A Bottom-Up Approach: Low-Carbon Energy Transition in Developing Countries

Article excerpt

The world's rapidly growing demand for resources, influenced by high growth rates and urbanization in countries such as China, India and Indonesia, is resulting in higher overall commodity prices, particularly for fuels. Yet there are technologies available which can help to ease the demand for fossil fuels in developing countries and to produce goods and services more efficiently. These technologies can also reduce greenhouse gas emissions.

Although the world is likely to continue its heavy dependence on fossil fuels in the near term, low-carbon energy technologies will increase their share. These include technologies that traditional environmentalists do not always view as sustainable: advanced clean coal technologies, fourth-generation nuclear energy and carbon capture and storage all offer lower carbon emissions. Clean energy systems, i.e., renewable energy and energy efficiency systems, are expected to play a key role in decarbonizing the energy sector and reducing greenhouse gas emissions.

Much attention has already been placed on policy measures that will help shift the energy sector to a low-carbon path. However for developing countries, low-carbon energy brings a specific set of issues, or more accurately barriers, that continue to constrain its rate of growth. These factors include increased investment costs, the need for technology transfer, perceived technology risk and its management, and limited capacity of developing countries to integrate innovative technologies.

REEEP's role

In a developing country context, renewable energy and energy efficiency represent a new challenge in how to integrate the planning of energy systems into policy priorities of energy security, climate, decentralization, pluralism and local employment.

The Renewable Energy and Energy Efficiency Partnership (REEEP) is a global public-private partnership that was launched as a type-II United Nations partnership by the United Kingdom to deliver the commitments made at the World Summit on Sustainable Development and implement the recommendations of the G8 Renewable Energy Task Force. Over the past five years the partnership has worked with more than 50 developing countries to accelerate the development of renewable energy and energy efficiency technologies to support sustainable development and poverty alleviation.

The partnership takes a bottom-up approach. Initiatives are often led by local organizations--governments, businesses and financiers who are establishing replicable and scalable examples of clean energy market development. Many use innovative financing approaches and new business models that tackle barriers from the grass-roots level. The aim is to reward innovative thinking and recognize potential.

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One example is the establishment of a finance facility with the Fiorello H. LaGuardia Foundation. It set up a fund to provide financing for using renewable energy as an input to rural economic development. This finance facility has leveraged local finance to support renewable energy-based agricultural systems in Joao Pessoa in Brazil. Small farmers have used the loans for technologies such as micro-irrigation combined with solar pumps and bio-digesters for biogas production and organic fertilizers. They have also financed solar dryers for dried fruits and spices.

Private Financing Advisory Network

This hybrid finance approach has now been replicated in Mozambique through another REEEP-supported initiative, the Private Financing Advisory Network (PFAN).

Another issue in developing countries is that people might be willing to consider clean energy solutions, but there are simply no retail outlets offering them, particularly in rural areas. …