It is an alarming fact that today - in the 21st century - billions of people lack access to the most basic energy services: 1.3 billion people are denied access to electricity around the world and 2.7 billion people rely on the traditional use of biomass for cooking. More than 95% of these people are either in sub‐Saharan Africa or developing Asia and 84% are in rural areas. “Lack of access to modern energy services is a serious hindrance to economic and social development and must be overcome if the UN Millennium Development Goals (MDGs) are to be achieved,” says the IEA.
"Tackling the issue of modern energy access is crucial if the global community wants to achieve its goals of eradicating poverty and accelerating social and economic development. The United Nations 'International Year of Sustainable Energy for All' in 2012 is an excellent opportunity to agree rapid collective action. A target of universal modern energy access by 2030 is achievable and, as shown in this report, has only a small impact on global energy demand and carbon emissions." IEA Chief Economist, Dr. Fatih Birol.
In 2009, the IEA estimated that $9.1 billion was invested globally in extending access to modern energy services. In the absence of significant new policies, it projects that the investment to this end between 2010 and 2030 will average $14 billion per year, mostly devoted to new on‐grid electricity connections in urban areas. This level of investment will still leave 1.0 billion people without electricity and, despite progress, population growth means that 2.7 billion people will remain without clean cooking facilities in 2030, reports the Agency. “To provide universal modern energy access by 2030 annual average investment needs to average $48 billion per year, more than five‐times the level of 2009. The majority of this investment is required in sub‐Saharan Africa,” highlights the IEA.
Barriers to energy for all “surmountable”
However, the IEA is confident that the barriers to achieving modern energy access are “surmountable, as many countries have proven”. The Energy for all: Financing access for the poor report concludes that five actions are essential to transforming the situation:
1. Adopt a clear and consistent statement that modern energy access is a political priority and that policies and funding will be reoriented accordingly. National governments need to adopt a specific energy access target, allocate funds to its achievement and define their strategy for delivering it.
2. Mobilise additional investment in universal access, above the $14 billion per year assumed in our central scenario, of $34 billion per year. All sources and forms of investment have their part to play, reflecting the varying risks and returns of particular solutions. All need to grow. The sum is large, but is equivalent to around 3% of global investment in energy infrastructure over the period to 2030.
3. Private sector investment needs to grow the most, but significant barriers must first be overcome. National governments need to adopt strong governance and regulatory frameworks and invest in internal capacity building. The public sector, including multilateral and bilateral institutions, needs to use its tools to leverage greater private sector investment where the commercial case is marginal and encourage the development of replicable business models. When used, public subsidies must be well targeted to reach the poorest.
4. Concentrate an important part of multilateral and bilateral direct funding on those difficult areas of access which do not initially offer an adequate commercial return. Provision of end‐user finance is required to overcome the barrier of the initial capital cost of gaining access to modern energy services. Operating through local banks and microfinance arrangements can support the creation of local networks and the necessary capacity in energy sector activity.
5. Make provision for the collection of robust, regular and comprehensive data to quantify the outstanding challenge and monitor progress towards its elimination.
Renewables key
The IEA reports that renewables “play a large role in the Energy for All Case”. As a mature, reliable technology that can supply electricity at competitive costs, the Agency cites hydropower as one part of the solution. “It has a place in large on‐grid projects and in isolated grids for rural electrification, say the authors of the report. “The global technical potential for hydropower generation is estimated at 14 500 TWh, more than four‐times current production (IJHD, 2010), and most of the undeveloped potential is in Africa and in Asia, where 92% and 80% of reserves respectively are untapped.”
Equally, the IEA sees a place for biomass in providing universal access to electricity. “We estimate that to provide over 250 million households worldwide with advanced biomass cookstoves an additional cumulative investment of $17 billion will be needed to 2030. Additional investment of $37 billion is required in biogas systems over the projection period, providing access to around 70 million households”. The Agency concludes that advanced biomass cookstoves and biogas systems represent a relatively greater share of the solution in rural areas, while LPG stoves play a much greater role in urban and peri‐urban areas.
While the IEA admits that achieving the Energy for All Case is likely to increase global demand for energy by 179 million tonnes of oil equivalent (Mtoe), an increase of 1.1% in 2030, with fossil fuels accounting for around 97 Mtoe or over half of this increase, it forecasts that a rise in renewable energy use will help offset the need for more oil and gas to meet achieve the required increase in energy supply. “Other renewables, mostly solar and wind, enjoy the largest proportional increase in demand in 2030, providing additional deployment opportunities,” it concludes.
International concern about the issue of energy access is growing. While the United Nations Millennium Development Goals do not include specific targets in relation to access to electricity or to clean cooking facilities, the United Nations has declared 2012 to be the “International Year of Sustainable Energy for All”.
The Energy for All Conference in Oslo (Norway) held on Monday and the COP17 in Durban, South Africa (December 2011) are important preliminary opportunities to establish the link between energy access, climate change and development. These issues can then be addressed at the United Nations Conference on Sustainable Development (Rio+20) in Rio de Janeiro, Brazil in June 2012. “That conference will be the occasion for commitments to specific action to achieve sustainable development, including universal energy access,” ends the IEA.
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