Energy for Growth Hub
Blog Apr 21, 2021

Ten reasons for optimism in the fight against energy poverty and climate change

It’s easy to feel daunted by the overlapping (and overwhelming) challenges of simultaneously ending energy poverty and tackling…

Better Metrics and Data

It’s easy to feel daunted by the overlapping (and overwhelming) challenges of simultaneously ending energy poverty and tackling the climate crisis. This Earth Day, here are 10 reasons we’re actually feeling optimistic:

  1. African economies may be recovering faster than expected. COVID-19 has crippled economies across Africa, but some forecasts for recovery look surprisingly good. The World Bank projects regional GDP growth in 2021 of up to 3.4%, and even higher in non-resource dependent economies like Côte d’Ivoire and Kenya. Accelerated vaccine distribution would be a huge help — and (believe it or not) there’s good news there too. The Center for Global Development’s Charles Kenny notes that this year COVAX aims to deliver 1.8 billion doses to lower-income countries, and the Duke University Global Health Innovation Center estimates enough vaccines will be produced in 2021 to cover 70% of the world’s population.
  2. Economic growth is decoupling from carbon emissions. Earlier this month, Breakthrough Institute’s Zeke Hausfather noted that since 2005, 32 countries with a population of at least 1 million have absolutely decoupled their emissions from economic growth. So far, these are mostly wealthy countries, and GDP growth is neither the best nor the only measurement for progress and wellbeing. But this trend, as Zeke points out, reminds us that “linkages between emissions and economic activity are not an immutable law, but rather simply a result of our current means of energy production.”
  3. Energy access is no longer the problem in most countries. Achieving universal electricity access remains a major challenge, but we’ve made huge progress. As of 2018, 156 countries had electricity access rates over 90%, including emerging economies like the Philippines and South Africa. This is up from just 140 countries in 2013 and 128 in 2008. Countries like Ghana and Bangladesh are not far behind, with rates above 80% and moving fast towards universal access. While there’s still a lot of work to be done, this is a moment to celebrate — and, more importantly, to raise our ambitions — increasing our focus on ensuring not only access to basic electricity, but to abundant, reliable, and affordable energy to power economies and especially job creation.
  4. Renewable capacity additions in 2020 beat estimates and all previous records. IRENA announced that over 80% of all new generation capacity last year was renewable. Between 2011 and 2020, Africa added nearly 26,000 MW of renewable capacity, mostly in just the last few years. Progress in certain countries is even more striking: for example, Senegal’s renewable capacity during that time grew by more than 600%. Although net capacity additions in Africa remain small compared to other parts of the world, ambitions are big.
  5. South Africa took a big step forward on energy storage. Expanded deployment of batteries will enable greater renewable shares and decrease reliance on fossil fuels. Affordability is still a huge challenge at smaller scales and in emerging markets. But battery prices continue to fall: NREL projects that costs for 4-hour lithium-ion storage systems will decrease as much as 63% by 2030. In March 2021, South Africa included 3 renewable + storage projects among the 8 preferred bids, indicating promising opportunities for growth on the continent.
  6. More funders are paying attention to the grid. A frequent criticism of development finance in the energy sector (including by me) has been its preponderant focus on generation, even though grid systems represent one of the greatest barriers to solving energy poverty and scaling up renewables. While MDBs have long provided concessional loans for grid extension and rehabilitation, a wider range of donors are now getting involved. For example, the Millennium Challenge Corporation made strengthening Senegal’s transmission network one of three core components of its Power Compact. USAID supported Angola’s national transmission company as it managed expansion of a transmission line to join the country’s multiple regional grids. And the British CDC Group launched Gridworks, a promising investment platform focused on grid systems and utilities.
  7. If we improve electricity reliability, we can reduce both greenhouse gas emissions and local pollution. Investments in the grid can help address the rampant unreliability of power in emerging economies, which drives the widespread use of back-up generators. Yael Borofsky’s recent memo for the Hub highlights a few jarring stats. Back-up generators provide 40% of all electricity consumed in West Africa. Across sub-Saharan Africa, diesel generators produce as much CO2 as 20% of the region’s vehicles, and represent a major source of harmful pollutants. Improving reliability is a huge opportunity to simultaneously tackle energy poverty and environmental challenges — not to mention economic competitiveness.
  8. Private investors are shifting to clean energy. Corporate interest in climate and clean energy is surging, with many companies targeting net-zero emissions. While many such pledges remain worryingly vague, corporate investment in renewables is definitely increasing. Corporations purchased a record 23.7 GW of clean energy in 2020, up from just 13.6 GW in 2018. And more than 300 companies worldwide have now joined the RE100, committing to 100% clean energy. The US remains the largest market for corporate renewable procurement, but other regions are gaining ground. In South Africa, Sasol and Air Liquide just issued an RFP to jointly purchase 900 MW of renewable capacity by 2030, Africa’s largest private sector procurement to date.
  9. Next generation energy technologies will (hopefully) get the investment they need. Only a subset of the technologies needed to achieve net-zero are widely available today — but major players are increasingly recognizing the importance of early-stage funding to stimulate development and commercialization. Breakthrough Energy is building ‘Catalyst’, a financing platform to commercialize emerging technologies including green hydrogen, sustainable aviation fuel, long-duration energy storage, and direct air capture. And US President Biden’s proposed American Jobs Plan includes roughly $1 trillion for climate-related investments, including increased R&D and pilot projects in areas like energy storage and hydrogen.
  10. Broad emerging economy participation at COP? And finally, something we’re hoping for: In the lead-up to COP26, major economies like the US, India, China and the Europeans are jockeying to make bold statements and big new headline commitments. But we hope this round of negotiations is also the moment when emerging economies, particularly those in countries with low per capita emissions and low energy consumption, assert their perspectives and priorities on what a truly fair and equitable global energy transition should look like. We’ll be watching events in the run-up, including the US-hosted virtual Leaders Summit on Climate, which will include 40 world leaders — including 5 African heads of state.