Can self-interest drive sustainable energy for all?
A bold plan to bring every person on Earth sustainable energy within 18 years will face its first test of international acceptance at the Rio+20 Earth Summit (the United Nations Conference on Sustainable Development) next month (June 20-22).
The Sustainable Energy For All (SE4All) initiative is a flagship programme launched by UN secretary general Ban Ki-moon. Its goals are to get power to the one billion people who lack electricity (and give almost three billion clean cooking technologies), to double the rate of improvement in energy efficiency and to double the share ofrenewables in the global energy mix.
Ban, supported by the United Nations Foundation and the UN Energy coordinating group, launched SE4All last year (20 September). Last month (25 April) saw the formal launch of SE4All’s Global Action Agenda, setting out how the targets are to be achieved.
The key is not so much in developing new technologies, it says. Promising technologies such as off-grid photovoltaics, liquefied petroleum gas stoves, and smart mini-grid systems already exist. Instead, the drive has to be towards scaling up and rolling out technologies so they reach even the very poor.
But, while the goals have won much praise, some say the initiative needs to secure international support at Rio+20 if it is to achieve them.
Without an endorsement — and without integration into other UN frameworks — commitment for the initiative may be hard to get. And the latest Rio+20 negotiating text has watered down calls for both practical and financial support for SE4All.
Rather than binding nations to targets, the initiative relies on a bottom-up approach and on voluntary commitments. Sustainable energy, it believes, is in everyone’s interest.
For example, Small Island States pledged to move towards renewable economies, away from exorbitant spending on fuel imports, at a recent meeting in Barbados (8 May).
But broader statistics show that it will take a vast investment to go beyond present energy trajectories.
The world invests US$9 billion annually in access to electricity and clean cooking facilities. The International Energy Agency (IEA) estimates, in its World Energy Outlook 2011, that this will rise to US$14 billion by 2030. But, says the IEA, it needs soar to US$48 billion to meet the SE4All targets.
Similarly, renewables are set to reach 20 per cent of global energy by 2030 under existing policies. But the SE4All target requires 30 per cent.
To meet all three SE4All targets the initiative may need US$1.8 trillion of investment in energy every year, says a new Global Energy Assessment, to be released at Rio+20. That’s 0.5 trillion more than global investment today.
Is voluntary enough?
Can SE4All’s voluntary approach really meet these challenges?
“I think a voluntary approach might get you some quick results but it won’t give you long-lasting sustainable change,” says Pascoe Sabido, sustainable energy advisor for Friends of the Earth Europe.
“We need the initiative to be integrated into the UN process and then, at the country level, into plans and processes so that civil society can actually hold it accountable.”
“There needs to be a partnership between governments and business, one that makes large-scale private sector investment in developing countries possible,” says Reid Detchon, Vice President for Energy and Climate at the United Nations Foundation.
The biggest challenges will be building investor confidence through institution-building and legal frameworks, says Nebojsa Nakicenovic, deputy director at the Austria-based International Institute for Applied Systems Analysis, which is preparing the Global Energy Assessment.
In the relevant sections of the renewable energy industry, “almost all the costs stem from the capital investments and hardly any from the operation,”says Tobias Schmidt, researcher and lecturer at ETH Zurich, the Swiss Federal Institute of Technology. So policies must reduce the risks in capital investments.
Delivering technology to the poor
All this calls for creativity, says Detchon.“There need to be new financial models for people who can’t afford to pay a big chunk — but can pay for products out of their savings over time.”
For example, the company Eight19 combines mobile phone and solar technology in a pay-as-you-go energy service in Kenya.
One country that has successfully promoted small-scale renewable energy to rural communities is Nepal. Over two thirds of the money needed for renewable technology “comes from the poor man’s pocket” because of the country’s private sector-led, government-enabled market-based solutions, says Govind Pokharel, executive director at the country’s Alternative Energy Promotion Center. He suggests ‘soft’ credit loans, at low rates of interest with four or five year payback periods, to convince people to invest.
Over the period of a decade, more than a million households have installed renewable technologies, from solar home systems to domestic biogas, micro-hydro to improved cooking stoves.
Will the private sector flood in?
Optimists think that, with the right frameworks, the private sector might simply flood in.
Renewables often prove cheaper than fossil-based energy. Even photovoltaics are now cheaper than diesel in some countries.
“Continuing to drive that market will continue to lower the price, and continue to expand the number of places where it is economically attractive,” says Detchon.
But in Nepal the poorest still struggle to access finance mechanisms. So even where the private sector plays ball, the public sector must still find money: to ensure energy services reach the poorest; to build local operational and maintenance capacity; for quality control, and to monitor the sector, says Sabido.
And optimism over private sector investment must be judged against the background of fossil fuelsubsidies, which reached US$400 billion in 2010, an almost 30 per cent increase from 2009.
Fossil fuel subsidies distort markets but are notoriously difficult to eliminate. A recent study published in Nature Climate Change on the cost of wind and solar energy in six developing countries showed that fuel subsidies were holding back the competitiveness of renewables.
“Governments should shift subsidies from diesel to renewable energy in a gradual manner,” says Schmidt, a lead author of the study. “There are a lot of countries coming up with renewable energy plans and policies; however I am not so sure whether they are at the same time reducing fuel subsidies.”
Endorsement at Rio+20?
It is not yet clear whether Rio+20 will furnish SE4All with the international commitment to its targets, or to providing practical and financial support, that critics say it needs.
The first draft of the proposed outcome statement from the conference proposed to “build on” the SE4All initiative and called for adequate financial resources to help developing countries.
But the latest draft merely “notes with appreciation” the initiative, and “recognises the importance” of finances rather than calling for them.
Yet a conviction that countries will find it in their self-interest to support the initiative still convinces many, especially those in the Action Agenda’s high-level group, that SE4All will succeed.
Leena Srivastava, executive director of operations at The Energy and Resources Institutes in Delhi, India, says: “The targets are ambitious but aspirational and the sense within the group is that if you start along these tracks then the momentum will build up”.