This election cycle, what will separate Democrats from Republicans on energy policy and their approach to climate change? Republicans tend to be fairly strong supporters of the fossil fuel industry, and to various degrees deny that climate change is occurring. Democratic candidates emphasize the importance of further expanding the share of renewable energy at the expense of fossil fuels, and agree that climate change is a real problem—with some saying the challenge trumps most, if not all, other U.S. security concerns.

Now that there are presumptive nominees for both major political parties, it’s an important moment to outline, in broad strokes, the positions of Secretary Hillary Clinton and businessman Donald Trump. We realize that Democratic Presidential candidate Bernie Sanders has not dropped out of the race, but note that it is fairly unlikely at this point that he would clinch the nomination.

Clinton: Building on the Obama legacy 

Secretary Clinton has laid out the most comprehensive and detailed energy and climate policy proposals of the candidates to date. They are in essence a continuation, and in some cases a further expansion, of existing White House policies under President Obama. The Secretary has stated that she wants the United States to be the “clean energy superpower of the 21st century.”

This starts with the notion that climate change is an existential threat, which the global community has to address as soon as possible. In order to do that, in her view, the United States needs to continue to show leadership on the international stage, as the Obama administration sought to do surrounding the Paris agreement in December 2015. This will require substantial reforms to expand low-carbon options, including nuclear energy to some degree, while tightly regulating fossil fuels (and gradually phasing them out). 

[S]he wants the United States to be the “clean energy superpower of the 21st century.”

The first casualty of this transformation is the coal industry, which Clinton has explicitly acknowledged. She presented a $30 billion plan to revitalize communities where coal production is currently an important industry and job creator, for example, and has campaigned with this message in various state primaries. Implicitly, Secretary Clinton does not seem to believe in the economic viability of carbon capture and sequestration in the United States—this is despite the fact that most analyses, including those of the Intergovernmental Panel on Climate Change (IPCC), suggest that this technology could be a cost-efficient tool in a wider carbon emission mitigation portfolio. 

Clinton sees natural gas as a bridge fuel, though at this point it’s not clear how long that bridge is. Questions remain about the role that natural gas can play in scenarios of deep decarbonization in 2030 and beyond. At the moment, the gas industry is rather nervous of the Secretary’s statement that she’d increase regulations on, in particular, the fracking industry—if her conditions came to fruition, there would very few places where fracking would continue. 

Secretary Clinton believes that oil consumption has to be cut substantially in the coming years, and she has suggested that new drilling in places like the Arctic, off the Atlantic Coast, and on federal lands would be discouraged or banned. She has previously opposed crude oil exports, though we would not anticipate a roll-back of existing policies (in December 2015, the Obama administration lifted the decades-old ban). 

Clinton foresees a new energy economy built on rapidly increasing shares of renewable energy, which should comprise 25 percent of the U.S. fuel mix by 2025 according to her plan (solar energy would be a key focus, with half a billion panels to be installed by the end of her first term). To facilitate this transition, she presented an elaborate energy infrastructure plan to modernize the U.S. grid and improve efficiency in reviewing and approving projects. 

Tax credits to support renewables would be continued under a Clinton White House, whereas fossil fuel subsidies would be phased out. Increased energy efficiency, including harmonization of vehicle efficiency and fuel standards, are high on her agenda as well. The Secretary also supports the Clean Power Plan that the Environmental Protection Agency under the Obama administration has launched, and which is currently on hold in the Supreme Court. 

On the international stage, Clinton supports the Paris agreement on climate change. Should she win the presidency in November, she would make an effort to take this Treaty to the next step, thus continuing U.S. leadership. That would mean reinforcing U.S. leadership along the lines described above, while helping address current uncertainties about finance, transparency, and accountability, to name only a few challenges that remain.

Trump: Drill, baby, drill

Although Donald Trump’s candidacy remains highly controversial, he is now the presumptive Republican nominee for president. To the extent that we know any detailed plans, quod non, it is safe to say that his views on energy and climate change are diametrically opposed to most of Clinton’s. Broadly speaking, Mr. Trump has come out as a fervent supporter of the fossil fuel industry, and has expressed skepticism about the economic viability of renewable energy.

Mr. Trump’s views start with the belief that climate change is not man-made. In the past, the controversial businessman has suggested that climate change might be a hoax invention from China, in order to undermine U.S. industrial interests and job creation. This starting point allows Mr. Trump to be extremely supportive of existing industrial interests (if carbon and other greenhouse gas emissions are not a problem, the thinking goes, then business as usual is the way to go). 

In a speech in North Dakota in late May, Mr. Trump laid out some broad initial ideas for his energy policy. He declared that under his presidency the United States would “accomplish complete American energy independence,” leaving unaddressed arguments about what that would mean for existing international energy trade. 

It is probably safe to say that Mr. Trump would like to further expand oil, gas, and coal production in the country. The latter, in particular, is remarkable: even coal executives have declared that market forces (particularly very competitive natural gas) have been the primary threat to the coal industry. Since Mr. Trump is also a strong supporter of the natural gas industry—and considering the challenges of building new bulk terminals for exports—it is unclear how a revitalization of the coal industry would occur. 

If climate change is a hoax, it will come as no surprise that Mr. Trump will not support efforts to mitigate carbon and other greenhouse gas emissions.

Contrary to his opponent, Mr. Trump would also like to revoke restrictions on drilling for oil and gas, and would permit production on federal lands. He also supports further expansion of energy infrastructure, and would, if elected, ask Trans Canada to resubmit a permit application for the Keystone pipeline, which he’d approve. He has caveated his support for projects like these by demanding that a portion of the revenues from oil and gas flows be redistributed to local communities, to compensate them for intrusion on their private property. Mr. Trump has also indicated that he wants to use revenues from oil and gas production to rebuild U.S. infrastructure more broadly.

If climate change is a hoax, it will come as no surprise that Mr. Trump will not support efforts to mitigate carbon and other greenhouse gas emissions. The candidate has called the Obama administration’s Clean Power Plan “stupid,” and when asked what he would do about the Paris agreement on climate change, he said he’d cancel it. 

Though Trump says the United States must pursue all forms of energy—including renewables—he has expressed skepticism about their economic viability, calling solar energy “very expensive.” Wind energy received similar pejorative feedback, since Trump says it kills eagles and is noisy. During one of the few debates about renewable energy during the Iowa primary, he voiced his support for blending biofuels in vehicles. 

To the polls

The 2016 U.S. presidential election will have a profound impact on global affairs. Not only will it affect a range of security and economic issues in important ways, it also means a lot for global energy and climate policy. Will the United States continue on the trajectory that President Obama has started and continue a major energy transition strategy? Or will it shift course, potentially undermining existing domestic policies and investments, as well as international obligations? In November 2016, the American people will decide.

       

The debate surrounding net energy metering (NEM) and the appropriate way to reform this policy is under scrutiny in many U.S. states. This is highly warranted since NEM policies do indeed need reforming because NEM often results in subsidies to private (rooftop) solar owners and leasing companies. These subsidies are then “paid for” by non-NEM customers (customers without private rooftop solar installations). The fundamental source of the NEM subsidy is the failure of NEM customers (customers with private rooftop solar installations) to pay fully for the grid services that they use 24/7. These subsidies are well-documented and underpin much of the regulatory reform efforts underway across the United States.[1]

In a recent Brookings paper, “Rooftop solar: Net metering is a net benefit,” Mark Muro and Devashree Saha contend that net metering is a net benefit for non-NEM customers.[2] I fundamentally disagree with their findings, and argue that NEM is not a net benefit; it is, in fact, a tariff that much of the time results in a subsidy to NEM customers and a cost shift onto non-NEM customers. As Executive Director of the Institute for Electric Innovation, a non-lobbying organization focused on trends in the electric power industry, I have followed this debate and written about it for several years.

Much of the talk about NEM focuses too often on the “value” of the energy that is sold back to the grid by a NEM customer. In reality, the amount of energy sold back to the grid is relatively small. The real issue is the failure of NEM customers to pay fully for the grid services that they use while connected to the grid 24/7, as shown in Figure 1.[3] Customers need to constantly use the grid to balance supply and demand throughout the day, and the cost of these grid services can be sizeable. In fact, for a typical residential customer in the United States with an average electricity bill of $110 per month, the actual cost of grid services can range from $45 to $70 per month–however, the customer doesn’t see that charge.[4] That means, in the extreme, if a customer’s energy use “nets” to zero in a given month because the customer’s private solar system produced exactly what the customer consumed, that customer would pay $0 even though that customer is connected to the local electric company’s distribution grid and is utilizing grid services on a continuous around-the-clock basis.[5]

Although exactly netting to zero energy in a month is highly unlikely, this example demonstrates the point that the customer would pay nothing, despite using grid services at a cost ranging from $45 to $70 per month. Over the course of one year, this customer could receive a subsidy resulting from NEM of between $540 and $840. Over the life of a private rooftop solar system, which ranges from 20 to 25 years, this is a significant subsidy resulting from NEM.

Granted, this is an extreme example, and most NEM customers will pay for some portion of grid services. However, the fundamental source of the NEM subsidy is the failure of NEM customers to pay fully for the grid services that they use 24/7, and the cost of these services can be quite substantial. When a NEM customer doesn’t pay for the grid, the cost is shifted onto non-NEM customers.[6] It is a zero-sum game; plain and simple. This is the elephant in the room.

This issue was directly addressed by Austin Energy when the company implemented a “buy-sell” arrangement for the private rooftop solar customers in its service territory. The rationale for the buy-sell approach is that the customer buys all of the energy that is consumed on-site through the electric company’s retail tariff and sells all of the energy produced by their private rooftop solar system at the electric company’s avoided cost. This addresses the “elephant in the room” because, by buying all energy consumed at the retail tariff, the customer does pay for grid services that are largely captured through the retail tariff. It is an unfortunate fact that under ratemaking practices today in the United States, the majority of fixed costs (i.e., grid and other costs) are captured through a volumetric charge.

Hence, I fundamentally disagree with the Muro/Saha paper–NEM does need to be reformed. NEM is not a net benefit; it is a tariff that the much of the time results in a cost shift onto non-NEM customers. One of the first studies to quantify the magnitude of the NEM subsidy was conducted by Energy+Environmental Economics (E3) for the California Public Utilities Commission (CPUC) in 2013. There was no mention of this analysis for the CPUC in the Muro/Saha paper. The E3 study estimated that NEM would result in a cost shift of $1.1 billion annually by 2020 from NEM to non-NEM customers if current NEM policies were not reformed in California.[7] A cost shift of this magnitude–paid for by non-NEM customers–was unacceptable to California regulators. As a result, California regulators set to work to reform rates in their state; many other states followed suit and conducted similar investigations of the magnitude of the NEM subsidy.

In reviewing NEM studies, Muro and Saha chose to focus on a handful of studies that show that net metering results in a benefit to all customers. In this small group of NEM studies, they included a study that E3 conducted for the Nevada Public Utilities Commission (PUC) in 2014–perhaps the most well-known and cited of the five studies included in the Muro/Saha paper. Very soon after the E3 Nevada study was published, the cost assumptions for the base-case scenario which showed a net benefit of $36 million to non-NEM customers (assuming $100 per MWh for utility-scale solar) were found to be incorrect, completely reversing the conclusion. The $36 million benefit associated with NEM for private rooftop solar turned into a $222 million cost to non-NEM customers when utility-scale solar was priced at $80 per MWh.[8] Today, based on the two most recent utility-scale contracts approved by the Nevada PUC, utility-scale solar has an average lifetime (i.e., levelized) cost of $50 per MWh, meaning that the NEM cost shift would be far greater today. In February 2016, the Nevada PUC stated that “the E3 study is already outdated and irrelevant to the discussion of costs and benefits of NEM in Nevada…”[9] Hence, because the E3 study for the Nevada PUC that the Muro/Saha paper included has been declared outdated and irrelevant to the discussion and because costs for utility-scale solar have declined significantly, that study does not show that NEM provides a net benefit.

No doubt there is an intense debate underway about NEM for private rooftop solar, and much has changed in the past two years in terms of both NEM policies and the growth of private solar projects:

• First, several state regulatory commissions now recognize that the NEM cost shift is both real and sizeable and that all customers who use the grid, including NEM customers, need to pay for the cost of the grid. As a result, many electric companies have proposed and state regulatory commissions have approved increases in monthly fixed charges over the past few years; this partially addresses the issue of NEM customers paying for the cost of the grid services that they use.
• Second and related, getting the pricing right for distributed energy resources of all types is important because we expect those resources to grow significantly in the future. Work is underway in this area and it is one focus of the New York Reforming the Energy Vision proceeding; but there is still much to be done.

By focusing on a select group of studies that show that NEM benefits all customers (as stated by the authors); by excluding the E3 study for the CPUC which was fundamental to the NEM cost shift debate; and by not providing an update on the NEM debate today, I believe that the Muro/Saha paper is misleading.

In the second part of their paper, Muro and Saha suggest some helpful regulatory reforms such as moving toward rate designs that “can meet the needs of a distributed resource future” and moving “toward performance-based rate-making (PBR).” Some electric companies have already implemented PBR or some type of formula rate and PBR is under discussion in several states.[10] Lawrence Berkeley National Labs is looking closely at this and related issues in its Future Electric Utility Regulation series of reports currently underway.[11]

Mura and Saha also suggest decoupling as a way forward–I disagree. In my view, decoupling is a not solution for private rooftop solar. Revenue decoupling is currently used to true-up revenues that would otherwise be lost due to declining electricity sales resulting from electric company investments in energy efficiency (EE). Decoupling explicitly shifts costs from participating EE customers to non-participating EE customers causing the same cost-shifting problem that is created by NEM. However, a fundamental difference is that the magnitude of the cost shifting onto non-NEM customers is on a much larger scale than the cost shifting due to EE. A recent study revealed that decoupling rate adjustments for EE are quite small–about two to three percent of the retail rate.^[12] In contrast, as described earlier in this paper, a NEM customer could shift a significant cost onto non-NEM customers (and the NEM cost shifting is essentially invisible to customers, which is one reason that NEM customers do not believe they are subsidized).[13]

Finally, Muro and Saha suggest that electric companies should invest in a more digital and distributed power grid. In fact, electric companies across the United States are doing just that. In 2015, electric companies invested $20 billion in the distribution system alone and this is expected to continue. Over the past five to six years, electric companies invested in the deployment of nearly 65 million digital smart meters to about 50 percent of U.S. households. In addition, electric companies are investing in thousands of devices to make the power grid smarter and more state-aware. Today, in states such as California, Hawaii, and Arizona, electric companies are investing to enable and integrate the distributed energy resources that are growing exponentially. And, in some states–where regulation allows–electric companies are offering rooftop solar or solar subscriptions to their customers.

No doubt, the electric power industry is undergoing a period of profound transformation–our power generation resource mix is getting cleaner and more distributed; the energy grid is becoming more digital; and customers have different expectations.[14]

Collaboration, good public policy, and appropriate regulatory policies are critical to a successful transformation of the power sector. In the context of this paper, this means reforming NEM so that private rooftop solar customers who use the energy grid pay for the grid. One straightforward approach is to require NEM customers to pay a higher monthly fixed charge thereby reducing the cost shift.[15] Ultimately the challenge is to make the transition of the electric power industry–including the significant growth in private rooftop solar and other distributed energy resources–affordable to all customers.

Lisa Wood is a nonresident senior fellow in the Energy Security and Climate Initiative at Brookings. She is also the executive director of the Institute for Electric Innovation and vice president of The Edison Foundation whose members include electric companies and technology companies.

       

Editors’ Note: Science diplomacy can help countries solve on-the-ground challenges and improve standards of living for their citizens, writes David Hajjar. But it can also lay groundwork for improving relations through functional, scientific cooperation that is less politicized. This post originally appeared on Lawfare.

In the Middle East, governments and non-state actors alike have tried all forms of diplomacy to solve the challenges they face, with mixed results: shuttle diplomacy by the United States between the Israelis and Palestinians worked for a time, great-power diplomacy over the Syrian civil war largely hasn’t, and direct negotiations with unsavory groups like the Taliban have moved in fits and starts. 

But progress can come from unlikely sources, and science diplomacy—whereby experts collaborate scientifically to address common problems and build constructive international partnerships—has more potential than is often recognized. Science diplomacy can of course help countries solve on-the-ground challenges and improve standards of living for their citizens. But it can also lay groundwork for improving relations in a region often defined by tension (if not outright conflict) through functional, scientific cooperation that is less politicized. 

Efforts in science and technology, on the one hand, and diplomacy on the other, can achieve more if they are thoughtfully merged—rather than siloed. Science diplomacy, therefore, can contribute to peace- and security-building in the Middle East (and with the United States) in unique ways. 

Science and global governance

Across the world, science diplomacy has helped set the stage for advancing foreign policy and global governance goals.

The 2015 nuclear deal between Iran and the P5+1 illuminated how negotiating over and collaborating on science and technology issues can be an important gateway to achieving significant foreign policy goals. Direct (and often very technical) diplomacy between U.S. Secretary of Energy Ernest Moniz and the head of the Atomic Energy Organization of Iran, Ali Akbar Salehi, was key to achieving the framework agreement, as was collaboration between Iranian and Western nuclear scientists more broadly. Provided that the agreement is thoroughly enforced, it’s a major victory for global nuclear nonproliferation efforts—and much credit goes to effective science diplomacy. 

Global efforts to combat climate change are another area in which science diplomacy has had a real impact on policy. The United Nations’ Intergovernmental Panel on Climate Change has become a model for critical science policy research and recommendations. The 2015 conference in Paris brought together hundreds of political leaders and experts to examine the scientific evidence that the globe is warming, discuss remedies, and chart a path forward that can help slow environmental damage. So, science diplomacy was again central—this time in shaping and implementing the global climate governance framework. 

Another area where we have observed substantive gains from science diplomacy is the global management of infectious diseases. The Zika outbreak in Latin America, Ebola epidemic in West Africa, dengue in the Caribbean and Asia, MERS in the Gulf region and in South Korea, and the global threat of pandemic influenza all underscore that international cooperation is key to fighting modern plagues, which spread more rapidly in an era of constant global travel. In some cases more than in others, political leaders have devoted considerable resources to promoting international scientific cooperation—whether in clinical monitoring, medical interventions, research into pathogen biology and diagnostics, and treatments (including vaccine development). In fact, the global response to severe acute respiratory syndrome (SARS) is an example where international collaboration helped identify affected populations and coordinate treatment through the WHO Global Alert and Response System (which has identified new cases in Europe, the Middle East, Australia, Canada, Vietnam, Taiwan, and Hong Kong). The system’s main goal is to send supplies and medical specialists (including epidemiologists), design clinical trials, provide diagnostic tests, identify modes of transmission, and provide treatment. This coordinated response effort has controlled the pandemic.

Science in a fraught region

In the Middle East, opportunities abound for science diplomacy. Not only can this type of approach help solve practical, quality-of-life challenges—from energy to health and beyond—it can bring together expert communities and bureaucracies. In the process, it can contribute to more normalized people-to-people and government-to-government relations. Even at the height of the Cold War, for example, U.S. and Russian nuclear scientists and other experts worked together to monitor each other’s nuclear facilities; even though Moscow and Washington had nuclear-armed intercontinental ballistic missiles aimed directly at each other, bureaucratic cooperation on technical issues became a normal part of the relationship and helped enhance transparency and trust.

In the energy sector, for example, innovation in science and technology will play a crucial role in helping to transition Middle Eastern states in the region away from a dependence on fossil fuels—a broad goal of the Paris accords and a specific strategic goal of states like Saudi Arabia and Iran. Notwithstanding the sectarian disagreements between Iran and Saudi Arabia, both need to address their fast-growing demand for electricity; they need not be in competition with each other. Saudi Arabia currently fuels its own 10 percent annual rise in electricity needs with crude oil, owing to domestic natural dry gas reserves. Iran’s vast gas reserves could be used to meet the kingdom’s growing energy needs, but Iran’s decaying gas fields need $250 billion in major repairs. Many think that if Saudi Arabia used its investment power to revitalize Iran’s gas industry, it would secure the energy it needs to meet demands. The economic benefits of cooperation on energy could promote better relations. Another area of cooperation that can drive the local economies is the Arab Gulf’s first major cross-border enterprise, the Dolphin Gas Project, which was started in 2007. The project involves the transportation of natural gas from Qatar to Oman and to the UAE. Finally, international cooperation between Oman and Iran is developing, where Oman intends to import natural gas from Iran for industrial development. This would require investing in an underwater pipeline from the Iranian coast to Oman. The UAE could do the same to build its economy: import natural gas from Iran, since the pipelines exist. The technical know-how for all these initiatives already exists—to date the main stumbling block has been overcoming regional politics.

Qatari Oil Minister Abdullah bin Hamad al-Attiyah (L) and Dolphin Energy Chief Executive Ahmed Ali Al Sayegh hold a news conference about the inauguration of the Dolphin Energy plant in Doha May 12, 2008. Photo credit: Reuters.

In health, there is also room for mutually-beneficial cooperation. Back in 1996, the U.S. State Department’s Bureau of Near Eastern Affairs helped establish the Middle East Cancer Consortium—that effort continues to help train the next generation of scientists and medical professionals in cancer biology in the region. Other programs have focused on vaccine development for childhood diseases; preventing HIV, malaria, and tuberculosis infections; ending childhood malnutrition; and managing unwanted pregnancies. Programs like these have yielded important advances in public health and have enhanced cooperation between countries like the Palestinian Authority, Egypt, Cyprus, Turkey, and Israel with the United States.

And in a unique cross-sectoral approach, Jordan is host to a promising initiative called the Synchrotron Light for Experimental Science and Application in the Middle East (SESAME). Modeled after the European Organization for Nuclear Research (CERN), SESAME is a partnership between Bahrain, Egypt, Israel, Iran, Jordan, Pakistan, the Palestinian Authority, and Turkey that aims to create research career opportunities that will limit “brain drain” from the region and serve as a model for scientific collaboration.

STEM education: The root of science diplomacy

Science diplomacy has the potential to deliver real dividends that extend beyond the science and technology spaces themselves. When states cooperate on functional, non-politicized (or at least less politicized) issues—whether at the level of non-state scientific communities or at the level of state bureaucracies focused on energy, health, or other issues—they become more accustomed to working together and trusting each other. This can gradually have spillover effects into politics and security arenas.

Science diplomacy doesn’t just happen, though—it requires real efforts on behalf of policymakers and experts. One crucial step is advancing STEM education (science, technology, engineering, and mathematics) to build more robust and diverse expert communities. This is something that President Obama emphasized in his speech at Cairo's Al-Azhar University in 2009. He identified possible areas of cooperation, both within the region and with the United States, including researching and piloting new sources of energy, creating “green” jobs, enhancing communication and informatics, sharing medical information, generating clean water, and growing new crops. 

In some countries in the region, particularly in the Gulf, there are signs of new investment in STEM education and related efforts. For example, Qatar has pledged to spend 3 percent of its GDP on scientific research, and the United Arab Emirates (UAE) has decided to create the world’s first sustainable city. Saudi Arabia created the King Abdullah University of Science and Technology (KAUST) with a $20 billion endowment, $200 million of which has been used to attract scientists and educators from the West. Saudi Arabia, Qatar, and the UAE continue to build and sustain partnerships with European and American universities. 

Interest in science among students and the general citizenry in many Middle Eastern countries remains low, which is problematic at a time when the region’s young people need to compete in a world increasingly centered around STEM. More governments in the region—perhaps with U.S. help—need to increase efforts to attract their young people to STEM education and careers.

International cooperation on STEM issues—led by science diplomats—can strengthen relationships between Middle Eastern states and with the United States. Science and technology disciplines transcend politics, borders, and cultures, and are thus an important bridge between nations. During a time of strained geopolitical relationships, we can focus on making progress in health and disease, food and water security, and other areas—and thereby enhance domestic stability and international security in the process. 

       

When the Volkswagen emissions control scandal broke into the headlines in September, I wrote here how I felt like my lifelong love affair with VW had been violated. As an environmentalist, owning a Jetta that zipped along for 42 miles on a gallon of diesel was the best of both worlds. And it was a lie. My wife, Holly Flood, said she felt like she’d been “duped,” and since then she’s vowed never to buy another VW.

I’m not so sure. But I was pleased this week to see the agreed terms for the nearly half million of us who own the smaller diesel engine cars in the U.S. This was the largest car settlement in U.S. history.

What I like is the combination of individual and collective compensation for this crime.

Making it right with the customers

On the individual side, if this deal is approved by the judge in early October, my family will get our 2009 Jetta TDI sedan fixed for free (if the Environmental Protection Agency approves the fix), and we’ll get a check for $5,100. Holly says that’s perfect timing for a down payment on a new car (which will not be a VW).

I’m pushing for a plug-in electric hybrid, which we can charge with renewable energy we get off the grid from our local provider, People’s Power & Light. In our case, for every electron we use, they pay to have one electron put in from wind power somewhere right here in New England. Hopefully we’ll have variable pricing of electricity by then, allowing us to charge the car when the juice is cheapest, like when the wind blows at night but few people are using much electricity.

The unknown for us is whether the VW fix will noticeably harm the performance of the car. I’m guessing it will, perhaps in its remarkable torque, in its gas mileage, or both. But at this point the car has tons of my wife’s commuting miles on it, so we’re hanging on to it as the in-town backup car. Under the settlement we could get an extra $7k and give up the car entirely. That may be tempting, as it’s at that point where it’s getting substantially more expensive to maintain, and the Kelley Blue Book value is around $6k. They apparently aren’t lowballing us.

Making it right with the public

The collective part of this agreement is actually more interesting.

VW agreed to pay $4.7 billion  into environmental programs, which in my estimation will eliminate more harm than they created. One estimate guessed that scores of premature deaths occurred in the U.S. from VW’s “defeat devices” that shut off emissions controls when they were not being tested. Most of the deaths were probably in California, where there were many more sales of diesels than elsewhere in the country. (Of course in Europe the concentration of diesels is much greater and the Guardian put the number of deaths at thousands in the U.K. alone.) 

One part of this fund will go to replace diesel buses with electric ones. This will measurably improve air quality in inner cities, the precise places where extra sooty VWs were causing ill health and premature deaths with their NOx emissions. Another part will go to install electric vehicle charging stations in California. This helps overcome the “chicken and egg” problem of people not being willing to switch to electric vehicles for fear of running out of juice. The settlement says that “Volkswagen must spend $2 billion to promote non-polluting cars (“zero emissions vehicles” or “ZEV”), over and above any amount Volkswagen previously planned to spend on such technology.” That counterfactual will probably be impossible to prove, but the idea here is fairness.

A case of how America deals with environmentally criminal corporations

Sociologically, this is a fascinating case, because it reveals how our society resolves scandals that killed people through knowing contamination of the environment. As Deputy U.S. Attorney General Sally Yates harshly put it, "By duping regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our environment." There are individuals inside this company who deserve criminal prosecution, but apparently most of the thousands of other employees did not know what was going on.

The corporate response has been interesting, and seems to vary sharply from how most U.S. auto firms have dealt with similar lawsuits and scandals in the past. VW did not drag out the battle, but set aside $16 billion immediately as a loss, and then settled rather generously with us. (This spring they had already given us a $500 gift card and $500 in repairs in what was essentially hush money.)

VW’s response to this crisis was creative, forward-looking, and ultimately pro-social. Just a week or so ago they announced that their new business model was to be in electrics: They announced they’d be rolling out 31 electric vehicles in the coming years. This is a remarkable turn for a company that pushed diesels for decades as the solution to climate change. This is what it looks like when a massive corporation whose reputation was built on trust and belief in the integrity of a brand seeks to battle its way back into a changing market.

Spending billions on charging stations and replacing diesel buses may make immediate sense—can we say if this is helping avoid premature deaths or it is merely crass self-interest? Does it matter? 

Of course it does. But my first impression of what VW did this week was of a fair deal that was not just lining my pocket. It was helping us get off fossil fuels as a society and benefiting human health and the environment in a substantial way. And by rebuilding a major employer in Germany, the U.S., and around the world into one that might be a part of the solution to climate change, this is a significant and fairly brilliant business move to position the company for the next half century.

Or am I merely a sucker for my old flame?

       

Renewable energy is an important source to tackle against climate change, as the latest IPCC report has pointed out. However, due to the existence of multiple market failures such as negative externalities of fossil fuels and knowledge spillovers of new technology, government subsidies are still needed to develop renewable energy, such as solar photovoltaic (PV) cells. In the United States, there have been various forms of subsidies for PV, varying from the federal level to the state level, and from the city level to the utility level. California, as the pioneer of solar PV development, has put forward the biggest state-level subsidy program for PV, the California Solar Initiative (CSI). The CSI has planned to spend around $2.2 Billion in 2007–2016 to install roughly 2 GW PV capacity, with the average subsidy level as high as $1.1/W. How to evaluate the cost-effectiveness and incentive pass-through of this program are the two major research questions we are pursing.

Our cost-effectiveness analysis is based on a constrained optimization model that we developed, where the objective is to install as much PV capacity as possible under a fixed budget constraint. Both the analytical and computational results suggest that due to a strong peer effect and the learning-by-doing effect, one can shift subsides from later periods to early periods so that the final PV installed capacity can be increased by 8.1% (or 32 MW). However, if the decision-maker has other policy objectives or constraints in mind, such as maintaining the policy certainty, then, the optimally calculated subsidy policy would look like the CSI.

As to the incentive pass-through question, we took a structural approach and in addition used the method of regression discontinuity (RD). While in general, the incentive pass-through rate depends on the curvature of the demand and supply curve and the level of market competition, our two estimations indicate that the incentive pass-through for the CSI program is almost complete. In other words, almost all of the incentive has been enjoyed by the customer, and the PV installers did not retain much. Based on the RD design, we observe that PV installers tend to consider the CSI incentive as exogenous to their pricing decision.

The relative good performance of the CSI in terms of both the cost-effectiveness and the incentive pass-through aspect are tightly related to its policy design and program management. International speaking, the biggest challenge for the design of any PV subsidy program is the quick running out of the budget, and in the end, it looks like customers are rushing for the subsidy. Such rushing behavior is a clear indication of higher-than-needed incentive levels. Due to the policy rigidity and rapid PV technological change, the PV subsidy policy may lag behind the PV cost decline; and as a result, rational customers could rush for any unnecessarily high subsidy.

Due to the high uncertainty and unpredictability of future PV costs, the CSI put forward a new design that links the incentive level change and the installed capacity goal fulfillment. Specifically, the CSI has designed nine steps to achieve its policy goal; at each step, there is a PV capacity goal that corresponds to an incentive level. Once the capacity goal is finished, the incentive level will decrease to the next lower level. Furthermore, to maintain the policy certainty, the CSI regulated that every step-wise change in the incentive level should not be higher than $0.45/W, nor smaller than $0.05/W, together with other three constraints.

A good subsidy policy not only requires flexible policy design to respond to fast-changing environment, but also demands an efficient program management system, digitalized if possible. For the CSI, the authority has contracted out a third-party to maintain a good database system for the program. Specifically, the database has documented in detail every PV system that customers requested. Key data fields include 22 important dates during the PV installation process, customers’ zip code, city, utility and county information, and various characteristics of the PV system such as price, system size, incentive, PV module and installer. All information is publicly available, which to some extent fills in the information gap held by customers and fosters the market competition among PV installers. For customers to receive the incentive, their PV systems have to pass the inspection of the local government, and also to be interconnected to the grid. On the supply side, the CSI has also certified and created a list of PV installers that every customer can choose from.

Although the CSI has ended in 2014 due to fast PV cost reduction starting from 2009, its experience has been transferred to other areas in the United States and in Europe. It is highly possible that other similar new technologies and products (e.g. the electric car and the battery) can adopt the CSI policy design, too. In summary, a good and successful policy may need to be simply, clear, credible, foreseeable, flexible, end-able, and incentive-compatible. The PV subsidy policy in China still has a long way to go when compared to the CSI.

       

       

       

       

       

       

       

       

       

        

       

       

       

       

       

       

       

       

       

       

       

       

       

With new technologies for extracting oil and natural gas producing an energy boom throughout North America, Senior Fellow Charles Ebinger sees the potential in hydraulic fracturing or “fracking” to free the continent from dependence on Middle East oil, and even make some progress on curbing sources of air pollution.
 

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Video

• Fracking and Prospects for Energy Security in North America

      

In many African countries, women still cannot own land or resources, a significant barrier to their ability to start businesses and take advantage of the continent’s economic potential.  Fellow Anne Kamau explores their plight.

Video

• Challenges for Women in the African Economy

      

Partisan gridlock and political extremism threaten to tear down the pillars of public policy and render the U.S. government utterly dysfunctional, argues Senior Fellow Thomas Mann, co-author with Norman Ornstein—resident scholar at the American Enterprise Institute—of It’s Even Worse Than It Looks (Basic Books, 2012). He argues that a flood of super-PAC money, negative ads and cowed mainstream news media are contributing to the problem.

Video

• Mann: Blame for Gridlock Is Squarely on Republican Party

      

Emerging economies may chafe at international agreements calling for sustainable development, but Nonresident Fellow Nathan Hultman says many governments are putting plans for sustainability and green innovation in place out of self-interest, and cooperating with neighbors across the globe.

 

Video

• Nathan Hultman: Global Progress in Sustainable Development

       

The increasing diversification of news media—from online versions of major newspapers to political bloggers, to 24-hour cable news to social media—plus the profession’s changing economics have caused the balance of power between political reporters and presidential candidates to change. Stephen Hess, senior fellow emeritus, says our very good, well-trained reporters are “almost dangerous” to presidential candidates who are trying to stay on message. Thus, says Hess, the way the press covers campaigns has changed as well, and not for the better.

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• Stephen Hess: The Changing Balance of Power in Presidential Campaign Reporting

       

In this post-election season and with a fiscal cliff looming, states and metros have begun the work of meeting their many challenges. They’re implementing game-changing initiatives to create jobs and restructure their economies for the long haul. The federal government needs to take notice and get on board note, Metropolitan Program policy experts Bruce Katz and Mark Muro as they urge a move for remaking our federalism and renewing the economy. Katz and Muro explain in this episode of @ Brookings.

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• Bruce Katz and Mark Muro: Remaking Federalism and Renewing the Economy

       

Following U.S. troop withdrawal in 2014, Afghanistan faces an uncertain future. Its fate could be compromised or even commanded by war lords, terrorists or corrupt government officials. Fellow Vanda Felbab-Brown spent time on the ground observing events and talking to a mix of Afghans from high ranking officials to village elders, to merchants to the person on the street. In this four-part video series based on her book, “Aspiration and Ambivalence: Strategies and Realities of Counterinsurgency and State-Building in Afghanistan,” Felbab-Brown offers analysis on an Afghanistan in flux.

Video

• Vanda Felbab-Brown: Counterinsurgency and State-Building in Afghanistan after 2014
• Vanda Felbab-Brown: The Afghan People Simply Want to Live and Thrive
• Vanda Felbab-Brown: Pakistan Plays a Significant Role in Afghanistan's Future
• Vanda Felbab-Brown: The Choices the U.S. Makes Will Largely Determine Afghanistan's Future

       

       

       

       

       

"At the end of the day, we need to remember that Daesh is more a product of the civil wars than it is a cause of them. And the way that we’re behaving is we’re treating it as the cause.  And the problem is that in places like Syria, in Iraq, potentially in Libya, we are mounting these military campaigns to destroy Daesh and we’re not doing anything about the underlying civil wars.  And the real danger there is—we have a brilliant military and they may very well succeed in destroying Daesh—but if we haven’t dealt with the underlying civil wars, we’ll have Son of Daesh a year later." – Ken Pollack

“Part of the problem is how we want the U.S. to be more engaged and more involved and what that requires in practice. We have to be honest about a different kind of American role in the Middle East. It means committing considerable economic and political resources to this region of the world that a lot of Americans are quite frankly sick of… There is this aspect of nation-building that is in part what we have to do in the Middle East, help these countries rebuild, but we can’t do that on the cheap. We can’t do that with this relatively hands off approach.” – Shadi Hamid

In this episode of “Intersections,” Kenneth Pollack, senior fellow in the Center for Middle East Policy and Shadi Hamid, senior fellow in the Project on U.S. Relations with the Islamic World and author of "Islamic Exceptionalism: How the Struggle over Islam is Reshaping the World," discuss the current state of upheaval in the Middle East, the Arab Spring, and the political durability of Islamist movements in the region. They also explain their ideas on how and why the United States should change its approach to the Middle East and areas of potential improvement for U.S. foreign policy in the region. 

Show Notes

Fight or flight: America’s choice in the Middle East

Security and public order

Islamists on Islamism today

Temptations of Power: Islamists & Illiberal Democracy in a New Middle East

Ending the Middle East’s civil wars

A Rage for Order: The Middle East in turmoil, from Tahrir Square to ISIS

Building a better Syrian opposition army: How and why

With thanks to audio engineer and producer Zack Kulzer, Mark Hoelscher, Carisa Nietsche, Sara Abdel-Rahim, Eric Abalahin, Fred Dews and Richard Fawal.

Subscribe to the Intersections on iTunes, and send feedback email to intersections@brookings.edu.

         

Editors’ Note: The attack in Nice will inevitably, and appropriately, lead to more aggressive intelligence efforts against suspected ISIS networks and tighter security in general, writes Dan Byman. Unfortunately, they are also likely to bolster anti-Muslim voices in France and throughout Europe, and ISIS may in turn exploit Muslims’ resulting shame and anger. This post originally appeared on Slate.

At least 84 people are dead in Nice, France, after a truck deliberately plowed for over a mile through packed crowds celebrating Bastille Day; ISIS or one of its supporters is believed to be linked to the attack. As we reel in horror from yet another instance of terrorist carnage, news reports are trickling in, giving us a sense of the attack, its victims, and those behind the killings.

We’ll learn more in the days to come, but we already knew Europe—and France in particular—has a terrorism problem and that it may go from bad to worse in the near future. Ironically, one of the reasons for the increased attacks is the military successes the United States, France, and other countries and local fighters are scoring against ISIS’s core in Iraq and Syria and the setbacks suffered by ISIS’s key provinces such as that in Libya. ISIS, which had long trumpeted its success in establishing the now-shrinking caliphate, needs victories to compensate for these major losses. Earlier this month, CIA Director John Brennan warned, “As the pressure mounts on ISIL, we judge that it will intensify its global terror campaign to maintain its dominance of the global terrorism agenda.”

Running down people with a truck is a new form of violence for ISIS, though ISIS propaganda has called for supporters to kill by “ramming” people, al-Qaida’s Yemen branch recommended it in the past to “mow down the enemies of Allah,” and in 2008 a Palestinian used a bulldozer to kill three Israelis. But this is the fourth major terror attack in Europe in the past eight months: ISIS-directed terrorists killed 130 people in November in Paris; in March suicide bombers killed 32 people in Brussels, and just two weeks ago three men believed to be tied to ISIS killed more than 40 at the Istanbul airport.

The attacks will inevitably, and appropriately, lead to more aggressive intelligence efforts against suspected ISIS networks and tighter security in general. Unfortunately, they are also likely to bolster anti-Muslim voices in France and throughout Europe, fostering daily humiliations and furthering Muslim communities’ sense that they are suspect and under siege. ISIS will exploit the resulting shame and anger, increasing the risk of future attacks.

European nations face several types of terror threats from ISIS. The first is the unprecedented number of fighters—more than 5,000—that Europe has exported to Iraq and Syria to fight under the banners of ISIS and other jihadi groups. More than 900 of them (including 200 women) have come from France. More than 130 are dead, and almost 250 have returned; the rest are believed to still be in Iraq and Syria. The Paris attacks, which were coordinated and practiced, illustrate the danger such fighters can pose: Time in the battle zone allows them to gain fighting skills, become indoctrinated, and develop a network to exploit for future attacks. In addition, ISIS leaders can direct their operations to achieve maximal effect. As the so-called caliphate shrinks, more of these fighters may try to return. More than 1,000 other Frenchmen are believed to be radicalized but have not gone to Iraq and Syria, and this represents another overlapping danger. In the past many might have tried to go to Syria, but now, perhaps acting on directions from ISIS leaders with whom they are communicating or perhaps mixing with returned foreign fighters, these individuals might strike directly at France or other countries.

The last category are true “lone wolves”—those inspired by ISIS or other jihadi ideologies but with no direct operational connection to a group (the attacks in San Bernardino and Orlando appear to fall into this category). Two years ago ISIS propaganda emphasized coming to the “caliphate” to help it consolidate and expand. Earlier this year, however, its spokesman and external operations leader Muhammad al-Adnani declared, “The smallest action you do in the heart of their land is dearer to us than the largest action by us and more effective and more damaging to them.”

France, as we’ve seen, is particularly vulnerable. As my Brookings colleagues Will McCants and Chris Meserole have recently argued, French political culture is a counterterrorism problem. They found that “four of the five countries with the highest rates of radicalization in the world are Francophone, including the top two in Europe (France and Belgium).” Part of the problem are the large numbers of unemployed urban youth, a fertile field for radical recruiting. But part of it is also France’s aggressive secularization programs, which prohibit girls from wearing the veil in school and are considered by many Muslims to be a deliberate attack on their religion. Muslims’ trust in the government and security services is low. Add such a sense of humiliation to a surging far-right political movement that constantly blasts Muslim immigrants and citizens, and the conditions for radicalization are strong.

The United States is less vulnerable by comparison. Fewer than 300 Americans have gone to fight in Iraq and Syria. Part of this is because of an aggressive and effective law enforcement and intelligence effort to disrupt volunteers. But part of it is because the American Muslim community is far better integrated than its French counterpart and regularly cooperates with law enforcement. U.S. politics are becoming more poisonous toward Muslims, but—we can hope—that anti-Muslim sentiment in America may have peaked, and recent polls suggest positive attitudes toward Muslims are increasing.

Continued military and intelligence operations against the ISIS core by U.S.-led coalition forces and their local partners are necessary, but they will take time to bear fruit and in the end still don’t solve the terrorism problem. Stopping an attack like the one in Nice is exceptionally difficult. The attacker chose a “soft” (undefended) target and showed that one sick person can kill many with the right combination of determination and luck. Unfortunately, the most likely reaction after the Nice attack is also the worst one: more vitriol and hostility toward French and European Muslims, furthering a cycle that makes it harder for European security services to gain the cooperation of local communities and easier for ISIS to gain recruits and score victories.

         

France has been struck by an unprecedented three terror attacks in the last 18 months. In what’s called Operation Sentinelle, 13,000 French military personnel now patrol streets and protect key sites across the country, assisting police and other security agencies. “The fact that the armed forces are visible,” said French Defense Minister Jean-Yves Le Drian at a Brookings event on July 20, “help to reassure the French people that they are safe both at home and abroad.”

Do the challenges facing France today mean that it should reduce its engagement overseas, focusing instead on security at home? Le Drian doesn’t think so, and I agree. In a new book titled "Who is the Enemy?," he particularly emphasizes the multifaceted ISIS threat. As he said at Brookings: 

"Every war [has] two enemies…[Today’s] war [with ISIS] also sets in place two concepts of the “enemy” that are radically different: From a strategic point of view, we are dealing with a proto-state; at the heart of this entity, there is a terrorist army." 

It only further complicates matters, of course, that France faces ISIS threats on several fronts: in Syria and Iraq, on the one hand, and also on its own territory. This, Le Drian stressed, means “we must seek coherence in our military action.” It also helps explain why France remains one of the most active countries in the fight against the so-called Islamic State, as well as other extremist groups in the Middle East and in sub-Saharan Africa. In 2013 and 2014, France intervened in Mali in order to prevent jihadi groups from taking over the country. The French military also has a presence in Djibouti, Lebanon, Côte d’Ivoire, the Central African Republic, Gabon, Senegal, as well as in the Pacific (in French Polynesia and New Caledonia)—not to mention Syria, where France uses the Mediterranean Sea-based Charles de Gaulle aircraft carrier to strike ISIS targets. 

France is not a warmongering country—rather, it is responding to the fact that overseas threats come to it. Although it remains unclear to what extent the Nice attacker had connections with foreign terrorist networks, it has been established that the November 2015 Paris attacks were planned and orchestrated from Syria. This, among other considerations, has prompted France to engage further in Iraq and Syria. The rationale, as Minister Le Drian explained, is: 

“[T]rading our peace by reducing our military involvement doesn’t make sense. The more we let ISIS consolidate its presence on the Middle East, the more it will gather resources, attract fighters, and plan more attacks against us.” 

Team player

French policy isn’t just about ensuring its own security—rather, its many contributions are integrated within global efforts, including U.S.-led ones. As Le Drian said at Brookings: “I am convinced that the French-American relationship is stronger and better than ever.” France is a prominent participant of the 66-member international coalition against ISIS, and in that capacity participated in the first joint meeting of that group’s foreign and defense ministers in Washington this month. 

France remains a key member of the joint military operation Inherent Resolve in Iraq and Syria, which has damaged or destroyed over 26,0000 ISIS-related targets since August 2014. The Charles de Gaulle carrier—with 26 aircrafts on board—has been an essential part of that coalition mission. Following specific instructions from U.S. Defense Secretary Ash Carter and his counterpart in Paris, Minister Le Drian, French and U.S. intelligence agencies cooperate closely in intelligence-sharing. And just last week, President François Hollande announced that France will soon be supplying artillery to Iraq to support its fight against ISIS. Beyond the Iraq-Syria theater, France is cooperating with the United States and other partners in Libya, another country that is both a victim and source of extremist threats. 

The French Defense Ministry’s efforts to double-down on protecting French citizens within France, therefore, has not reduced its overseas role. Particularly now that the United Kingdom will leave the European Union, France’s military role has never been so important. France—along with Germany, which recently suggested it would raise its defense spending significantly—should continue to play a leading role as one the top defense actors in the West. 

         

       

       

       

       

Introduction

The global community has set itself the challenge of meeting the Millennium Development Goals (MDGs) by 2015 as a way to combat world poverty and hunger. In 2007, the halfway point, it is clear that many countries will not be able to meet the MDGs without undertaking significantly greater efforts. One constraint that needs to be overcome is that development interventions—projects, programs, policies—are all too often like small pebbles thrown into a big pond: they are limited in scale, short-lived, and therefore have little lasting impact. This may explain why so many studies have found that external aid has had weak or no development impact in the aggregate, even though many individual interventions have been successful in terms of their project- or program-specific goals.

Confronted with the challenge of meeting the MDGs, the development community has recently begun to focus on the need to scale up interventions. Scaling up means taking successful projects, programs, or policies and expanding, adapting, and sustaining them in different ways over time for greater development impact. This emphasis on scaling up has emerged from concern over how to deploy and absorb the substantially increased levels of official development assistance that were promised by the wealthy countries at recent G8 summits. A fragmented aid architecture complicates this task; multilateral, bilateral, and private aid entities have multiplied, leading to many more—but smaller— aid projects and programs and increasing transaction costs for recipient countries. In response, some aid donors have started to move from project to program support, and in the Paris Declaration, official donors committed themselves to work together for better coordinated aid delivery.

The current focus on scaling up is not entirely new, however. During the 1980s, as nongovernmental organizations (NGOs) increasingly began to engage in development activities, scaling up emerged as a challenge. NGO interventions were (and are) typically small in scale and often apply new approaches. Therefore, the question of how to replicate and scale up successful models gained prominence even then, especially in connection with participatory and community development approaches. Indeed, the current interest among philanthropic foundations and NGOs in how to scale up their interventions is an echo of these earlier concerns.

In response to this increased focus on scaling up—and its increased urgency—this policy brief takes a comprehensive look at what the literature and experience have to say about whether and how to scale up development interventions.

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Summary

At the Gleneagles Summit in 2005, leaders of the G8 group of nations committed to increase aid to poor nations by $50 billion per year. During the same year, in a meeting in Paris, donors promised to coordinate their interventions for more effective delivery. These commitments are now often referred to as the promise of donors to “scale up aid.” Increasing aid flows and improving coordination are indeed important goals and, in fact, goals that donors seem to have trouble meeting. The international donor community met this fall in Accra and will meet in Doha in November 2008 to review progress with this aspect of scaling up aid, and it is hoped that they will recommit to meet the ambitious targets set three years ago.

Scaling up aid is only one of the challenges that donors face. A more important challenge is to “scale up through aid,” meaning that aid flows should not merely support short-lived, one-time and partial development interventions—pilot projects, short-term technical assistance, programs that only address part of the problem, but leave major bottlenecks unaddressed—but should support projects, programs and policies that scale up successful interventions in a country, region or globally to reach the entire target population. Scaling up means that programs are long-term and sustained and that external support is aligned with country needs and deals comprehensively with the development challenges—often by working in partnership with other donors and pooling resources. This is the scaling up challenge that donors should address head-on, but so far have not.

This policy brief reports on the findings of an in-depth review of the literature and practice of scaling up development interventions and focuses on the role that aid donors can play in supporting scaling up for effective development. It stresses that successful scaling up with external assistance means that donor agencies need to: work with a vision and leadership; help create the political constituencies for large-scale implementation; create linkages among project, program and policy interventions; strengthen the institutional capacity of the implementing entities; provide for effective incentives and accountabilities of their own staff and management; work together with each other; monitor and evaluate the progress of programs with special attention to the scaling up dimension; and finally make sure they focus on effective preparation and flexible implementation of the scaling up process. While this is a long-term agenda, donors can take a few practical steps right away that will provide a basis for a more ambitious effort over time.

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Abstract

Scaling up of development interventions is much debated today as a way to improve their impact and effectiveness. Based on a review of scaling up literature and practice, this paper develops a framework for the key dynamics that allow the scaling up process to happen. The authors explore the possible approaches and paths to scaling up, the drivers of expansion and of replication, the space that has to be created for interventions to grow, and the role of evaluation and of careful planning and implementation. They draw a number of lessons for the development analyst and practitioner. More than anything else, scaling up is about political and organizational leadership, about vision, values and mindset, and about incentives and accountability—all oriented to make scaling up a central element of individual, institutional, national and international development efforts. The paper concludes by highlighting some implications for aid and aid donors.

An annotated bibliography of the literature on scaling up and development aid effectiveness was created by Oksana Pidufala to supplement this working paper. Read more »

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EXECUTIVE SUMMARY

Fragile states present one of the greatest challenges to global development and poverty reduction. Despite much new learning that has emerged from within the development community in recent years, understanding of how to address fragility remains modest. There is growing recognition that donor engagement in fragile states must look beyond the confines of the traditional aid effectiveness agenda if it is to achieve its intended objectives, which include statebuilding, meeting the needs of citizens, and managing risk more effectively. Current approaches are constrained by relying heavily on small-scale interventions, are weakened by poor coordination and volatility, and struggle to promote an appropriate role for the recipient state.

Scaling up (i.e., the expansion, replication, adaption and sustaining of successful policies and programs in space and over time to reach a greater number of people) is highly relevant to fragile settings, both as an objective and as a strategic approach to development. As an objective, it reinforces the logic that the scale of the challenges in fragile states demands interventions that are commensurate in purpose and equal to the task. As a strategy, it encourages donors to identify and leverage successes, and to integrate institutional development more explicitly into projects and programs. In addition, scaling up can assist donors in addressing the priority areas of improved project design and implementation, sustainability and effective risk management.

Successful scaling up in fragile states almost certainly occurs less often than is possible and does not always involve a systematic approach. Donors should therefore look to more systematically pursue scaling up in fragile states and evaluate their performance with specific reference to this objective. This can be done by incorporating relevant elements of a scaling up framework into operational policies, from strategy development through to program design and monitoring.

Contrary to expectations, there are compelling examples of successful scaling up in fragile states. While the conditions prevailing in fragile states create serious obstacles in terms of “drivers” (the forces that push the scaling up process forward) and “spaces” (the opportunities that need to be created, or potential obstacles that need to be removed for interventions to grow), and in terms of the operational modalities of donors, these can be overcome through the careful design and delivery of programs with a clear focus on creating scaling up pathways, and through close partnership and sustained engagement of governments, communities and foreign partners.

Case study evidence suggests that the pathways taken to reach scale in fragile states demand different approaches by donors. Donors need to adopt greater selectivity in determining which areas or sectors for scaling up are justified—a strategy that has also assisted some donors in managing risk. More investment and time are required in upfront analysis and building the evidence for successful scaling up pathways. In some cases, donors require longer time horizons to achieve scale, although demand from government or beneficiaries has sometimes forced donors to move immediately to scale, allowing little or no time for piloting. Regardless of the pace of scaling up, donors that were most successful were engaged early and then remained engaged, often far beyond the replication phase of scaling up, to increase the likelihood of interventions being sustained. Other common characteristics of successful scaling up were simple project design and a focus on the institutional aspects of the scaling up pathway.

Case studies also point to the crucial role of drivers in moving the scaling up process forward in fragile states. Proven ideas and practical models have often been picked up in fragile states, contrary to the expectation that actors may be less responsive to recognizing and acting on the utility of promising results. Leaders undoubtedly have a role to play in supporting scaling up, although there are clear dangers that must be avoided, including avoiding the perception that donors are picking (political) winners by nominating leaders, and tying the survival of projects too closely to the fortunes of a leader’s political career. Incentives were found to be one of the most important drivers in fragile states, and there is a good case to be made for donors introducing new inducements, greater transparency or similar reforms to strengthen the role incentives play. Finally, and in contrast to the standard scaling up framework, community demand was found to be an important driver in many fragile states, both in demanding the expansion of small-scale projects and by facilitating the community’s own resources to support the scaling up process.

The greatest challenge to scaling up in fragile states is the limited spaces these environments provide. This is especially the case in respect to those spaces which concern aspects of governance: political, institutional and policy spaces. When working in fragile states, donors must recognize that spaces for scaling up are almost always more constrained, but look for ways to expand upon them. Some of the most successful examples of scaling up used creative approaches to build space quickly or used existing capacity to the fullest possible extent. Also relevant are the lessons of robust analysis, greater realism and cost control. The case studies confirm the importance of two additional spaces in fragile states. For example, security space often imposed horizontal obstacles to scaling up which could not realistically be overcome while ownership space served as a good indication of the perceived legitimacy of the scaling up process and the likelihood that interventions would be sustained longer term.

Case studies also affirm the importance of emphasizing robust project design and implementation, and the close linkages between the scaling up agenda and the role of risk management and sustainability in fragile states. While sustainability presented a significant problem for many of the projects and programs reviewed, a more focused approach around scaling up may assist donors in addressing sustainability concerns. This would entail adopting a longer-term perspective beyond the immediate confines of any individual project, looking for available drivers and supportive spaces, and focusing on effective implementation and consistent monitoring and evaluation (M&E). Any intervention introduced on a small scale that scores well in sustainability serves as a possible candidate for scaling up.

Similarly, many of the methods used by donors for managing risk—an emphasis on analysis, scenario planning, realism and making use of specialized aid instruments—are equally relevant for supporting scaling up in fragile countries. A persuasive argument can be made that the adoption of a more explicit scaling up approach by donors can form part of a risk management strategy in fragile states. Scaling up can enable donors to more ambitiously tackle development risks without allowing institutional and project risks to grow unchecked. Ultimately, a donor approach that combines good risk management and scaling up requires strong leadership and well-aligned incentives.

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Development ministers and experts will meet at the Fourth High Level Forum on Aid Effectiveness in Busan, Korea, in November 2011 to assess their efforts to improve the impact of aid. A recent survey by the Organisation for Economic Co-operation and Development (OECD) shows that little progress has been made since they met in Accra in 2008 for their Third High Level Forum. The many good intentions to improve coordination among donors, to enhance the alignment of aid programs with the priorities of aid recipients, and to develop effective partnerships in practice have turned out to be difficult to implement.

If anything, the challenge has become greater: the number of aid agencies keeps rising, as does the number of aid-supported projects, while average project size continues to drop. According to the OECD, more than half of the 90,000 official aid projects implemented annually are now well below $100,000 in size. With so many small interventions, most of them one-time, without links to each other, driven by the short-lived preferences of individual agencies and individuals in agencies, it is no surprise that the lofty goals of aid ministers go unrealized and that the cumulative impact of the many well-intentioned small aid projects is minimal at best.

It doesn’t have to be that way. There are examples of successful development programs that have lifted millions of people out of poverty, have greatly improved health conditions and have generated new business and employment opportunities. Examples such as the Mexican government’s national program of cash transfers to poor households (“Progresa- Oportunidades”) which conditions assistance on whether children attend school and mothers take their infants for health check-ups; the multi-donor program to eradicate the deadly river-blindness disease in West-Africa; the community based microcredit and employment programs of Grameen Bank and BRAC in Bangladesh; the Chinese government’s program for the development of the loess plateau with support of the World Bank; or the program of rural poverty reduction in the highlands of Peru supported by the International Fund for Agricultural Development (IFAD) – these are just a few examples of cases where the impact of development programs has been at a scale such that it made a real and lasting difference in the lives of millions of people. And success at scale is also possible in fragile and conflict-affected states as a recent review by the Brookings Institution for the Australian aid agency AusAID has shown.

This raises three questions that development ministers should consider as they prepare for and meet in Busan: What made these success stories possible? Why are they the exception rather than the rule? What needs to be done the make scaling up the norm? Let us take these questions in turn.

What made these success stories possible? Each case has its own ingredients of success, but three dimensions are common to them all:

• The programs pursued a scaling up pathway towards a long-term goal: Few successful programs followed a blueprint for long-term scaling up from the start, but they all built on the recognition that if the early steps were successfully piloted, subsequent steps needed to systematically replicate and scale up what works, adapting the approach in the light of lessons learned at each of the earlier project. A key element in this connection is that the long-term objective of scale impact is part of the program concept from the beginning; that monitoring and evaluation are designed to test not only whether an idea works, but also to measure progress against the long-term goal; and that an effort is made to identify the drivers, to create the spaces and to chart a suitable scaling up pathway for programs to move from small pilot to impact at scale.
  
  
• The programs benefitted from strong and sustained drivers for scaling up: Specifically, they had strong leadership with a clear vision of the need for large scale impact, with ideas that were suited to the challenge, ready to learn from experience, willing to stay engaged for the long haul, championing the cause, building partnerships with other like-minded actors and politically savvy in overcoming obstacles. This leadership could come from public officials, such as the President of Mexico and his Deputy Minister of Finance in the case of “Progresa”, from private individuals, such as the founders of Grameen Bank and BRAC, from a community of national experts and community leaders, as in the case of the Peru Highlands Development Program, from outside aid donors, as in the case of the West-African River- Blindness program, or be part of a wellestablished system of experimentation with replication of success as established in China’s approach to economic growth.
  
  
• The programs created the space for sustained growth: As programs expanded successfully they managed to open up financial and fiscal space by keeping costs down and finding suitable financing mechanisms; they pursued policy reforms that created favorable legal and regulatory conditions; they created the institutional space by identifying appropriate organizational approaches and building institutions for managing the programs at scale; they adapted approaches to the specific cultural realities; and they created political coalitions and operational partnerships that made it possible to grow and sustain the initiative. In the case of “Progresa- Oportunidades” the Mexican government designed a program with a long-term goal of universal coverage of all poor, but started with carefully designed pilots, which were subjected to detailed evaluation against control groups and adapted as needed during the 5-10 year scale-up phase. It created the required fiscal and financial space by abandoning other less successful social programs and by seeking the support of international financial institutions. The government also insulated “Progresa-Oportunidades” from political controversy by carefully monitoring and documenting its positive impacts and by legally assuring that it did not get caught up in party politics. Finally, it designed an institutional approach suitable for phased nation-wide scale-up with minimal bureaucratic obstacles.

Why are these success stories the exception rather than the rule? The first explanation for the lack of systematic and effective focus on scaling up lies in the nature of governmental and bureaucratic incentives and the resulting planning and implementation mechanisms in the developing countries themselves. Typically, governmental plans set out broad targets, policies and implementation modalities, but they generally do not link specific interventions, projects and programs or individual agency budgets and investment plans with the longer-term goals set forth in national or sectoral plans. Moreover, whenever governments or heads of agencies change, the new leadership has a strong tendency to discard the programs supported by the former incumbents and instead to pursue new ideas and new programs. Finally, the practice of methodically evaluating the impact of programs is poorly understood in most countries, and in any case is not well appreciated, since politicians and agencies like to claim success, but prefer not to acknowledge failures in their programs. Contrast this with the incentives for scaling up in the private sector: In a competitive market a successful new initiative, i.e., one that makes a profit, will be replicated and scaled up either by the firm that pioneered it, or by competitors who see the opportunity to garner some of the potential profit for themselves.

The second explanation can be found in the way aid agencies work. While some donors help governments with advice and technical assistance to develop a longer-term national, sub-national and sectoral plans and improved budgeting and investment planning mechanisms, the aid agencies’ own operational modalities and incentives tend to operate just like those of governments: Their operational policies, programming, management and staffing do not encourage support for systematic scaling up. On the contrary, they tend to focus on innovative initiatives and even discourage replication of successful projects and programs. They do not reward effective monitoring and evaluation against longer-term objectives. They rotate managers and staff frequently and with little attention to ensure appropriate hand-over. And the incentives for staff are to start new projects rather than focusing on implementing and building on ongoing ones. And while partnerships, coordination and handing off programs to the clients are encouraged at the level of ministers and agency heads, in practice staff have little incentive to pursue these avenues, since they take time, effort and even budgetary resources, increase risks of delay and of loss of institutional identity and control, and since fiduciary requirements for procurement and disbursements are not harmonized among donors.

What needs to be done to make scaling up the norm? Let us start with aid agencies. Donors have an obligation to do no harm, and it can be argued that their proliferation of small, one-time, uncoordinated and unevaluated interventions do more harm than good. They certainly represent an opportunity forgone, namely the opportunity to support a systematic focus on scaling up successful development interventions. Indeed, this represents an obligation that should be reflected in the mission statements of all official aid organizations, as well as in those of the larger non-governmental organizations and foundations that provide development assistance A recent assessment of donor performance in terms of their attention to scaling up concluded that donors need to address five critical gaps in their operation approach:

1. Institutional information gap: Aid agencies should review and develop their institutional approaches to scaling up.
2. Evaluation gap: Evaluations of donor projects should include an assessment of the scaling up practices of donors.
3. Incentives gap: Donors need to develop internal and external incentives (e.g., operational policies and staff incentives; replication funds, competitions) to help drive the scaling up process.
4. Partnership gap: Donors should expand the use of programmatic approaches and instruments with joint funding of programs designed to bring donors together so they can help scale up successful interventions;
5. Ownership gap: Ultimately, scaling up is a country’s job; donors need to help by setting an example, build capacity and hand off to agents in the country.

In their turn, the governments of developing countries need to make scaling up of successful interventions an explicit part of their national planning and programming, need to implement rigorous monitoring and evaluation as learning and accountability mechanisms for the political and agency leadership, and need to find ways to ensure that successful programs do not fall victim of the electoral cycle.

The good news is that progress is being made. There is now a well established body of evidence that scaling up can and does work, even in fragile states. There exists a framework for analyzing, planning monitoring and evaluating scaling up approaches, building on the scaling up pathway, drivers and incentives concepts as summarized above. Examples of governments focused on scaling up success show that it is possible to pursue this avenue to development, with China the outstanding case in point. And some aid agencies have begun to focus systematically on scaling up in their operational mission, strategy, policies, processes and incentives, among them IFAD, the Global Fund to Fight AIDS, Tuberculosis and Malaria, and the Bill and Melinda Gates Foundation. The United Nations Development Program has made scaling up an explicitcriterion in its evaluation of its programs. And the Gesellschaft für Internationale Zusammenarbeit (GIZ) recently issued practical guidelines for scaling up.

What is needed now, and what development ministers and agency heads should focus on in Busan and beyond, are the following three important priorities to ensure that an operational focus on scaling up becomes the rule, not the exception, in the way governments and aid agencies work:

1. Developing country governments commit themselves to introduce the scaling up objective and practice into their own planning, implementation, evaluation and accountability mechanisms.
2. Official donors and large private donors commit to introduce the objective and practice of scaling up into their mission statements, operational policies and evaluation practices.
3. Donors specifically commit to assist development partners through their technical and financial assistance to implement systematic approaches and incentive mechanisms that help drive the scaling up of successful development interventions. Scaling up success is not rocket science. It is a simple, intuitively appealing concept. And yet in practice it has been an orphan in the development literature and practice. Fortunately, this is now changing. We do not need complex models and metrics, nor do governments and aid agencies need sophisticated operational instruments. What we need is for scaling up to become the accepted goal at the political and institutional level. We need a clear vision of scaling up pathways, an assessment of the needed drivers and spaces for scaling up. And we need a readiness to evaluate progress against ultimate and intermediate goals and to adjust the scaling up pathway in light of the lessons learned.

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