Originally published on the CGS blog on July 30, 2014.
Carlos Pascual, the Special Envoy and Coordinator for International Energy Affairs for the State Department, spoke last week on the new geopolitics of energy and what challenges and opportunities this presents for the future. Most notably, he emphasized the need to consider the developing world moving forward, creating policies that are based on an understanding of finance and that foster transparency.
Today, 1.2. billion people do not have access to electricity and 2.8 billion rely on wood or other biomass to cook and heat their homes. To address this, the UN has put forth its Sustainable Energy for All initiative, which seeks to ensure universal access to modern energy services, double the global rate of improvement in energy efficiency, and double the share of renewable energy in the global energy mix by 2030. This is a daunting set of goals; the World Bank estimates that to increase global renewable energy consumption from 13% to 30% or more by 2050 would require an additional “17,000 wind turbines, 215m square meters of solar panels, and 80 solar power plants every year for the next 40 years.”
Meeting the demand for renewable energy, therefore, requires that the cost of this energy decrease. While this can be done partly through investment, it must also be done by reducing the financial barriers placed on this technology. As Peter Brun of the Guardian notes:
Trade in sustainable energy goods and services is currently distorted by tariffs, subsidies, and complicated and conflicting standards – all of which make the products more expensive for consumers.
Even developing countries impose import tariffs, which, combined with high capital costs and the low incomes of many residents, make purchasing and maintaining renewable energy almost impossible.
At times it seems as though the biggest barriers to development are developing countries themselves, as there is, along with the financial challenges, rampant corruption. As Pascual pointed out in his speech, the amount of capital that leaves Africa due to corruption is greater than aid it receives. In fact, many private businesses provide corrupt officials the means to launder large amounts of money. These corrupt deals can have significant impacts on a poor country’s development; through five suspicious mining deals, the Democratic Republic of the Congo lost an amount equivalent to their total health and education budget. This also hurts developed countries, as it renders their aid ineffective and cripples their own ability to invest in renewable energy at home and abroad.
But even if a country is able to overcome trade policies and corruption, the issue of long-term financing still remains. Even developed countries with strong infrastructures are struggling to transition to renewable energy: Germany’s $412 billion Energiewende green energy agenda has resulted in a net increase in costs to consumers and other stakeholders. Consumers have seen a major spike in energy bills, leading many to call electricity a “luxury good.” Will it be possible then to create renewable energy solutions that residents of developing countries can utilize long-term?
Fortunately, renewable energy technologies continue to be invented and improved each day, suggesting that it is possible to bring renewable energy to the developing world. For example, the Waka Waka solar light offers an alternative to the kerosine lamp, providing 80 hours of light after one day of charge. Unfortunately, most of these products have limited funding; they rely on crowdfunding and Kickstarter campaigns to expand production, once again emphasizing the important financial barriers still in place.
Just as Carlos Pascual stressed in his speech last week, transparency and financial incentives are key to spreading renewable energy worldwide. Part of this will come with time: as technologies become more efficient and cheaper to manufacture, they will become more widespread. But part of this must come from policy: we need policies that demand transparency and eliminate the financial barriers (such as tariffs) that make this technology so expensive in the first place.
As we work to create a sustainable world, we must not forget those who do not yet have a developed world. Only then can we reach a truly global solution.
