Wealthy countries have a “moral responsibility” to support clean energy transitions in Africa, said Fatih Birol, the executive director of the International Energy Agency (IEA).
The world has two major challenges: to provide energy to 800-million people on the planet — 600-million of whom live in sub-Saharan Africa — and to reach its climate goals, he said.
“Many governments today around the world have come up with net-zero 2050 [emission] targets. This is, of course, very important but we know that Africa is responsible for only about 2% of global emissions. However, the continent is disproportionately hit by the impacts of climate change.”
This shows that the “race to zero is a race not between countries but a race against time”, Birol said.
Some countries, with their vast economies, have begun this race ahead of others. “But one thing that is important to note is that unless everybody crosses the finish line, nobody wins this race, because it’s a global issue.”
A new report from the IEA — Financing Clean Energy Transitions in Emerging and Developing Economies — shows how investment in clean energy in emerging and developing economies fell by 8% to less than $150-billion in 2020, with only a slight rebound expected this year. Annual capital spending on clean energy in these economies needs to expand by more than seven times to more than $1-trillion by the end of the 2020s to put the world on track to reach net-zero emissions by 2050.
This will not happen by itself, Birol said. “There are two [sets of] homework here. One is for the countries themselves in Africa and other emerging countries to provide the right investment framework to attract investments.
“Number two, and this is maybe more important, is that the international financial institutions should be given a mandate to support emerging countries, including in Africa, to provide clean energy investment funds.
“I believe, especially for Africa, there is a moral responsibility for advanced economies to support the clean energy transitions in Africa and beyond. It is extremely important that the G7 countries and others prioritise clean energy investments in Africa as a key action item from a financial point of view and a moral responsibility point of view,” he said.
The grouping of emerging and developing economies spans countries in Africa, Asia, Europe, Latin America and the Middle East and includes the world’s least developed countries, as well as many middle-income economies, emerging giants of global demand such as India and Indonesia, and some of the world’s major energy producers.
In the foreword to the report, which was produced in collaboration with the World Bank and the World Economic Forum, Birol wrote how the damaging effects of the Covid-19 crisis are lasting longer in many parts of the developing world where the economic slump is deeper and the capacity to drive a sustainable recovery is limited.
“If energy transitions and clean energy investment do not quickly pick up speed in emerging and developing economies, the world will face a major fault line in efforts to address climate change and reach other sustainable development goals,” he wrote.
This is because the bulk of the growth in global emissions in the coming decades will come from emerging and developing economies as they grow, industrialise and urbanise.
Their emissions are projected to grow by five gigatonnes (Gt) over the next 20 years, according to the report. “In contrast, they are projected to fall by two Gt in advanced economies and to plateau in China. A massive surge in clean energy investment in the developing world can put emissions on a different course.”
There is a huge opportunity to take advantage of lower cost, clean energy technologies, led by solar and wind, to forge a new low emissions model for the developing world.
“There is also no shortage of capital globally to realise such a vision,” Birol noted. But this capital is not finding its way to the countries and sectors where it is most needed.
“Many institutions are supporting energy transitions in developing countries, with good intentions and often impressive results. But private capital does not yet see the right balance of risk and reward in clean energy projects,” he said.
Fostering the financial conditions for a rapid use of clean energy technologies in emerging and developing economies is “one of the defining challenges of our times”, he said.
Although every country must choose its own energy path, based on its specific needs and resources, the global challenge of climate change demands global solutions.
“The massive scale of the challenge requires rethinking how we approach it — and major efforts from international financial institutions, their donors, multilateral development banks and many other actors,” Birol wrote.
The report’s recommendations include measures to enhance financial markets; improve the visibility of public policies; remove distortions from energy markets; enable grids to better integrate renewable power; empower local entrepreneurs to develop smaller-scale clean energy solutions, as in energy efficiency; and build models for universal access to modern energy.
One of the most urgent recommendations, Birol said, is that governments give international public finance institutions a strong strategic mandate to finance a transition to clean energy in the developing world.
“Accelerating clean energy transitions in emerging and developing economies can no longer be just one investment option among many. It has to become a major priority for governments and investors world-wide,” he wrote.
“Our planet’s future depends on meeting this challenge and avoiding deep fractures in global efforts to tackle climate change.”