Analysis

The Developing World Needs Energy—and Lots of It

At COP26, leaders must find ways to allow much greater economic growth across large parts of the world.

By , a columnist at Foreign Policy and the co-founding dean of the Columbia Climate School.
A Zimbabwean boy does his homework by candlelight in Harare, Zimbabwe, on June 26, 2019.
A Zimbabwean boy does his homework by candlelight in Harare, Zimbabwe, on June 26, 2019. JEKESAI NJIKIZANA/AFP via Getty Images

When the world gathers in Glasgow, Scotland, next week for the United Nations climate summit, known as COP26, many climate leaders and activists from Africa and other parts of the developing world will be notably absent as they find it near impossible to get vaccinated against COVID-19.

While this glaring disparity between rich and poor countries concerns health care, it is also a reminder that when it comes to climate change, developed and developing countries have vastly different needs that must be taken into account to put the world on a fair and just path to climate action.

Time is running short to act on climate change. At current emission rates, the amount of greenhouse gases that can be emitted without exceeding warming levels of 1.5 degrees Celsius could be exhausted in roughly a decade. Climate change is the result of cumulative carbon emissions over time. One-quarter of total emissions from the beginning of the industrial age until now have come from the United States and nearly as much from Europe. A mere 2 percent has come from the entire continent of Africa.

When the world gathers in Glasgow, Scotland, next week for the United Nations climate summit, known as COP26, many climate leaders and activists from Africa and other parts of the developing world will be notably absent as they find it near impossible to get vaccinated against COVID-19.

While this glaring disparity between rich and poor countries concerns health care, it is also a reminder that when it comes to climate change, developed and developing countries have vastly different needs that must be taken into account to put the world on a fair and just path to climate action.

Time is running short to act on climate change. At current emission rates, the amount of greenhouse gases that can be emitted without exceeding warming levels of 1.5 degrees Celsius could be exhausted in roughly a decade. Climate change is the result of cumulative carbon emissions over time. One-quarter of total emissions from the beginning of the industrial age until now have come from the United States and nearly as much from Europe. A mere 2 percent has come from the entire continent of Africa.

Unsurprisingly, average per capita electricity consumption in the developed countries of the Organization for Economic Cooperation and Development is more than 50 times higher than it is in sub-Saharan Africa (excluding South Africa). Despite years of progress, the number of people without access to electricity rose last year to nearly 800 million people. Roughly 2.5 billion people still cook using wood, charcoal, or dung.

There is no ethical way around energy use in the developing world rising sharply for many years to come. Creating a fair and just energy transition needs to allow for much greater economic growth in the developing world. And let’s be clear: This does not just mean the amount of energy needed to achieve “energy access”—often defined as being able to charge cell phones or power lights—but to allow households to have cars, refrigerators, and air conditioners, businesses to industrialize, and agriculture to mechanize. All of that requires vast quantities of energy, especially as Africa’s population is poised to double to more than 2 billion by 2050.

To start, we need to recognize that the solutions that work for Europe, Japan, and the United States may not always work in the developing world.

But if nothing is done, that growth will severely exacerbate climate change—the worst impacts of which will occur in the very same poorest, most vulnerable countries. Indeed, on the current trajectory, the International Energy Agency (IEA) projects emissions to fall in advanced economies, but global emissions will continue to rise as that drop is more than offset by growth in developing and emerging nations.

Advanced economies must lead the way to reduce their own emissions far more rapidly. But there is no solution to the climate crisis that does not also prioritize developing and emerging market countries, where emissions will grow most quickly. How, then, to reconcile the tension between rapidly curbing emissions and providing enough energy for meaningful prosperity in lower-income countries?

To start, we need to recognize that the solutions that work for Europe, Japan, and the United States may not always work in the developing world. For example, charging a car may not be viable in countries with hours of blackouts per day and where grids are backed up by diesel generators. Clean cooking requires shifting from air-polluting biomass and coal stoves to liquefied petroleum gas, not just electric-powered induction cooktops. And the cost to decarbonize construction activity, such as producing the vast quantities of steel and cement needed for new roads and buildings in rapidly growing economies, is still prohibitively high.

Then, we need to acknowledge that helping the developing world to navigate the transition is as much a financial problem as it is a technical one. To that end, wealthy nations pledged in 2009 to provide $100 billion annually in climate finance to low-income countries by 2020. Not only has that not happened, but that figure is still a rounding error compared with the roughly $1 trillion to $2 trillion needed annually in clean energy investment in developing and emerging market economies to achieve net-zero emissions by 2050. By contrast, clean energy investment in those nations was only $150 billion last year.

Renewable electricity is not the entire answer—sun and wind are intermittent, and electricity cannot yet power certain sectors, such as ships, steel, and cement—but the low cost of solar and wind means that transforming the power sector through renewable energy and energy efficiency is a good place to start. Beyond renewable energy, low-income economies undergoing rapid growth, urbanization, and industrialization require technologies such as hydrogen, carbon capture, and more efficient heavy transportation and industrial equipment to be much cheaper. Investment by advanced economies to drive down the cost of these solutions is its own form of climate assistance.

To do so, access to financing and cost of capital are critically important because renewable energy is more capital-intensive than fossil fuels, even if the long-term operating costs are lower. Yet obtaining financing in poor countries is difficult and expensive. Due to a lack of experience with renewable energy, local banks are often reluctant to lend to such projects.

Meanwhile, foreign investors often view projects as risky, as local utilities may not be not creditworthy. In addition, investors face currency and inflation risks in many developing countries and thus may worry about recouping their upfront investment if bills are paid in local currency. Political risk, corruption, and inconsistently enforced regulations are also problems. It is also harder to build clean energy infrastructure without adequate infrastructure: It is harder to sell clean electricity if electric grids are unreliable or build projects with inadequate roads, communication networks, and ports.

To achieve net-zero by 2050, more than 70 percent of clean energy investment in developing and emerging markets will need to come from the private sector, according to the IEA. Governments must thus do more to mobilize that capital. For example, institutions such as the World Bank and the U.S. Development Finance Corporation can lend to local banks at affordable rates, finance projects in local currency, and expand the availability of loan guarantees. Or they can lend to project developers directly. Blended capital from development finance institutions can go a long way to spur private investment.

Developing nations need to do their part, too, to reduce political risk and corruption, streamline licensing procedures, remove restrictions on foreign direct investment, and offer transparent, predictable, and competitive tendering opportunities. Reforming weaknesses in local banking and capital markets can also help create a future in which developing countries can build and finance these projects indigenously.

Next week’s climate summit will throw into sharp relief the stark divide between rich and poor countries. As attention then shifts to next year’s U.N. climate meeting in Africa, wealthier nations must go far beyond their pledge of $100 billion in climate finance to catalyze the trillions of dollars in global private clean energy investment necessary to enable developing countries to prosper while also curbing and coping with climate change.

Jason Bordoff is a columnist at Foreign Policy, the co-founding dean of the Columbia Climate School, the founding director of the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, a professor of professional practice in international and public affairs, and a former senior director on the staff of the U.S. National Security Council and special assistant to President Barack Obama. Twitter: @JasonBordoff

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