Over the next decade, fast-growing developing nations will contribute to the bulk of the increase in energy consumption. However, the responsibility of adopting sustainable growth does not – and cannot – fall on them alone. A global shift towards more sustainable growth needs innovative and responsive policies that can only be implemented with international cooperation.
The world today is the most interconnected it has ever been. While this generates economic, cultural, and political benefits, interconnectivity also creates dependencies and vulnerabilities. The COVID-19 pandemic has reminded us of the latter, triggering effects ranging from the economic impact on remittances to the financial endangerment of tourism-dependent small island developing states. No one is truly safe until we all are.
The interconnectedness of this global crisis should also serve as a wake-up call to the effects of climate change, which, unlike the current pandemic, is being driven explicitly by human activities. Since the climate crisis has grown largely by fossil fuel-led energy consumption over the last century, it is very necessary to address how and whether countries shift their energy generation and consumption behaviour. There is also an urgent need to support countries that are experiencing more vicious climate shocks than others and to help them build resilience.
While there are still almost 770 million people without access to electricity worldwide, developing countries have recently been making great strides with their electrification plans (such as India, with 99% energy access achievement through its Saubhagya Scheme). These efforts are in line with SDG7 (ensure access to affordable, reliable, sustainable, and modern energy); however, increased electrification using fossil fuel-based energy leads to increased CO2 emissions, which contributes further to climate change. More growth in developing countries will in turn lead to greater demand for energy.
Mitigating climate change requires global collaboration. While commitments such as the Paris Agreement of 2016, and climate dialogues such as COP-26 are a necessary step towards mitigation, there remains the need to enhance mitigation strategies by addressing the unique barriers faced by developing countries. Such strategies can include:
- Collaborative energy transition: Over the next decade, the bulk of the increase in energy consumption will come from developing countries. Thus, there is a need for these countries to find cleaner ways to service their energy demand. This responsibility must not fall solely on these fast-growing developing countries. Global collaboration is needed to generate knowledge around feasible renewable energy solutions. This should be applied in a targeted way to support growth in energy demand while reducing local and global air pollution. Additionally, national governments must also create an environment that fosters competition and technology inflows that harness their renewable energy potential. For example, sub-Saharan Africa has approximately 474 gigawatts of potential hydropower, wind, and geothermal capacity, and 11 terawatts of potential solar capacity. However, most countries in East Africa still predominantly rely on fossil fuels for energy. A regulatory environment that enforces quality control and depoliticises energy generation and distribution is important and is best done with the support of development partners that add credibility and set international standards. For example, the International Finance Corporation (IFC) is setting up laboratories across Africa to test and ensure off-grid lighting products meet quality and performance standards before entering the domestic market. Further, both developed and developing countries should make efforts to put in place channels for new technology to be utilised where it is most needed. New reforms such as the removal of fuel subsidies that encourage the adoption of renewables and deter excessive fossil fuel consumption should also be introduced. It is also necessary to consider the transition in relation to fragile and conflict-affected states, which requires a new power planning approach.
- Market integration: The cost of renewables has fallen greatly over the last decade – especially for solar power – which makes renewables cost-competitive. However, there are still concerns around the intermittent nature of some renewables as their importance grows. Both developing and developed countries must develop policies that prevent this intermittency from being a barrier to increased adoption. One way of doing this is through market integration, whereby regional integration can lower the risk of unexpected supply fluctuations, and in turn, increase the overall value of renewable energy production.This can be especially relevant for developing countries where electricity integration is typically low (e.g. just 5% of energy is traded across countries in Africa). In addition to overcoming intermittency issues, market integration can also help equalise energy prices across countries. However, this should be complimented with competition, pricing schemes, political buy-in, and good levels of consumer information.
- Leveraging finance: Although the cost of renewables has been declining, when countries face credit and capital constraints, it becomes difficult for them to adopt renewables. This is the case for many low-income countries, especially those incurring costly debts due to COVID-19. Thus, it is important to design and implement effective financing mechanisms for renewables in such countries. However, the responsibility for this does not only fall solely on these governments. They need support from the private sector, international organisations, and philanthropic foundation – especially for bridging the finance gap in fragile environments. Innovation can further ensure the market affordability of new technologies. M-KOPA, for instance, is a pay-as-you-go model in Kenya (based on the M-Pesa mobile money payment system) that makes solar power-based home systems affordable for low-income households. Investments in energy-efficient appliances and products such as green transportation is also necessary, and incentives should be offered to mobilise investments in renewables. This includes innovative investment vehicles, such as diaspora funds.
Having witnessed due to COVID-19 how dependent countries are on one another, serious efforts to mitigate climate crisis are required. These efforts need to come from developing countries, that account for the bulk of the increase in energy demand over the next decade, as well as developed countries and key players worldwide. Both climate change mitigation and adaptation strategies are important. Mitigation primarily requires a transition to increased renewables, as well as market integration and leveraging financing solutions.
Editor’s note: This is the first of the two-part blog series that explores climate change mitigation and adaption strategies for developing countries through the lens of an interconnected world in the context of the current COVID-19 pandemic. Part 2 can be found here.
Disclaimer: The views expressed in this post are those of the authors based on his experience and on prior research and do not necessarily reflect the views of the IGC.