Access to energy services and energy efficiency are the two key messages of the report released in New York April 28 by UN Secretary-General Ban-Ki-moon and his Advisory Group on Energy and Climate Change. “Energy for a Sustainable Future” calls on countries—rich, poor and middle-income—to transform their national energy systems to ensure universal access to modern energy services, and reduce global energy intensity by 2030.
These are ambitious goals, the report says. It notes that access, in particular, “requires overcoming complex challenges in some of the poorest and most remote locations on the globe.” Although ambitious, the goals are certainly attainable. Achieving both of them will require political will, money, ingenuity and cooperation, not only among governments, but must also include the private sector and civil society.
Already, the World Bank Group, seized by the urgency of this agenda, is stepping up to the plate. Our financing in the energy sector has more than doubled in the past two years, from US$3.6 billion in 2007 to US$8.2 billion in 2009. Of this amount, 40% is devoted to development of renewable energy, including hydro, wind and solar sources, and energy efficiency projects, up from 18% five years ago.
But the Bank cannot do it alone. For example, the need is to almost quadruple annual financing from all sources in sub-Saharan Africa, from $11 billion this year to about $40 billion a year, to achieve the access goal. Other international financial institutions and official donors will have to raise their contributions. Most important, the private sector must play a bigger role.
Economists know that the private sector responds to incentives. Getting private investors to put their money into clean energy projects, such as hydro, in African and other low-income countries depends on the governments of those countries having the right policies. It is a delicate balance--to ensure that there is enough return to attract private capital, while also ensuring that new privately-funded energy projects deliver access to the poor at a price they can afford.
That’s where the World Bank Group and other multilateral agencies must redouble existing efforts to advise governments, decision-makers and opinion leaders on analysis, design and implementation of appropriate policies tailored to each country. In Africa, regional coordination is critical, as regional energy markets are needed to make hydro investments viable.
Programs such as the Energy Sector Management Assistance Program (ESMAP), have helped governments in Vietnam and the Philippines, among others, to make huge strides forward in delivering electricity to the poor.
In many cases, this has been done by expanding hydropower, including grid-based, mini-grid and off-grid solutions. It can be done in Africa too, where 93% of the continent’s hydropower potential remains unexploited.
The two Climate Investment Funds, approved in 2008, play a vital role in this effort. They have a total of $6.3 billion in pledges. One of them, the Clean Technology Fund, is supporting accelerated transformation to low-carbon growth, using US$4.35 billion to mobilize US$40 billion investment in renewable energy, energy efficiency and low-carbon development. The second one, the Strategic Climate Fund, includes a Scaling-Up Renewable Energy in Low-Income Countries Program, which now has a funding package of US$292 million. With increased support for these funds, along with expanded carbon markets and enhanced public and private investments, we all can build on the will expressed in the report of the UN Secretary General’s Advisory Group on Energy and Climate Change. By working together we can create a low-carbon future in which everyone has access to the energy they need to reach their full potential.