Funding devils in the detail of the UN’s energy targets

  

SPECIAL REPORT: Funding plans for initiatives as ambitious as the UN’s Sustainable Energy For All project (SE4ALL) traditionally contain as many details as they do devils, and from financing sources to fossil fuel emissions, SE4ALL is no exception.

The UN is committed to three 2030 targets that mesh energy politics with emissions reductions and the global poverty eradication agenda: a doubling of global renewables and energy efficiency improvements, along with providing universal energy access to all.

The initiative has already notched up some impressive achievements, with a claimed $50 billion of investment from businesses and investors backed up by tens of billions of dollars more from governments, multilateral development banks and civil society groups. 

Earlier this year, an EU technical facility was set up with a €50 million budget to spend over the next two years. At the Rio+20 Conference in June, the EU president, José Manuel Barroso also proposed to mobilise €400 million by June 2014 “to support concrete new investments”.

“We are very aware that our money alone won’t be sufficient [to meet the SE4ALL goals] as you need billions of investment,” Catherine Ray, a spokeswoman for the Development Commissioner, Andris Piebalgs told EurActiv.

 The idea was that the “EU money would be used as grants and mixed with development bank funding from the European Investment Bank or African Development bank to create innovative methods of financing,” she said.

The EU has pledged to help provide energy access to 500 million people currently lacking supplies, and this is considered a concrete pledge by SE4ALL and Brussels alike.

“It’s a clear commitment, no doubt,” said Christope Yvetot, the United Nations Industrial Development Office’s representative to the EU told EurActiv. “The €400 million is already secured and allocated, and in 2030 they want to report that they have connected 500 million people.”

Despite an economic crisis, which has seen cuts in climate protection of €3.8 billion in Spain, €3.1 billion and €1.5 billion in Germany, Yvetot said that future EU funding would continue and refocus on the energy priorities of the world’s poorest countries.  

The German government has committed to helping provide energy access for 100 million people, Norway has pledged €232 million for an 'Energy+' sustainable energy package, and the UNSE4ALL goals could be incporated into post-2015 development frameworks.

"A global tracking framework is being developed which will be used to track progress against the goals to 2030, with institutional arrangements to support it," Simon Trace, the chief executive of Practical Action, an environmental NGO told EurActiv.  

Successes and limitations

The success of fundraising in this UN Year of Sustainable Electricity may be measured by the fact that the UN General Assembly is reportedly soon to vote on extending it to cover the decade.

But the huge sums collected so far still fall far short of the $48 billion per year that the International Energy Agency says will be needed to actualise the universal access to energy goal alone.

Questions such as total project costs, what percentage should come from the public sector, and whether it should be measured to ensure that it is new and additional to what would have happened anyway, remain to be resolved.

Yvo de Boer, the climate change advisor to the KPMG group and former secretary of the UN Framework Convention on Climate Change (UNFCCC), says that a ballpark estimate based on historic ratios would see 85% of funding coming from the private sector.

Policy incentives

“The critical question is how government policy incentivises or drives private setcor investment in the right direction,” he told EurActiv.

De Boer highlighted three instruments for intervention to ensure the proper pricing of carbon as a driver for greenhouse gas reductions. “You need taxation, you need trading and you need regulation,” he said.

“I personally believe that the challenge we face is now so massive that we don’t really have the option of picking one or two of those, we need to go for all three.”

One emissions reduction instrument expected to be finally unveiled at the Doha Summit is the Green Climate Fund.

“Funding [for SE4ALL] could come from the Green Climate Fund,” Yvetot said. “I hope it will be open for any activities to deal with energy systems, because energy efficiency can dramatically reduce emissions.”

However, UN SE4ALL’s measurements will not be counting the additionality of such investments. “We don’t make the distinction,” Yvetot said. “The important thing was to put energy back on the agenda.”

This does however mean that, for instance, Microsoft’s commitment to going carbon neutral can be cited as a SE4ALL achievement even though the initiative is not mentioned in Microsoft’s literature announcing the move.

Public funds enabling electricity?

Another initiative, Enabling Electricity, launched by the Italian energy firm Enel claims that it will double the one million people worldwide utilizing the company’s energy access programs.

Marina Migliorato, Enel’s head of corporate social responsibility told EurActiv that UN funds “boosted our projects but we were already fully aware that sustainable energy can definitely create the environment to foster Human Development.”

The use of public sector support for private investment was “essential,” she said, singling out “a need for long-term and effective market mechanisms and legislative frameworks to support and motivate private sector actions.”

“It is a reality that sustainable access to energy requires robust financing mechanisms to address the specific needs of stakeholders,” she said.

Enel investments have paid for local solar photovoltaic projects for rural communities which do not involve grid connections, but also infrastructure projects for new network connections, which do.

As well as transporting whatever energy a host country mostly uses, central grid-based approaches can have transmission losses and problems in matching demand to supply which can raise carbon emissions.

Other innovatory Enel projects though, such as pricing mechanisms that have provided €420,000 in discounts to more than 300,000 families who brought their waste to recycling collection points will clearly have a CO2-reducing effect.

“The important thing about this initiative is that it puts climate and energy-related issues in a developmental context,” De Boer said.

“The primary concern of many people in the south is economic growth and poverty eradication [while] climate change is something they’ll get round to addressing afterwards, so in that sense I think it is very constructive,” he said.

Timeline: 
  • 2030: Deadline for UN SE4ALL goals to be met
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