FSM

Without the presence of multiple enabling frameworks, the progress of the Federated States of Micronesia toward achieving the targets of SDG 7 and the NDCs will be challenging. In terms of access to modern energy, the Federated States of Micronesia is likely to fall short on universal access to electricity in 2030. Additionally, without concerted efforts, the Federated States of Micronesia is unlikely to achieve universal access to clean cooking technology by 2030. One option for the Federated States of Micronesia is to explore the use of highly energy efficient liquified petroleum gas (LPG) / butane gas cooking stoves. Improved cooking stoves (ICS) can be considered in areas where the distribution of the LPG/butane gas stove will be difficult. 

As an island nation, which is currently heavily reliant on imported energy resources, energy security is high on the development agenda of the Federated States of Micronesia. Therefore, key aims of the country should include diversification of the power generation mix, with a focus on indigenous sources (i.e., solar), and a reduction in the reliance on imported petroleum fuel. This aligns with the SDG 7 target for renewable energy (RE), which calls for a substantial increase in the share of RE in the total final energy consumption (TFEC) to rise from the 0.8 per cent share in 2019 (excluding traditional biomass). 

In the CPS, renewable energy capacity is expected to be 57.7 per cent by 2030. This falls short from the target of 70 per cent renewable generation because a significant amount of diesel-fired generation will be required to fulfil the increasing demand for electricity. Thus, the Federated States of Micronesia needs to strengthen its energy efficiency measures. In terms of energy efficiency, energy intensity is expected to be 4.6 MJ/US$₂₀₁₇ in 2030 which corresponds to an annual improvement of 1 per cent under the CPS. NEXSTEP analysis identifies that by following the SDG scenario, the Federated States of Micronesia can even lower its energy intensity to 3.5 MJ/US$₂₀₁₇ by 2030, which corresponds to an annual improvement of 3.4 per cent, thereby aligning with the global energy efficiency improvement rate.

In addition to a highly efficient energy system, a faster transition towards cleaner energy sources, especially renewables in electricity generation, will help the Federated States of Micronesia to reach net-zero greenhouse gas (GHG) emissions by 2050. This, however, requires an ambitious effort to switch fossil fuel-based energy systems to renewables. Electrification of existing technologies, such as the transport system and cooking stoves, will be critical. A deeper analysis indicates that phasing out diesel-fired power plants by 2050 is feasible, since the lifecycle cost of renewables-based power generation is already competitive as compared with diesel-fired generation.

1. Universal access to electricity

In 2019, around 81.3 per cent of population of the Federated States of Micronesia had access to electricity leaving about 20,000 people, primarily in rural areas, with no access. Achieving universal access to electricity is a priority for the Government of the Federated States of Micronesia. However, due to the remoteness of outer islands, it is expected that the 100 per cent access rate will not be achieved by 2030 under the current policy setting. NEXSTEP analysis suggests that leveraging mini/off-grid system technologies (i.e., solar mini-grid and solar home systems) would be more appropriate to close the gap, based on their cost-effectiveness, climate resiliency and faster implementation methods.

2. Universal access to clean cooking technology

Under the current policy settings, access to clean cooking is projected to increase from 39.7 per cent, in 2019, to 45.9 per cent, in 2030 (figure I). This means that by 2030, 10,173 households will still rely on polluting fuel stoves, which primarily use biomass and kerosene as fuel, exposing a significant population to negative health impacts arising from indoor air pollution, including non-communicable diseases such as stroke, ischaemic heart disease, chronic obstructive pulmonary disease and lung cancer, particularly among women and children (WHO, 2022).

The Road Map suggests that gaps can be closed by transitioning to LPG/butane gas stoves as this option may provide an affordable alternative compared to electric cooking stoves, given that electricity tariffs are expensive. In areas where distribution will be difficult, ICS can be promoted. With these measures in place and under the SDG scenario, the share of LPG/butane gas cooking stoves will increase to 60.9 per cent and to 32.4 per cent for ICS. The remaining will be fulfilled by existing biogas digester and electric kitchen appliances. 

Figure I. Access to clean cooking under the current policy scenario (CPS) in the Federated States of Micronesia

Source: ESCAP.

Note: Historical trend projection is based on the access rate data for 2000, provided by ESCAP (2022) as well as the access rate data for 2001 provided by SPC. 

3. Renewable energy

The share of modern renewable energy (excluding traditional biomass usage in residential cooking) in TFEC (including non-energy use) was 0.8 per cent in 2019. Based on current policies, the share of renewable energy in TFEC is projected to increase to 9.2 per cent by 2030. This increase is attributed to the projected growth in renewable electricity, as per the energy master plan, along with financial support from development partners. In the SDG scenario, the share of renewable energy is projected to increase to 26.2 per cent of TFEC in 2030. The additional 17 percentage point increase can be attributed to the phasing out of traditional biomass for cooking, together with improving energy efficiency that contributes to a reduction in energy intensity.

In terms of power generation, NEXSTEP analysis projects that the Federated States of Micronesia may only reach a 57.7 per cent renewable generation, falling short from the 70 per cent target, since a significant amount of diesel generation will still be in operation to meet the increasing demand for electricity. The renewable energy share in power generation will further increase to 81.7 per cent in the SDG scenario, attributed to the suggested energy efficiency measures to reduce demand for electricity.

4. Energy efficiency

NEXSTEP analysis finds that to reach the required 2030 energy intensity under the SDG 7.3 target, the annual improvement rate between 2019 and 2030 needs to be 9.3 per cent, which is quite challenging. Therefore, NEXSTEP analysis suggests that the energy intensity target of the Federated States of Micronesia should be aligned with the global annual improvement target of 3.4 per cent (IEA and others, 2023). This corresponds to a 2030 energy intensity target of 3.5 MJ/US$₂₀₁₇.

Under the CPS, the energy intensity is projected to drop to 4.6 MJ/US$₂₀₁₇. This translates to a 1 per cent annual improvement rate. The Federated States of Micronesia can further reach an energy intensity of 3.5 MJ/US$₂₀₁₇, aligning with the global energy efficiency improvement rate of 3.4 per cent per annum, by implementing some global best practices, such as setting minimum energy performance standards (MEPS), shifting transport modes, improving the fuel economy and implementing green building codes. 

5. Nationally Determined Contributions

The updated NDCs of the Federated States of Micronesia sets a conditional mitigation target of reducing carbon dioxide emissions from electricity generation by more than 65 per cent below 2000 levels in 2030 (relative to the year 2000 inventory, electricity generation accounts for 64 ktCO₂-e, which means that the conditional reduction from electricity generation will be around 41.6 ktCO₂-e. Therefore, emissions from electricity generation must be less than 22.4 ktCO2-e) (Government of the Federated States Micronesia, 2022).

Under the CPS, emissions will reach 114.6 ktCO₂-e in 2030, a 72.9 ktCO₂-e (38.9 per cent) reduction compared to the BAU scenario. The decrease in GHG emissions, relative to BAU, is due to the increase in renewable share in electricity supply as per the existing capacity expansion plan under the energy master plan of the Federated States of Micronesia. Increasing the implementation of energy-saving measures, in order to align with the global improvement target of 3.4 per cent, will further reduce emissions. In the SDG scenario, total emissions will reach 82.1 ktCO₂-e by 2030, corresponding to a 105.4 ktCO₂-e (or a 56.2 per cent) reduction compared to the BAU scenario (figure II). Despite significant emissions reduction under the CPS, emissions from the power sector will be 27.8 ktCO₂-e (which does not meet the NDC target). Meanwhile, emissions from the power sector will be 8.7 ktCO₂-e under the SDG scenario which meets the NDC target.

Figure II. Comparison of emissions, by scenario, 2019-2030

Source: ESCAP. 

Increasing ambition beyond SDG 7 

This Road Map also includes a scenario that looks beyond 2030 and aims for net-zero emissions by 2050. Achievement of this target will require decarbonization of the energy sector. This will be best achieved by: (a) decarbonizing the power sector; and (b) switching all energy consumption to renewables and electricity. Fortunately, the energy system of the Federated States of Micronesia is well-positioned for an accelerated decarbonization effort since many of the required net-zero technologies, such as renewable power generation, electric cooking stoves and electric vehicles, are mature and readily available. A well-concerted effort must be undertaken to reduce electricity tariff in the future so that electrification of energy system would be possible in the long run.

The Road Map sets out the following key policy recommendations to help the Federated States of Micronesia achieve the SDG 7 and NDC targets, together with suggestions on how to reduce reliance on imported energy sources:

1. Introduce strong policy measures to address the gap in clean cooking by 2030. Achieving universal access to clean cooking fuels and technologies seems to be one of the major challenges. Adoption of LPG/butane gas cooking stoves and ICS will significantly help improve clean cooking access. The cumulative deployment cost of both technologies would require US$ 1.21 million by 2030. In the long run, the deployment of electric cooking stoves will also help the Federated States of Micronesia achieve its net-zero emissions target.

2. Enhance efficiency of energy use in all economic sectors. The Federated States of Micronesia needs to enhance and strengthen its energy-saving measures to align with the 3.4 per cent global energy efficiency improvement pathway. This can be achieved by implementing best practices, such as setting MEPS, building energy codes, shifting transport modes, and improving the fuel economy, in the years leading up to 2030.

3. Implement fuel switching strategies, including electrification. Such strategies are needed to accelerate progress toward achieving SDG 7 and provide multifold benefits in the long run. The electrification of end uses would be critical to decarbonize the entire economy by 2050. Since electrical equipment is more efficient compared to fossil fuel-based equipment, this will significantly reduce demand for fossil fuel. Rapid adoption of electric vehicles in the Federated States of Micronesia, for instance, will reduce the demand for oil products, hence reducing the reliance on imported petroleum fuels. The Government should start setting ambitious electric vehicle and electric cooking stove targets from 2031 to 2050. Switching over to electric appliances must be supported by investment in clean energy systems. The need for additional investment in clean energy systems can be limited by an increased adoption of energy efficient measures.
4. Decarbonize the power sector to provide the highest potential in GHG emissions reduction as well as improve energy security. In the ambitious TNZ emissions by 2050 scenario, the projected decrease in grid emissions can realize a substantial overall national GHG emissions reduction. Investments in diesel-fired power are no longer cost-effective compared with renewables and should be discontinued to avoid emissions lock-in. NEXSTEP analysis suggests that lifecycle costs of renewables, such as hydropower, solar and wind, are cheaper than diesel-fired technologies. The underlying financial risks of investment in diesel-fired power plants should not be ignored. Fulfilling the required capacities for the net-zero emissions scenario could be challenging technically and economically, yet these investments will help improve energy security through the utilization of indigenous resources.