NAIROBI, Kenya, Oct 17 – New research has highlighted a chronic lack of finance that will leave billions of people in Sub-Saharan Africa and Asia without electricity or clean cooking energy by 2030.
Global leaders commenting on the findings released just ahead of COP26 in Glasgow, called for urgent action to accelerate investment in clean energy for developing countries to ensure a just energy transition.
Tracked finance for electricity in the 20 countries that make up 80 percent of the world’s population without electricity – the high-impact countries – declined by 27 percent in 2019, the year before the onset of the Covid-19 pandemic.
The economic strain caused by Covid-19 is expected to have caused even further reductions in energy access investment in 2020 and 2021.
Co-Chair of UN-Energy Damilola Ogunbiyi, noted that the path to net zero can only happen with a just and equitable energy transition that provides access to clean and affordable energy.
“We are at a critical moment in the energy-climate conversation,” said Ogunbiyi. “This requires resources to mitigate climate change and create new opportunities to drive economic development and enable people everywhere to thrive. Energizing Finance provides an evidence base of current energy finance commitments and the finance countries require meeting SDG7 energy targets.”
Energizing Finance: Understanding the Landscape 2021, one of two reports released under the series, finds committed finance for residential electricity access fell to USD 12.9 billion in 2019 (from USD 16.1 billion in 2018) in the 20 countries.
This is less than one-third of the USD 41 billion estimated annual investment needed globally to attain universal electricity access from 2019 to 2030.
Despite polluting cooking fuels causing millions of premature deaths each year and being the second largest contributor to climate change after carbon dioxide, only USD 133.5 million in finance for clean cooking solutions was tracked in 2019. This is nowhere near the estimated USD 4.5 billion in annual investment required to achieve universal access to clean cooking (accounting only for clean cook stove costs).
These findings have been released just ahead of COP26 in Glasgow, where global leaders will focus on how to spark meaningful progress on fighting climate change.
As part of this, they will need to consider how to reduce global emissions from the energy sector while also increasing energy access in developing countries to support their economic development.
In 2018, 50 percent of total electricity finance flowed to grid-connected fossil fuels in the high-impact countries compared to 25 percent in 2019.
While this is a positive trend for the climate, tracked investment in off-grid and mini-grid technology also declined and represented only 0.9 percent of finance tracked to electricity.
“Achieving both the Paris Agreement and universal energy access requires far greater investment in grid-connected renewable and off-grid and mini-grid solutions than what has been tracked in Energizing Finance. These solutions are essential to helping high-impact countries develop their economies without a reliance on fossil fuels,” Global Managing Director at CPI, Dr. Barbara Buchner said.
Providing results-based financing for energy project developers and exploring policies that facilitate demand-side subsidy support and reduce taxes on solar home systems are among several policy recommendations presented for Ghana, Mozambique and Vietnam.
“Ghana, Mozambique and Vietnam each have unique challenges to achieving universal access to electricity and clean cooking,” said Aly-Khan Jamal, Partner at Dalberg Advisors. “This research digs deep into these national contexts to identify solutions that can make Sustainable Development Goal 7 a reality.”
Energizing Finance also advocates for increased innovation in financial instruments to reach the scale of finance needed for universal clean cooking access; for integration of electricity access, cooking access and climate change strategies; and for national governments, bilateral donors, philanthropies, and DFIs to all increase their efforts to mobilize commercial capital to Sub-Saharan African countries.
