U.N. advisers push annual $35B-$40B global plan to expand energy use and reduce carbon

UNITED NATIONS -- At least $35 billion to $40 billion of annual investments will be required to link all people in the world with modern forms of energy by 2030, a goal that must be reached while reducing heat-trapping carbon dioxide emissions, a U.N. advisory group recommended yesterday.

Fifteen billion dollars of this should be in the form of annual grants donated by rich nations to expand electricity access to the poor. And the world should not only achieve universal access to energy by 2030, but it should do so while increasing efficiency by 40 percent overall, or 2.5 percent per year. Such steps will be necessary to not only reduce extreme poverty but also combat climate change.

These proposals and others were put forward yesterday by the Advisory Group on Energy and Climate Change (AGECC), a committee set up by U.N. Secretary-General Ban Ki-moon, charged with assessing the global energy picture and incorporating this into international climate change talks. Kandeh Yumkella, chairman of AGECC, insisted that his group's recommendations, while daunting, are not unprecedented.

"We call for smart private-public partnerships to do this, to spread electrification and to give access to various communities and to the energy-poor," said Yumkella.

Spending on new energy sources for the poorest may also be needed to head of future crises, Yumkella added. Most new oil and gas projects coming online today can be found in places like the Gulf of Guinea region in West Africa, the Middle East and Central Asia, where sophisticated hydrocarbon developments exist alongside pockets of extreme poverty and social unrest.


"It's not enough to just take energy out," said Yumkella.

Promoting electricity and alternative fuels

Among the five overarching recommendations outlined in their report, AGECC members are asking governments to launch a "global campaign" aimed at connecting impoverished rural and urban households to national electricity grids and distributing alternative fuel sources for cooking. The United Nations estimates that at least 2.5 billion people worldwide rely mainly on wood fuels -- charcoal or raw wood -- for cooking and other purposes, and the harvesting of wood for household or business use is one of the leading causes of deforestation.

Highlighted in their report is a call on governments to adopt a goal of universal energy access by 2020 and commitments to cough up the large sums of money that will be required to get there.

The group also recommends that each developing country adopt its own national strategy for expanding energy access while keeping overall greenhouse gas emissions levels low. Part of the strategies should include adoption of laws and policies that would encourage better private-sector investment in national energy infrastructures. Developed nations, meanwhile, should enhance their research and development efforts in energy efficiency and be willing to transfer any new technologies abroad, the group said.

The panel members pointed to precedents that suggest universal access can be achieved with the right policies put in place. China, Vietnam, South Africa and other rapidly developing nations are estimated to have linked more than 240 million of their citizens to the power grid for the first time between 1990 and 2000. If the world were to achieve that feat again, then universal access to reliable electricity supplies could be reached over the next 20 years.

"We believe the goal is achievable. It will, however, require strong commitment from national governments and the international community alike," said Helge Lund, CEO of the Norwegian energy firm Statoil and a member of the advisory group. "First, we need a robust framework of regulatory regimes to spur investment."

Connecting 25% of the world's population without power

Perhaps most controversially, the advisory group is asking that public and private sources deliver $35 billion to $40 billion each year in aid to expand access to energy, including replacing charcoal with modern fuels and extending power grids to urban slums and rural villages without. Of this, $20 billion to $25 billion should be in the form of concessional lending, while the rest should be provided as free grants, the group said.

AGECC is less clear about where this new funding could come from. Currently, total foreign aid payments by the Development Assistance Committee of the Organisation for Economic Co-operation and Development, comprising all Western aid donors and Japan, amounts to only about $10 billion per year, for all forms of aid.

Still, experts estimate that about a quarter of the world's population has no access to electricity at all, including 80 percent of all citizens in the poorest 50 nations of the Third World. And harvesting wood for fuel has resulted in devastating consequences for the natural environments in a number of developing nations, especially in sub-Saharan Africa. Massive amounts of fresh capital will be needed to fill the gap.

AGECC suggests tapping into the so-called "fast start funding," the $30 billion pool promised by developed nations over the next two years as part of the Copenhagen Accord. The $6 billion committed by the multilateral development banks for climate investment funds could also be steered toward expanding energy access.

The global carbon markets are also eyed as another potential source of revenue. Yumkella said that the United Nations' international carbon offsetting scheme, the Clean Development Mechanism, should be restructured to allow carbon credits to be awarded to charcoal substitution programs or for the provisioning of more efficient stoves, some of which can triple the efficiency of wood burning and cost as little as $15 a piece.

The private sector will also have to be compelled to invest in greater energy access for the poor, preferably through alternative energy sources but also through the development of fossil fuels as needed. Wary of the dangers of exacerbating the climate change problem along the way, AGECC says that natural gas should be prioritized over coal if alternative energy supplies are unavailable.

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