Energy for Growth Hub
Impact Story Apr 01, 2022

US Adopts More Nuanced Pro-Development/Pro-Climate Approach to Downstream Gas Investment in Poor Countries

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Impact Summary: With global climate goals front-of-mind, the United States and 38 other countries signed a 2021 pledge to terminate public support for fossil fuel projects overseas. But a blanket ban on public financing for gas without flexibility for the world’s poorest countries risks exacerbating poverty and hindering the move to cleaner cooking solutions — all without a meaningful impact on global emissions. 

We worked publicly and behind-the-scenes with policymakers and funders who care about both climate and development to design more nuanced policies that tailor investment to local contexts, and support gas where it’s truly needed while helping countries scale clean energy alternatives as quickly as possible. 

Why It Matters

Decisions about the future of natural gas are driving global geopolitics and shaping local economies. Many low-income countries — even as they work to attract investment in renewables — depend on natural gas to produce the reliable electricity they need to create jobs and power hospitals and businesses. In some cases, they’re also using it to reduce their emissions by transitioning away from heavy fuel oil and traditional biomass for cooking.

The 2021 pledge to end public finance for all fossil fuels was meant to reduce global emissions. But the world’s poorest countries emit only a tiny fraction of the world’s carbon, and struggle to get renewable projects financed at all — let alone at scale. Because most energy projects in these developing markets depend on concessional finance or other international support, the pledge risks having enormous impacts on poor countries — effectively preventing them from building new gas-fired power plants or expanding the use of gas cookstoves, without providing easy access to cleaner options. Ultimately, this could constrain their ability to reduce poverty, adapt to climate change, and strengthen their economies and security.

What We Did

Put a spotlight on rich-country hypocrisy. Our infographics and articles highlighted how bans on natural gas finance in poor countries are inconsistent with how the US, EU, and other wealthy nations prioritize securing gas for themselves, for example, Europe to Africa: Gas for Me but Not for Thee by W. Gyude Moore and Todd Moss in Foreign Policy.

We also used data to put Africa’s emissions in context to help decision makers more accurately weigh climate and development trade-offs and understand how minimal the emissions contribution of new African gas plants would actually be, for instance, Why the Climate Panic About Africa Is Wrong by Vijaya Ramachandran and Todd Moss in Foreign Policy.

Created and shared two memorable data points that were used repeatedly by American, African, and global leaders, journalists, and policy influencers.

Both data points were used by journalists and policy influencers in pieces in Axios, Nature, the Center for Strategic and International Studies, The Hill, Breakthrough Institute, World Economic Forum, Business Insider Africa, Foreign Policy, Bloomberg Next Africa, African Business, and the Economist, and more.

Responded to African leaders’ requests with additional data analysis and ideas. Privately, several African leaders reached out to us with their perspectives and frustrations. They used Hub data and policy points in their own op-eds, speeches, and meetings to call for international policy that better reflected their countries’ needs and goals.

Briefed the World Bank board. At the invitation of African executive directors, Katie Auth, Rose Mutiso, and Todd Moss briefed the full board in February 2022 on energy poverty and how the World Bank can power growth through energy investments while avoiding harm through overly restrictive rules. The board very rarely invites outsiders to give briefings, signaling both the importance of this issue and the Hub’s leadership and credibility.

Proposed nuanced pathways that are both pro-development and climate-sensitive. For instance:

Worked closely with US government colleagues to find a pragmatic approach. The Hub team collaborated with White House staff, the U.S. Treasury, and staff at the Development Finance Corporation and on the Special Presidential Envoy for Climate team to find practical ways to finance downstream gas projects in poor countries that achieve both development and climate goals. In private briefings and public events with USG counterparts, we shared additional data analysis, policy insights, and new ideas to accelerate coal plant retirements, create win-win gas financing rules, and build a deeper clean energy project pipeline.

Seized the moment to push for compromise. Russia’s invasion of Ukraine thrust energy security back to the top of the global agenda, while European shopping for Africa gas contracts opened a window for a more constructive approach to gas financing in low-income countries.

Policy Nudge Impact: A subtle but significant policy shift in the US approach to downstream gas investments in poor countries

Starting in mid-2022, US policy became more nuanced, recognizing the scale of energy inequality, greater country-specific context, and a better understanding of what it will take to build a high-energy, low-carbon future in emerging and frontier economies — particularly in Africa.

  • A new White House Africa strategy released in August 2022 explicitly recognized gas. It said, “The United States will work closely with countries as they determine how to best meet their specific energy needs, which include pursuing energy access and economic development goals through technologies such as energy efficiency and renewable energy, as well as gas-to-power infrastructure.”
  • US Climate Envoy John Kerry began using more nuanced diplomatic language acknowledging that the 48 countries of sub-Saharan Africa emit only 0.55% of global emissions and that, by contrast, twenty countries, including the United States, are responsible for 80 percent of global emissions. He also noted that gas will be a component of the energy transition in poor countries.
  • The World Bank has clarified its renewed openness to gas investment and released updated guidelines for energy investment.

Bottom line impact → Our efforts converged with rapidly changing global energy security dynamics to shape a more nuanced approach to downstream gas investments African countries (and other lower-income economies) need for a high-energy future that benefits people and the planet.

Key players:

  • Katie Auth, Policy Director, Energy for Growth Hub
  • Murefu Barasa, Fellow, Energy for Growth Hub, and Managing Partner, EED Advisory
  • Vijaya Ramachandran, Hub Board Member and Director for Energy and Development at the Breakthrough Institute.
  • Todd Moss, Executive Director, Energy for Growth Hub
  • Rose Mutiso, Research Director, Energy for Growth Hub
  • Mark Thurber, Hub Fellow and Stanford University
  • W. Gyude Moore, Hub Board Member and Policy Fellow at the Center for Global Development

Learn more about the future of natural gas.