Energy innovation and emissions reduction strategies overlook the poor
Curbing greenhouse gas emissions is a very hot topic these days. Between mitigating climate change and eliminating air pollution, environmental policy has the energy sector in its crosshairs. The good news is that innovation in clean energy and renewable sources holds great investment potential. However, innovation is moving at a glacial pace due to a lack of attention from policymakers. Currently, efforts put into energy innovation are generally focused on emissions reduction. While this may seem encouraging to some people, to the world’s poor, this is bad news.
In an article published in the January 2015 issue of Earthscan’s Climate Policy Journal, the authors explain how the poor are negatively affected by most energy-related environmental policies, how the various living conditions of the poor impede access to energy, and finally what potential pathways could facilitate better innovation and investment into expanding access to energy. The team of authors from the World Resources Institute, the Renewable and Sustainable Energy Institute, and the International Institute for Applied Systems Analysis explores innovation needs and possible policy approaches for increasing access to energy in developing nations.
One of the biggest differentiations that need to be made is between the “haves and have nots.” Those who have access to energy have the facilities, systems, and structures necessary to convey energy. Moreover, they have the finances, expertise, and market demand incentive to invest in energy innovation. Many of the barriers that the world’s poor typically face are major deterrents for innovators and investors. Even when wealthy nations or institutions try to help developing nations by sharing technology, there are huge incompatibilities between what works in developed nations and what would work in developing nations. Furthermore, expanding energy consumption, and potentially increasing emissions by developing nations, is not a very popular subject.
The authors identified three general categories, based on where the poor are living — urban, peri-urban and rural — to explain the challenges of investing in energy expansion. Each demographic faces its own challenges in accessing energy. Although often connected to the grid, urban users experience unaffordable electricity prices, unreliable service and discriminatory grievance processes.
Rural users are usually not connected to an electrical grid, nor do they normally live in homes suitable for electricity use. Installing grids is not only a challenging endeavor financially and physically, it also often requires partnership between residents, service providers, and private businesses, which is already a tenuous relationship. Rural users also don’t have much in terms of savings or steady income which not only makes it difficult to find service providers willing to be flexible with payment timelines, but a pay-for-energy arrangement is extremely risky for residents who would otherwise use available fuelwood for needs like cooking.
Users between rural and urban settings, described in this article as peri-urban, often live in the outskirts of cities or in shantytowns. Many communities like these are considered unwelcome, so governments do what they can to discourage people from settling in — including prohibiting access to services. These people are viewed as unreliable customers, typically experience discriminatory grievance processes, are vulnerable to price extortion due to their status, and are generally limited by a lack of valid identification.
In this article, emphasis is placed on the intellectual elements of innovation. This is particularly key in developing countries where the physical and technical aspects of innovation are incomplete without the people and organizations that truly understand the technology. In relation to this challenge, two models of innovation are discussed: business and finance. The business model uses the strengths of individual businesses, and small and large-scale utilities to drive domestic development within developing nations. The finance model addresses the economic needs and limits of developing nations and their citizens. Different payment schemes, subsidies and government-driven technology incentive programs are examples of strategies employed in the finance model.
The policy approaches recommended in this article focus on a domestic, decentralized strategy that pulls on the strengths and assets within each country. Rather than relying on international policy, or transfers of technology from wealthy nations, the authors suggest that developing nations would know best the limitations of their energy systems, and would therefore know best how to innovate in ways that would enable energy expansion. Even when wealthy nations attempt technology transfer to assist developing nations, their systems and technology are often not suitable for the receiving nation. Furthermore, developing nations would benefit greatly from working with one another, rather than with developed nations, as they share many of the same limitations and challenges. One example that the authors noted was China’s work in solar panels and ultra-high-voltage, long-distance electricity grids. China is leading the world in developing some of the most advanced technologies, and is often doing it at lower costs, making this technology accessible to other developing nations.
This article explains why innovations into energy technology are not addressing the needs of the poor. In an already slow investment and innovation environment, expansion of access to energy is a high-risk investment for private companies, a huge challenge for governments, and a complicated situation for innovators in developed nations. The authors recommended policy and innovation models that play to the strengths of developing nations, which would lead to increased domestic innovation and facilitate partnerships between developing nations.