My Vision for the Decade of SE4All: Guiding Global Efforts With An Integrated Approach

In 1935, the United States established the Rural Electrification Administration (REA) to extend electric and telephone lines into rural areas without access. Over the coming decades it was instrumental in achieving universal access to these services throughout the US. At the time the initiative faced skepticism about its practicality, about its cost, and about the benefit of extending energy access to those without it (Ellis 1966). Today, of course, the United States looks back on this milestone as one of its proudest.

Today we stand at the outset of another historic effort to extend access to electricity, the UN's Decade of Sustainable Energy for All, with goals of universal energy access, a doubling of the rate of improvement in energy efficiency, and an increase of renewable energy to 30% of the global supply by 2030. Instead of millions of individuals affected as in pre-electrification US, the numbers are measured in billions. Rather than a nation of 10 million square kilometers we consider an area closer to 60 million, with drastically more heterogeneous geography, climate, culture, existing infrastructure, and forms of government. Rather than utilizing relatively stable, well-quantified funding within one nation we consider diverse and unpredictable sources of funding crossing many geopolitical boundaries in complex ways. And most importantly, rather than considering the simple extension of power lines to new areas, we are considering the task of extending access to sustainable energy to all of the world's people – this includes new access for those without it, and sustainable access for those whose only current option is energy not compatible with the long-term flourishing of all of the planet's ecosystems and people.

essay thorpeThis task is formidable, but fortunately we are aligned with another key aspect of the electrification of the US – we are acting as part of a large response to crisis and an overwhelming impetus to change. The REA's efforts were part of The New Deal in the US, a response to the historically tragic Great Depression, and today we can similarly draw motivation and fortitude from the wide variety of global issues addressed via sustainable energy – mitigation of climate change, improved health and education outcomes, eradication of poverty and hunger, protection of ecosystems, improved gender equality, and more. Our task is great, but our motivation and our potential impact are greater.

Here we consider a vision for the Decade of Sustainable Energy for All, one that leverages the co-benefits of sustainable energy and attempts to craft an intelligent course of action in context with the multitude of efforts already being undertaken to address issues of energy and sustainability.

The basic proposal is this: the number of efforts and the amount of funds expected to go towards sustainable energy in the coming decades are both tremendous, much more than enough to meet the Decade's goal of universal access if utilized intelligently, and hopefully enough to meet the goals of 30% renewables in the global energy supply and a doubling of the rate of efficiency improvements. Unfortunately, such investments to date have been uncoordinated and it is clear both investors and recipients need more information and guidance to act effectively. The Sustainable Energy for All initiative (SEFA) can best meet the goals of the Decade by acting as a guide for as much renewable investment as possible going to developing nations in effective ways, ensuring universal access and tapping all of the many co-benefits of investment there. This can be achieved by 1) identifying the areas that would most benefit from investment, considering a wide array of possible benefits 2) identifying the investment-readiness of these areas, including their local geographical, environmental, technical and governmental needs, and any significant barriers to successful investment, and 3) recruiting different sources of funding to areas with high need, both for direct investment and to address barriers, and weaving these sources together for coherent progress. The SEFA initiative is already beginning to do this with its "High Impact Opportunities" focus, and here we detail the global context of investment efforts that make an expansion of that focus the best path forward.

How Much Money Is There?

Global renewables investment has grown sharply, from $39 billion (USD) in 2004 to $257 billion in 2012 (REN 21 2012). The International Energy Agency details a "New Policies Scenario" for the world wherein countries follow through on the numerous broad policy commitments and plans announced to date – they estimate that this will require $17 trillion between 2012 and 2035 ($740 billion/year on average) and will lead to 30% renewables penetration by 2030, exactly matching one of the goals of the SEFA initiative (IEA 2012). It would be wise to direct a large portion of this investment to the developing world, given the co-benefits of such investment, given that most new global energy capacity (both renewable and non-renewable) is expected to be in non-Annex I nations (Krey and Clarke 2009, Krewitt 2009), and given that up to 65% of revenue-positive efficiency improvement opportunities may lie there as well (Farrell and Reemes 2009).

This amount of investment, $740 billion/year on average, will dwarf the total amount needed, for example, to meet the Millennium Development Goals by 2015, around $120 billion total above projected aid as of 2012 (OECD 2012). Though the overlap between different international development goals and energy access vary, it is clear that the scale of energy investment will be so large that tapping even modest co-benefits could represent huge gains in financing for many different international development goals, and the promise of these co-benefits could even be used to motivate more investment.

This level of renewables investment also dwarfs the needed amount for universal access, around $48 billion/year (IEA 2011) though the current New Policies Scenario only provides around $14 billion/year for universal access, leaving a gap of $34 billion/year. This gap could be addressed by securing additional funding, but it would probably be better secured by helping developed nations direct more of the New Policies Scenario money towards the developing world and universal access. Redirecting this money should also not harm other SEFA goals, since the IEA estimates that about 2/3 of energy capacity developed to provide universal access will be from renewables (IEA 2011).

Fortunately, several mechanisms already exist for developed countries to invest in sustainable development in developing countries, including the Clean Development Mechanism (CDM) ($215 billion in projects to date (UN 2012)), and the nascent Global Climate Fund (with a goal of $100 billion/year in spending by 2020), amongst others. Unfortunately, these effortsbhave their shortcomings, and recent analysis of the CDM provides valuable insight into how we might better channel money towards universal access, renewables investment, and efficiency improvements in the developing world.

The Need For Information, The Need For Organization

The CDM is the most prominent mechanism for investment in sustainable development in the developing world, allowing Annex I nations to meet their Kyoto Protocol emissions reductions targets in part by investing in emissions reductions in non-Annex I developing nations. It has provided cost effective climate change mitigation for investing nations, but has had little success evenly penetrating different countries, with only 3% of investments going to Africa (UN 2012) where most of the 1.3 billion without access to energy reside. It has also faced concerns that funds may not have been "additional," that is, that they may not have stimulated new activity that would not have happened in their absence - 68% of funds have gone to China, often to projects that critics say would have proceeded with regardless (CDM Policy Dialogue 2012). Many of these difficulties seem to be driven by a lack of complete information or assistance. On the investors' side there is often a lack of information about the "additionality" of proposed projects and lack of easy, standard comparisons of the co-benefits of different projects (CDM Policy Dialogue 2012). On the local developers' side there is often difficulty completing the CDM application process, especially for small projects in rural areas (exactly the areas that need to be targeted for universal access).

Further, general concerns about investment in sustainable development have been raised. These include the macroeconomic problems that can arise in developing nation with
large influxes of investments (Strand 2009), as well as the challenge of integrating separate investment sources, especially when many are driven by individual projects. This is in addition to technical challenges of integrating renewables into existing (or not yet existing) grids, especially small and potentially unsophisticated grids as are often found in the developing world (IPCC 2012).

Fortunately, there is a way to address these different issues and effectively encourage investment in SEFA goals, and it is a way that the SEFA initiative is already approaching with its "High Impact Opportunities" list.

A Guide For Smart Investment

The solution to these difficulties is as outlined at the beginning of this essay, namely a guide. Rather than add to the large list of often-disconnected sustainability-related efforts in the coming decades, this approach helps coordinate existing efforts and could potentially channel many more resources towards the SEFA initiatives' goals.

Such a guide should first identify areas of high need and provide simple metrics investors can use to compare co-benefits in different areas, with emphasis on the expansion of access to sustainable energy (and maybe even a funds-matching opportunity for universal access, to heavily incentivize investments to this end). These co-benefits can be very large – for example in Beijing the air-quality-related external cost of car transport are 15x higher than the external costs related to sustainability and climate change (Creutzig and He 2009), and the expansion of energy access is tied to gender equality (Danielsen 2012) and is well correlated with improvements in education and health outcomes (Cabraal 2009). Such a comprehensive evaluation could also prevent problems that investors may have difficulty evaluating on their own – for example the possibility that expanding biomass utilization in some areas could be environmentally damaging.

Second, this guide needs to identify barriers to investment in these locales, including needed improvements in local policies and infrastructure, amongst other things. This is a critical step in ensuring full utilization of funds and is particularly difficult for individual investors to evaluate (IPCC 2012).

Third, this guide needs to help local developers recruit funding and also attempt to integrate different investment efforts, making clear to investors what barriers exist and what other investments are being made. This can help adjust the scale and timing of new investments to fit into a larger picture. This last effort is difficult, but it is crucial for the encouragement of smart investments over time for sophisticated efforts, like developing dense new urban areas with public transit. These kinds of sophisticated efforts will be necessary for large-scale sustainable development (Creutzig and Kammen 2009).

None of these tasks are easy, but if executed they could draw needed investment to developing nations and help use it well. The SEFA initiative is already taking excellent steps in this direction with their "High Impact Opportunities" focus. Further development of this theme, as described above, could be a huge boon to the international community, helping developed nations and investors identify the best opportunities for impactful investment and helping regions with high-impact potential draw funding and utilize it in a coherent manner, while avoiding many of the pitfalls that more piecemeal efforts have encountered in the past.

Conclusion

At first glance the goals of the Decade of Sustainable Energy for All seem quite ambitious. When taken in context of the full projected effort to combat climate change, however, they become much more achievable. Given the large amounts of money that will be invested in renewable energy and efficiency improvements between now and 2030, the best way for the SEFA initiative to meet its goals is likely not to form yet another separate effort, but rather to act as a guide, channeling some existing efforts to the developing world where the largest co-benefits to investment lie, and where the largest opportunities for new growth and new efficiency improvements exist. This integrated approach is no doubt challenging, but it could address problems with sustainable development efforts to date, could ensure universal access to energy, and could provide many co-benefits to issues like human rights, education, health, and environmental protection for decades to come.

 

Daniel Thorpe was Runner-Up of the Global Energy Essay Contest 2013. He is a PhD Student at Harvard University School of Engineering and Applied Science.

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