Driving accountability: Access to energy
As the world counts down less than 7 days until COP27, conversations continue to intensify on the urgent actions that global leaders can take to limit the effects of the climate crisis. One of our contributions to the conversation is a new, limited edition blog series that will present key insights and reflections ahead of the major climate conference of parties in Sharm El-Sheikh, Egypt this November. This blog is the third installation of our “Road to COP27” series, authored by research analysts from WBA’s Climate and Energy Benchmark Transformation Team. Each blog will discuss a different topic of global importance related to global climate policy that will be on the decision-making table at COP27. Our Climate and Energy Benchmark methodology includes considerations for social indicators such as just transition, yet through this blog series, our researchers will begin to explore a wider scope of climate policy topics. These topics may reach beyond our benchmarks but remain highly critical to the global discussion on corporate responsibility to act on climate change.
The invasion of Ukraine by Russia that started last February and resulted in an ongoing war is credited for helping trigger a global crisis, during which energy prices have drastically increased. For electricity retail prices alone, prices have increased by almost 50% year-on-year from July 2021 within the European Union. The World Bank estimates that global energy prices (including oil, gas and coal) will also increase by about 50% by the end of 2022.
Even though the current geopolitical context is challenging, one needs to keep in mind that access to energy is far from being a reality for all people. The global share of population without access to electricity dropped from 17% in 2010 to 9% in 2020, representing 733 million people, IEA says. It is also important to note that 77% of people lacking access to energy live in Sub-Saharan Africa, often in countries where populations grow fast. The three countries with the biggest populations without access to electricity are Nigeria (92 million), Democratic Republic of the Congo (72 million) and Ethiopia (56 million).
Even more worryingly, an estimated 2.4-2.6 billion people around the world still lacked access to clean cooking solutions (technologies and fuels) in 2020. 35% of them are located in sub‐Saharan Africa, 25% in India and 15% in China, according to the IEA Net-Zero by 2050 report. However, this sector is less discussed and studied, for three main reasons: none of the related sectors (energy, health, climate, etc.) allocate enough public investment to it; groups that are the most affected are vulnerable (women, children, low-income and rural populations); solutions often are too expensive for concerned populations. However, access to clean cooking solutions is of prime importance to prevent serious negative impacts to public health, environment, economy and gender equality in concerned countries.
The topic has been gaining global attention since early 2000, and back in 2015 it was adopted and specified within the 17 Sustainable Development Goals (SDG) on United Nations General Assembly (UNGA). Thereby, SDG7 is to ‘ensure access to affordable, reliable, sustainable and modern energy for all’, which means reaching universal energy access, by 2030. The UN custodian agencies responsible for tracking progress on SDG7 are the International Energy Agency (IEA), the International Renewable Energy Agency (IRENA), the United Nations Statistics Division (UNSD), the World Bank, and the World Health Organization (WHO).
Complementing this, the IEA defines energy access as “a household having reliable and affordable access to both clean cooking facilities and to electricity, which is enough to supply a basic bundle of energy services initially, and then an increasing level of electricity over time to reach the regional average.”
Other topics are embedded in SDG7, such as deployment of renewable energy, energy efficiency and international public financial flows. Some targets have also been defined for these. That being said, this blog will mainly focus on energy access, which is related to the target 7.1 of the SDGs: “By 2030, ensure universal access to affordable, reliable and modern energy services.”
What is the current state of play?
To tackle energy access related issues and make SDG7 a reality, the UNGA has set a specific agenda with important steps these last years. 2012 was defined as the “International Year of Sustainable Energy for All”, right after the creation of the dedicated organisation SEforAll in 2011. Back then the “Decade of Sustainable Energy” was declared for the 2014-2024 timespan. An overview of the appraisal of this decade will provide vital information to estimate how deep the progress has been on reaching universal energy access.
More recently, in September 2021, the UN organized the High-Level Dialogue on Energy, gathering 130 Heads of State and Government, high-level representatives and multi-stakeholder leaders. A ‘Global Roadmap for Accelerated SDG7 Action’ has been defined. The first milestone is to make electricity available to 500 million additional people and 1 billion people for clean cooking solutions by 2025, which represent about 70% and 40% of targeted populations respectively. The second one is to reach universal energy access by 2030.
All stakeholders are expected to contribute to these highly ambitious targets: Member States, international organizations, multilateral development banks, businesses, civil society, scientific communities, cities and regional governments. In its theme report on energy access, the UN presents a ‘results and actions’ matrix dedicated to various stakeholders. Expected results are summarized in four categories:
- Reinforcing policy and regulatory frameworks
- Catalysing, harnessing and redirecting finances
- Enhance socioeconomic inclusiveness
- Aligning cost, reliability, quality, and affordability
How can the private sector contribute to achieving universal access to energy?
The World Benchmarking Alliance (WBA) aims to hold the private sector accountable for advancing the SDGs. On access to energy, both service providers and private financiers have an important role to play.
Providing universal access to electricity cannot be done thanks to a “one size fits all” technology. Basically, two main options are available: creating/extending a grid at the regional, national or even international (such as in Europe) levels; or implementing mini-grid/off-grid systems to ensure local production. Both ways present advantages and drawbacks, meaning that for each country where large shares of population still do not benefit from electricity access, various factors are to be taken into account: physical geography, distribution of people within the territories, climate conditions, financial resources, local policies, etc. In its Net-Zero scenario, the IEA estimates that “around 45% of those who lack access to electricity by 2030 gain it via a connection to a main grid,” which means that the other 55% will rely on the so-called mini-grid and off-grid solutions.
Clean cooking solutions encompass both fuels and technologies. Proposed solutions need to be contextualized to have any chance to get accepted and used by populations. The IEA Net-Zero scenario considers improved biomass cookstoves (ICS) run with 4 types of clean fuels: modern bioenergy, natural gas, liquified petroleum gas (LPG) and electricity. The Clean Cooking Alliance (CCA) lists more than a tenth of fuels and more than 450 models of stove as ‘clean’, highlighting the diversity of solutions to ensure access to clean cooking.
Consequently, research and development efforts are not the biggest lever to be activated anymore. It is however often mentioned that lowering costs and ensuring that provided solutions are scalable is of prime importance to ensure their accessibility to all. During Climate Week NYC 2022, Power for All presented its new report and insisted on the fact that access to energy does not suffer from technology limits, but rather distribution and implementation limits.
A high priority is to de-risk and attract more private sector investments. Many studies highlight the necessity of public sources of finance and encourage public-private partnerships. Various financing mechanisms have been proposed by SEforAll as viable solutions to support the access to energy target. A successful example lies in the deployment of more than 4 million solar home systems in Bangladesh, thanks to the Infrastructure Development Company Limited (IDCOL) program, accompanying private actors in applying for grants and debt financing. Impressive results have shown: the number of people without access to electricity halved in only two years, from 13 million in 2018 to 6 million in 2020.
What’s next?
It is highly important that among other stakeholders, private actors show some commitment to the universal energy access target. The WBA Benchmarks, which focuses on keystone companies do not currently directly assess contributions to this target. It has been decided not to create an in-house dedicated methodology to do so at this point in time, mainly because many other (smaller) actors are expected to have a significant role to play.
Nationally Determined Contributions (NDC) are the vehicle used by countries to show their contribution to the Paris Agreement Goal. On their side, companies more and more submit climate targets such as net-zero ones. In the same spirit, the UN and SEforAll have created the Energy Compact, which aims to be the equivalent vehicle when it comes to SDG7, for all relevant stakeholders. The first-ever EnergyNow SDG7 Action Forum hold by the UN-Energy highlighted that to date, Energy Compact commitments have generated US$ 46 billion in investment and provided enhanced electricity access to 6 million people and improved access to clean cooking for 14 million people. Actors from the sector can use this vehicle to show their commitment and participate to the needed momentum that will help achieve the SDG7.
Reporting tools are also important to benefit from data that enable to evaluate the picture of where we stand about access to energy. To boost the relevance of data that is collected and used afterwards, SEforAll and the World Bank published in 2015 a Multi-Tier Framework. This approach allows, thanks to household surveys, collection of granular information that goes further than a binary yes/no answer about getting access to energy, including for instance the usability of the service provided. It can be used for both electricity and clean cooking sectors.
WBA encourages private actors to submit their own Energy Compact, in order to state their objectives and plans related to access to energy. Quick, significant and relevant actions are needed to keep the hope of achieving SDG7 alive. The UN High Level Dialogue on Energy theme reports bring useful inputs to guide stakeholders about their potential participation to this goal.
WBA welcomes you to share your opinion and connect with us on these issues.
Contact our Climate and Energy Research Analysts by emailing them at info.climate@worldbenchmarkingalliance.org.