerate energy transition better policies. Yeah, I have to say, I remain optimistic. A lot of work, a lot of work but if we are scared by the work, I think we are really in troubles.
Bill Loveless: Riccardo Puliti. Thank you again for sitting down with us on the Columbia Energy Exchange.
Riccardo Puliti: Thank you, thank you very much. Good to see you again.
Bill Loveless: Well, that’s our conversation. I hope, you enjoyed it and if you have a minute, give us a rating on your favorite podcast platform and leave a comment for us. We appreciate your feedback. For more on the Columbia Energy Exchange and the Center on Global Energy Policy, go to our webpage at Energypolicy.columbia.edu or follow us on Twitter at ColumbiaUEnergy. For the Columbia Energy Exchange, I’m Bill Loveless. We’ll be back again next week with another conversation.