The Maldives will be the first country to be overwhelmed by the effect of climate change. The republic is a collection of coral atolls with maximum heights of one or two metres above sea level. Climate change is increasing worldwide sea levels and the atolls will probably go underwater by the end of the century.

The 300,000-400,000 people who live on the Maldives are not responsible for global warming. Their emissions per head (even including aviation fuels for incoming international tourism) are less than a seventh of typical European levels.

Many countries have set ambitious targets for the reduction of carbon emissions. The government of the Maldives seeks to encourage this trend by going one step further with a plan for near carbon neutrality within ten years.

This is an immensely challenging target. Chris Goodall (author of this blog) and Mark Lynas, the prize-winning climate change author, were asked to provide a short outline of how it might be achieved and what it might cost.[1]

In the rest of this note, we show our calculations. We will be the first to acknowledge that this work is incomplete. Although it was tempting to conduct fieldwork in some of the most attractive island resorts, we did our analysis using publicly available information and with help from officials attached to the Maldives government.

Our work shows that near neutrality is possible, but expensive. It will take at least $1.1bn for this small island state. The Maldives imports almost all its fuels in the form of refined oil products. Rates of financial return to the investment therefore depend largely on the price of oil. If expectations of future oil prices exceed $100 a barrel, we judge that the plan is sufficiently attractive to be financeable by international institutions such as the World Bank.

Comments on this work will be very gratefully received.

***

The Maldives’ use of fossil fuel The state has no natural resources other than fish and some of the finest locations for luxury resorts in the world. Fuels, almost entirely in the form of refined oil products, are all imported. There are two principal uses for these fuels – aviation and electricity generation. Smaller amounts are consumed as petrol for cars, diesel for boats, and kerosene for cooking stoves.

The CIA yearly factbook estimates that daily imports of oil products are equivalent to about 5,490 barrels. Although the energy value of oil products varies, this work has assumed that the fuels all provide about 1,700 kilowatt hours of energy. (Please note that the processes of conversion of fossil fuels to electricity are never 100% efficient, so the usable power delivered to consumers will be much less than the energy value of the oil.)

Small volumes of other refined products such as lubricants and bitumen are also imported. Our assessment of the disposition of oil imports is shown in the following diagram.

The Maldives The country consists of a large number of small islands grouped into atolls. About 250 islands are inhabited. The resident population, including migrant workers, is about 360,000. 600,000 international tourists visit these beautiful islands every year. They are principally from the UK, Italy, Japan, and other remote countries.

About a third of the resident population lives in Male, the country’s capital. Some of the most important tourist islands are close to Male, while others are some distance away. The Maldives chain is 750 kilometres from north to south.

The resorts are provisioned largely by imports. Fish are caught locally and some fruit is grown but the majority of the food provided for the visitors and the resident population is flown in from India, Sri Lanka, and other places.

The majority of the Maldivian population has access to electricity. This power is generally provided by diesel generators operating on the islands and at the resorts.

An outline of our plan The core of our scheme is:

the replacement of fossil fuels for electricity generation, for cooking and for some transport
the purchase and cancellation of EU emissions trading certificates to offset the importation of aviation fuel and small amounts of other fuels that cannot be otherwise be replaced.

Electricity generation Reliable figures for the amount of electricity generated were not possible to find. Much electricity is generated at resorts and other points on the island by smaller generators and the output may not be measured.

We have estimated that over half the oil imported into the island is used for electricity. The electricity is used for homes and businesses and for the desalination of water. Smaller amounts are used for boats and other uses.

We believe that the total annual amount of electricity generated and consumed is about 540,000 mWh. As the Maldives economy grows, this figure will rise. We are also proposing that the country should gradually switch to the use of electricity for road and some sea transport and for cooking. (The climate of the islands means that no heating is ever required and air conditioning needs are currently quite limited.)

Our estimate of the current needs for electricity:[2]

TOTAL[3]	542,000 mWh
Public electricity transmission	217,000 mWh
Private electricity transmission	217,000 mWh
Desalination	108,000 mWh

Our proposal is to replace diesel use with a mixture of:

wind energy
solar PV
biomass combustion in Male
battery storage outside Male.

Large expenditures will also need to be made on electricity transmission networks.

Wind Average wind speeds in the Maldives are reasonably high and quite consistent. Apart from the months of April and May, typical speeds are about 5 metres per second. (This compares with figures for central England of about 4.5 m/s.)

Average wind speeds in April and May are somewhat lower, at about 4 metres per second.

Our plan is to install enough wind turbines around the main islands to provide an expected annual electricity output of about 650,000 mWh. This exceeds the annual national requirements for electricity but because the wind does not blow at the same speed all the time, we will need additional generating capacity and electricity storage in reserve.

Our main assumptions are:

Typical size of wind turbine	1.5 mW
Expected output as a percentage of maximum output	32%
Expected annual output per turbine	4,205 mWh
Number of turbines necessary to provide 650 mWh	About 160 turbines

Most of the inhabited islands will be using wind power for the bulk of their electricity. In later paragraphs we will look at the need for storage of electricity to cover periods when the wind is not blowing strongly enough.

We have projected a typical cost of about $1,500 per installed kilowatt. Construction costs are likely to be moderate because of the ease of installing foundations in what we are told is coral limestone and sandstone.

Solar PV The Maldives are close to the equator and receive high levels of insolation. We can rely on good output from solar PV, both as a supplement to wind power and as a source of electricity on islands far from wind turbines.

After taking advice from the Maldives, we assume that the best location for solar PV will be in the very shallow lagoons in the centre of the atolls. Farms of PV panels can be installed at reasonable cost at the edge of these lagoons.

Our main assumptions are stated below:

Average insolation	270 watts per square metre
Panel efficiency[4]	17%
Square metres of panel installed	447,000
Expected output	180,000 mWh

These panels supplement the power provided by wind. Each location outside Male will need some form of electricity storage.

We have been told that solar energy levels are reliable across the Maldives islands. Monsoon weather produces cloud, but there are very few days without any direct sun. Even in cloud, the Maldives are sufficiently close to the equator for modern PV panels to capture large amounts of solar energy.

We assume a full cost (including cabling and inverters) of about $550 per square metre of installed capacity. This is lower than current levels because of the expected continuing decline in solar panel prices and because of the large size of the typical installation.

The average day length does not vary much in the Maldives across the seasons. But to be useful solar installations will need to be accompanied by some form of electricity storage.

Biomass A large fraction of the population lives in Male and nearby islands. For these areas, it makes sense to invest in a biomass combustion plant to provide backup when wind is not blowing and insufficient resources of sun are available.

We suggest a 50 mW plant, probably burning biomass wastes, such as coconut husks, some of which can be obtained locally and the remainder from Sri Lanka. We assume that the plant will provide an average output of about 20 mW. On an annual basis this equates to a production of 175,000 mWh, supplementing the electricity from wind and solar. We expect the cost of this plant to be about $50m, including installation. The cost of the biomass is expected to be about $20 a tonne and combustion efficiency about 35%. This implies an annual cost of about $5m.

Storage We have budgeted for electricity storage equivalent to twelve hours’ typical use in the areas outside Male. (In Male, the backup is provided by the biomass plant.) We exclude desalination because these plants can cope with limited intermittency.

We propose to use lithium iron phosphate batteries similar to those used in the most recent electric cars, although several other electricity storage technologies are possible. Lithium ion batteries are reliable, have long lives, and are completely safe. However, they are expensive. Our total requirement for storage is about 630 mWh and we believe that this will cost $315m. (This is cheaper than current prices for small orders but we have obtained an estimate of target costs in the next few years from Valence, the world’s largest manufacturer of automotive power batteries.)

Each wind and solar installation will need backup power from the battery systems. Further research could demonstrate that other forms of energy storage, such as compressed air, might provide cheaper alternatives, and we would be interested in hearing details of such systems.

Electricity transmission We have budgeted $100m for improvements in electricity transmission. We are told that the major population centres in the Maldives have electricity networks but a plan to switch to renewable sources will mean a need for new power distribution systems and for controls that maintain the voltage and frequency of AC distribution. Electricity will have to be taken from wind turbines and PV panel systems to local users. Our estimate is inevitably tentative but seems appropriately conservative at about $800-$1,000 per household.

Summary of renewable electricity generation, storage, and transmission Our projections show the Maldives installing total renewable electricity generating capacity well in excess of total current need. This is partly to provide a margin of safety but also to meet increasing need for electricity supply for uses such as transportation. In addition, the majority of the existing diesel generators will be available to users in the event of temporary unavailability of electricity from the renewable sources.

Element of infrastructure	Electricity generated (mWh)	Estimated cost ($m)
Wind turbines	630,000	380
Solar PV	180,000	242
Biomass combustion	170,000	50
Battery storage	n/a	315
Distribution of electricity	n/a	100
TOTAL	980,000	1,087

The available electricity supply in this plan is almost twice the level of current need. This leaves substantial reserve for other uses, such as road transport and cooking, increased desalination, and widening the availability of electricity.

Other uses for diesel We estimate that about 500 barrels a day of diesel are employed in other uses such as fuel for larger boats. This figure is tentative. In some circumstances, the fuel can be replaced by electricity. In other applications we will need to find alternatives which provide a low carbon liquid fuel. The best option at the moment which does not to involve the use of land that is used for growing food is jatropha oil, made from berries of a tropical shrub that grows on marginal land in places such as India. This is a temporary solution since all biofuels inevitably increase the pressure on the world’s productive lands. In the longer run, almost all diesel uses in the Maldives can be replaced by electricity.

Petrol/Gasoline About 490 barrels a day of petrol are used in the Maldives for cars and for smaller craft such as the tourist speedboats used in water sports. Over the next decade, the worldwide process of replacing internal combustion engine vehicles with electric cars will move rapidly. Already we are seeing rapid innovation in batteries from companies such as Valence. Every major auto-maker in the world has announced plans to produce electrically propelled cars. The short distances and small number of roads make the Maldives an appropriate location for using battery-powered vehicles.

Batteries need to be charged. This can be done from any mains socket, but as part of this plan for carbon neutrality, we anticipate that the government will need to establish charging points around the main towns that allow vehicle owners to top up their batteries. Renewable energy is an effective way to supply electricity to batteries. Batteries can be recharged when power is abundant, such as during night-time gales, rather than at periods of maximum electricity use. Battery-using cars can thus help to balance demand and supply for electricity. A rapid switch to electric vehicles might therefore help reduce the high cost of electricity storage.

Not all cars can be replaced in the ten years of this plan. Some vehicles will still be using petrol by 2020, as will many boats. We anticipate catering for the demand for liquid fuels by using ethanol from Brazil or other low-carbon sources. (Brazilian ethanol is low-carbon because it is made from sugar cane. The sugar in the cane can easily be fermented into ethanol. The waste from the cane (bagasse) can be used to provide the heat needed for the process. Most studies describe Brazilian sugar cane ethanol as extremely low-carbon because of the ease of making the fuel from ingredients that have absorbed CO2 from the atmosphere. The debate about whether cultivating sugar for ethanol increases the pressure on the world’s limited resources of arable land will continue and we cannot avoid some scepticism about whether ethanol will ever be truly low-carbon. New technologies (usually known as ‘second-generation biofuels’) are likely to use agricultural wastes, such as otherwise unused tree branches and straw, and these biofuels will probably be able to claim very low-carbon status.)

Battery cars vary in price but will eventually be cheaper than petrol equivalents. Electricity will almost certainly be far cheaper than petrol for fuel. A push towards using only electric cars on the Maldives will reduce costs. We have not included this in our estimates in the summary section.

Kerosene – cooking People on the islands largely use wood or kerosene for cooking fuel. For those homes and businesses using wood or other biomass for cooking, we suggest the introduction of new and highly efficient closed stoves. These stoves burn much smaller amounts of fuel than older types. This reduces the demand for fuel and decreases the pressure on local stores of wood. Homes and tourist hotels within the reach of the electricity system will need to have their stoves replaced with electric equivalents.

We are unable to estimate accurately the number of new stoves needed outside the Male area. A reasonable guess might be about 40,000. At a typical cost of $100 for simple stoves or electric rings, we believe the total bill will be about $4m.

Kerosene – aviation After electricity generation, the most important source of carbon emissions on the Maldives is aviation fuel. We believe it is approximately 1,800 barrels of oil a day. To be clear, this amount of jet kerosene is not sufficient to provide fuel for the whole of the return journeys of all the international flights coming into Male airport. (In recent days, our check shows that about 8 long distance flights arrive in the Maldives every day.) Most aircraft seem to travel through Colombo, Sri Lanka and may be fully refuelled there, either on the outbound or incoming legs of the return flight.

Although the oil of the jatropha bush may provide a long-term replacement for kerosene, airlines have no current alternative to using fossil fuels. The Maldives economy is reliant on tourism so the country will need to continue to import aviation fuel.

Our proposal is therefore to offset the CO2 emissions from aviation by purchasing emissions certificates from the EU trading system. EU countries have all been allocated a restricted number of allowances (or ‘permits to pollute’). These allowances are traded on a number of exchanges in Europe. The buying and selling of carbon allowances set the price for carbon dioxide emissions in Europe.

By buying and then cancelling emissions permits, the Maldives is decreasing the total volume of emissions allowed in Europe. Its purchases will therefore slightly raise the equilibrium price for CO2 in Europe from its currently depressed level of about €10-€12 per tonne. Raising the price in the EU permit system is important because it increases the incentives on the major polluters, such as power stations, to use lower-carbon technologies.

We need to offset about 270,000 tonnes of CO2 per year to cover the emissions from aviation kerosene landed on the islands. The current cost of this is about $4m but the price varies daily.

We also propose that the Maldives offset any remaining emissions, such as those that arise when diesel generators have to be used because of the lack of wind and sun in the areas that cannot be powered by the Male biomass combustion plant. We propose allocating a total annual cost of $3m for this purpose, making a total offset cost of about $7m.

Methane emissions Small quantities of methane (a potent global warming gas) are emitted from landfilled organic waste on the Maldives. Methane is given off when carbon-based molecules rot in the absence of the oxygen in air. One estimate suggests that the effect of this might be equivalent to about 20% of the total CO2 output of the islands.

We believe that the best way to avoid these methane emissions is probably to separate organic materials (food, other waste vegetable matter, woody materials) from other forms of waste, such as plastics and metal. The organic material should then be carefully composted and then added to the very thin local soils as a conditioner. With appropriate additions of fertility-raising compounds, this will increase the ability of the Maldives to grow food for its rapidly increasing population.

We estimate the cost of widespread installation of simple composting equipment to be about $6m. (There are about 250 inhabited islands. Composting equipment on 100 of the largest, at a price per unit of $50,000, would cost $5m. The main unit in Male might be an extra $1m.)

A summary of the costs and savings We assume that all fuel and energy prices remain the same. So, for example, if electricity is priced at 20 US cents per kilowatt hour, the price will stay at this level. The financial effect of the carbon neutrality plan will therefore arise from:

the equipment needed to decarbonise electricity generation – e.g. wind turbines
the extra cost of lower-carbon products such cooking stoves. These can also be regarded as capital costs
the annual cost of offsetting the emissions from imported aviation fuel
the reduction in the oil import bill, a continuing benefit to the islands. We have assumed that the import cost of refined oil products, including the cost of transport to the islands, adds $10 a barrel to the standard cost of crude oil, which is currently trading at about $45.

Capital costs	$m
Electricity system	1,087
Cooking stoves	4
Composting equipment	6
Total cost	About $1.1bn

Yearly costs and savings

Costs	$m
Offset costs	-7
Biomass purchase costs for Male plant	-5
Oil purchase savings
Total annual costs	-$12m

Savings – two scenarios

Net savings at $55 a barrel	$48m
1) BASE: 3,000 barrels a day at $55 a barrel for refined products	$60m
2) HIGHER OIL PRICES, LOWER IMPORTS: 3,500 barrels a day at $110 a barrel for refined products	$140m
Net savings at $110 a barrel and 3,500 barrels saved a day	$128m

What can we take from this financial analysis? If oil prices remain at $45 a barrel ($55 for refined products) then the costs of carbon neutrality are high and would not easily meet the standard tests of financial viability. For a country with a GDP of less than £2bn, the bills are large. But at $110 for a barrel of refined products the gains from reducing the use of fossil fuel are great enough to make the proposals financially attractive.

Crucial to the plan is the near-complete decarbonisation of electricity generation over a period of about 10 years. This will be the single most important switch in other countries as well, although it will take far longer in countries like Britain.

(This material accompanies Duncan Clark's article 'Maldives first to go carbon neutral' in the Observer on Sunday 15 March 2009.)

Footnotes [1] Mark Lynas and Chris Goodall will receive no payment of any form for this work. [2] These estimates are necessarily imprecise. But they are unlikely to underestimate current electricity use because otherwise electricity production would use an implausibly large fraction of total diesel imports. [3] This is about 0.15% of UK electricity production, and approximately a third of the figure per head in the UK. [4] This assumes a small continuing improvement in typical efficiency for standard silicon panels. The Maldives could decide to invest in lower efficiency thin film panels which are considerably cheaper.