Is the World Bank Lighting the Way on Energy Access?
By Nezir Sinani at Bank Information Center Europe and Anna Östergren at Swedish Society for Nature Conservation
According to the World Bank, roughly 1 billion people globally still live without access to electricity. Most of these people live in rural communities and are desperately poor. Global goals on energy access and climate change are inextricably linked, given that mostly poor rural communities need access to electricity and these same poor communities are the most vulnerable to climate change. Moreover, the energy sector is the largest contributor to greenhouse gas (GHG) emissions, making it paramount to poverty reduction and global climate change goals that the sector transitions out of fossil fuels and into renewable energy as quickly as possible.
The Paris Climate Agreement and the Sustainable Development Goals provide a UN framework for transitioning the global society to a GHG-neutral and climate-resilient future, and towards sustainable development. To avoid disastrous climate change and its impacts, the Paris Climate Agreement states that the rise in global mean temperature must be held well below 2°C, and to pursue efforts to keep it to 1.5°C. The agreement aims to set the world on a track towards decarbonizing the global energy system, while the Sustainable Development Goals recognise that access to modern energy is a crucial prerequisite to development and human well-being.
So far, progress on both fronts has been too slow and if it does not increase swiftly, we will not achieve either goal. Despite increased energy access rates in recent years, progress has been considerably uneven, leaving the majority of people living in Sub-Saharan Africa still in the dark (only 43 percent have access). In addition, even if we meet current NDC targets, global warming is still likely to exceed 3˚C to 4˚C in the 21st century.
As part of its mission to end poverty, the World Bank has committed to help countries achieve the objectives of both universal energy access and the Paris Climate Agreement, including helping member countries meet their Nationally Determined Contributions (NDC) to the Paris Agreement.
A new report by the Swedish Society for Nature Conservation (SSNC) and the Bank Information Center Europe, assessing the World Bank’s efforts to address the dual objectives, found that the Bank is not adequately prioritising energy access or renewable energy, especially low-GHG energy solutions for rural communities. To begin, the World Bank does not have any consequential targets for energy access or distributive renewable energy, which addresses both rural access and climate change. The lack of meaningful targets for rural electrification partially explains why in the last three years the rate of electrification did not improve for the poorest 40 percent of the population in countries with World Bank operations.
In addition, some World Bank operations threaten countries’ NDC climate objectives. The report points to the cases of Kenya and Nigeria where the Bank has multiple operations that contradict their NDC targets. For example, the Bank has invested $150 million in the world’s largest oil refinery in Nigeria and provided infrastructure investment incentives funneling to coal power generation in Kenya.
In order to avoid climate disaster and provide energy to the rural poor, the World Bank must put forward meaningful targets for rural energy access and distributed renewable energy. At the UN’s next global climate change meeting, COP24 in December, the World Bank’s new Post-2020 commitments should include:
- Increase rural energy connections by 15 million households per year. The World Bank should match the African Development Bank’s (AfDB) pledge of 75 million new off-grid connections for rural households and small businesses by 2025. The AfDB’s pledge averages 15 million household connections per year.
- Pledge $3.8 billion annually to distributed renewable energy (DRE). Increasing global DRE capacity is important for meeting both rural electrification and NDC climate targets. The International Energy Agency estimates that 69% of energy access funding should go for off-grid solutions. The World Bank should provide $5.5 billion annually to energy access (or about 50% of its energy budget), thus it should be spending about $3.8 billion a year on DRE.
- Help countries meet more ambitious conditional NDC climate goals and ensure all World Bank operations are consistent with conditional NDC climate goals. Most developing countries have unconditional NDC goals and more ambitious conditional targets that are conditional on receiving adequate international assistance. The World Bank should ensure adequate assistance to achieve the more ambitious conditional NDC climate goals.
These new commitments are not only essential, but achievable. They would also send strong signals to other investors that the World Bank is serious about taking action on climate change and towards achieving energy access for those most in need. It is time for the World Bank to step out of the darkness and light the way on energy access, while combating climate change.