Global investments must increase significantly to achieve universal access to energy

IEA meeting examines ways to raise and administer the required financing to end energy poverty.

18 May 2011

Current investments must increase significantly in order to achieve universal energy access, the International Energy Agency’s Chief Economist said at a meeting in Paris on 13 May.

“We need USD 36 billion a year to bring modern energy services to the poor,” Dr Fatih Birol explained, adding that “there is a big gap between this figure, and what is currently being invested.”

Over 60 top level international experts on energy access participated in this meeting, the results of which will help to shape the key findings and messages of the special excerpt – Energy for all: financing access to the poor of the World Energy Outlook 2011, the IEA’s flagship publication.

Momentum building

Dr Birol said that the annual World Energy Outlook has been “constantly and stubbornly highlighting energy poverty throughout much of the last decade,” and he welcomed recent international and regional momentum that has been building in this area.

The UN General Assembly, for instance, recently adopted 2012 as the ‘International Year of Sustainable Energy for All’ and the UN Advisory Group on Energy and Climate Change has called for the adoption of a goal of universal access to modern energy services by 2030.

These and other efforts, according to Dr Birol, are positive steps forward, but they must be built on if the world is to address the “current unacceptable situation”.

No electricity for 20% of world’s population

According to IEA analysis, there are currently 1.4 billion people – over 20% of the world’s population – who lack access to electricity. Five hundred and eighty-five million are based in sub-Saharan Africa, including over 76 million in Nigeria and 69 million in Ethiopia. Most of the remaining people without access live in Asia, including 400 million in India and 96 million in Bangladesh. One criticism levied against universal access to electricity is that it would lead to a dramatic increase in greenhouse gas emissions. “This is simply not true,” Dr Birol argued, adding that “the increase in carbon dioxide emissions would actually be less than 1%.”

On top of this, the number of people who use traditional biomass for cooking, such as wood and manure, is projected to rise from 2.7 billion today, to 2.8 billion in 2030.

According to estimates from the World Health Organization (WHO) and IEA projections, it is estimated that household air pollution from the use of these traditional sources of biomass in stoves with inadequate ventilation would lead to over 1.5 million premature deaths per year in 2030.
In order to combat this problem, and achieve universal access to clean cooking facilities for some 2.8 billion people, IEA analysis found that additional cumulative investment of some USD 56 billion would be required in the next 20 years, or USD 2.6 billion every year.

Special excerpt

What can be done to raise and administer the necessary finances to deliver energy access to the billions of people in need? This global challenge will be addressed in the 2011 World Energy Outlook (WEO), the IEA’s annual flagship publication, which will be released on 9 November 2011 in London.

The special excerpt – Energy for all: financing access to the poor – will seek to evaluate available and potential sources of financing, and will detail a new architecture for financing universal modern energy access. It will be presented to a special high-level meeting of senior government representatives and international institutions – The Oslo Conference – hosted by the government of Norway on 10 and 11 October 2011.

Specific issues which will be addressed in this study include:

  • Identifying successful solutions adopted in developing countries to deliver energy access, the financing mechanisms used, and how to scale-up efforts;
  • Examining the existing sources of government and non-government financing, where and how they are being deployed and seek to identify the financing gaps;
  • Assessing the current role, and potential, of private finance and expertise in delivering energy access, and identify the most suitable mechanisms and the commercial conditions required;
  • Bringing available and effective methods of financing, existing institutional frameworks and delivery mechanisms together to form a recommendation of a new financial architecture to achieve universal energy access.

Feedback from experts

The purpose of last week’s meeting in Paris was for IEA analysts to speak with experts from across private and public financial institutions as well as national, international, and non-governmental organisations that work on energy and development and to hear their views on how to forge new, cost-effective approaches to help meet the goal of financing universal energy access. Their comments will help shape analysis for the WEO special excerpt on energy access.

Dr Leena Srivastava, Executive Director of The Energy and Resource Institute; Ms Hela Cheikhrouhou, Director of the Energy Environment Climate Change Department at the African Development Bank; and Mr Rachid Bencherif, Senior Planning Analyst at the OPEC Fund for International Development were among those who attended the meeting.

Photo: ©IEA.

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