/ 5 April 2012

Clean energy crucial for poor countries

Developing countries in Africa received less in overseas aid last year than they paid for oil imports, figures published this week indicate.

Sub-Saharan Africa received about $15.6-billion in overseas development aid last year, but this was outweighed by the $18-billion cost of importing oil, according to the figures compiled by the International Energy Agency.

A decade of soaring oil prices has created huge problems for development efforts in countries whose attempts to industrialise have left them heavily dependent on fossil fuels.

Even though overseas aid has increased, poor nations are effectively “running to stand still” in development terms, because they are paying so much for energy imports.

Because oil prices were likely to remain high, developing countries needed to move to cleaner renewable sources of energy, said Fatih Birol, chief economist at the energy agency. “If you diversify the sources of energy, that is a good thing and using free, home-grown resources will bring down the import bills,” he said.

When industrialised economies were developing, oil was the equivalent of $13 a barrel, but now developing countries had to pay $120 to $130, said Birol, which left developing countries “hamstrung”. Therefore, if more people were to be lifted out of poverty, clean energy had to be an imperative.

The data from the agency, widely regarded as the gold standard for energy analysis, rang alarm bells for campaigners and is likely to be closely examined by donor governments, which have not tended to prioritise clean energy in the past.

A spokesperson for the United Kingdom’s department for international development said: “British aid is helping to improve the health, education and welfare of millions of the poorest, including providing cleaner, greener energy such as solar power to help grow their economies.”

Ruth Davis, chief policy adviser at Greenpeace UK, said: “Instead of giving taxpayer hand-outs to the fossil fuel industry through World Bank aid programmes and export credit guarantee schemes, countries like the UK should be investing in renewable energy and energy-efficiency projects in developing countries, which will improve access to energy for the poor and help build stronger economies.”

Whereas rapidly emerging economies such as China and India are forging ahead on wind and solar power, little has been invested in Africa. This is not because of a lack of renewable energy resources, but because private sector investors see the continent as a riskier proposition.

Under the United Nations scheme to give poor countries access to low-carbon technology — the clean development mechanism — the lion’s share of the investment has gone to China, followed by India and other big emerging economies.

Birol added that the problem of oil addiction was compounded by distorting subsidies for fossil fuels, common in many developing countries. These subsidies will reach a record $630-billion this year, according to the International Energy Agency’s latest data, which Birol said represented not only a market distortion that would exacerbate climate change, but were a drain on the treasuries of poor countries.

Although such subsidies are supposed to protect poor people from the impact of rising energy prices, in fact they usually disproportionately benefit the better-off and, in some cases, are hijacked by profiteers. —