The next few decades will see the world hit a number of deadlines to deliver meaningful social and environmental change, with the UN aiming to deliver on its Sustainable Development Goals (SDGs) by 2030. The global energy industry plays a key role in many of these targets, and none more so than SDG 7, the aim to deliver “affordable and clean energy” to people around the world.
While some praiseworthy progress has been made in this regard – the transition of Ørsted from an oil major to a wind power firm, the UK running for two months without burning coal, and California sourcing close to one-third of its power from renewables to name a few – many of these successes are isolated to regions such as Europe and North America. Indeed, in 2019, former UN commissioner Mary Robinson highlighted this issue, warning that whole countries could be “left behind” as the world’s wealthiest countries pursue energy reform without consideration for the rest of the world.
This concern is shared by the World Bank, which has published a report into the inequalities present as the world looks to achieve SDG 7. ‘The Energy Progress Report 2020’ highlights that while many countries are increasing their commitment to renewable power generation, Sub-Saharan Africa in particular is struggling, with the World Bank predicting that the region will be home to 85% of the world’s population who lack access to power by 2030. With economic and logistical challenges ahead, much work remains to be done to hit the UN’s lofty targets.
As a whole, the world is moving in a positive direction with regard to ensuring all people have access to affordable energy. The report notes that the number of people without access to electricity worldwide fell from 1.2 billion in 2010 to 789 million in 2018, and the share of the world’s energy consumption derived from renewables increased from 16.3% to 17.3% over this period.
These figures are particularly encouraging considering the world’s increasing population, which could threaten energy infrastructure installations that are already stretched. World Bank figures show that between 2016 and 2018, electricity reached an average of 136 million new people per year, while global population increased by 84 million people per year across this period. This change was particularly evident in central and southern Asia, which saw the number of people with access to electricity increase by 66 million over this period, close to three times the population increase of 24 million.
When asked about these figures, a World Bank spokesperson was optimistic about the improvements in the rate of electrification around the world.
“Progress towards universal electricity access has gained significant momentum in the past decade,” said the spokesperson, describing how the number of people with access to electricity increased by over one billion between 2010 and 2018. “The global electrification rate has progressed steadily, bringing electricity to 9 out of 10 people in the world. Access to standalone systems and mini grids quadrupled between 2010 and 2018.”
The growth of these “mini grids” has been a key driving force behind increased access to electricity, with these facilities and other small-scale renewable generators proving easier to construct and operate in remote areas than large, factory-scale facilities. The report builds on earlier reporting by the World Bank, which established five “tiers” of energy access, based on the number of Watt hours a household could access per day. The 2020 report found that the global population with access to “tier 1+” energy, a total between 12 Wh and 200 Wh per day, quintupled between 2010 and 2018, with mini grids providing 28% of all tier 1 off-grid access.
Slow progress and imbalanced growth
Despite this growth, challenges remain, with the inequality in the rate of progress in different parts of the world high on the World Bank’s agenda.
“The most vulnerable and isolated populations are currently left behind,” said the World Bank spokesperson. “Lack of access to electricity is overwhelmingly linked with poverty: in the 20 countries with the largest populations without access to electricity, electrification rates are four times higher in the top household expenditure quintile than in the bottom quintile.”
This imbalance is only exacerbated by existing energy infrastructure, or lack thereof, thus creating a vicious cycle of inadequate infrastructure. This makes investment difficult or prohibitively expensive, meaning that many of the initial infrastructure problems go unaddressed.
“Globally, 85% of the unelectrified population lives in rural areas, where affordability is low and costs of service provision high, often prohibitive for traditional grid extension methods,” explained the World Bank spokesperson. “In addition, expanding access to electricity — especially for clean technologies like renewable energy mini grids and off-grid electrification — remains underfunded, with the largest deficit recorded in Sub-Saharan Africa.”
There is also a broader concern that while the world is moving towards a more electrified future, it is not progressing quickly enough to reach the UN’s 2030 deadline. According to predictions made by the World Bank and the International Energy Association, at the current rate of progress, just 93% of the world’s population will have access to electricity by 2030, some way off the 100% target set out by the UN.
Similarly, the world’s energy efficiency is improving, but not quickly enough. The World Bank uses a measurement called “global primary energy intensity”, achieved by dividing total primary energy supply by unit of a country’s GDP, to measure the rate of improvement in energy efficiency. While this figure has improved by 1.7% between 2016 and 2017, it is still a ways short of the 3.6% needed between 2017 and 2030 to reach the UN’s targets.
Holistic policies and inclusive change
A key obstacle for many energy infrastructure projects is capital, and much of the financial muscle for these investments is set to come from outside of the countries where energy investments are most badly needed, as the vast cost of energy infrastructure investments is significantly greater than many of these countries can afford. The UN Development Program estimates that the world will need to invest $51bn per year until 2030 to guarantee energy access to everyone by 2030, a figure which is around five times the annual GDP of Chad, one of the countries with the lowest energy access rate, with less than 10% of its population able to access electricity.
Therefore, there is an expectation that foreign investment will play a key role in meeting the UN’s targets. While this growing financial support is positive on one level, on another it could contribute to an idea that could be considered energy colonialism, with developing countries reliant on investment from wealthier foreign countries to meet their energy needs, creating an imbalanced power dynamic. In 2010, what the World Bank called “international financing flows to developing countries in support of clean energy” was at $10.1bn, a figure which more than doubled to $21.4bn in 2017.
Yet the World Bank has called for “integrated” approaches to these challenges, where national policy, economic incentive, and environmental considerations are aligned to ensure lasting change in the energy sector, and change that does not take advantage of an exploitative colonialist model.
“Acceleration of electrification progress is, therefore, feasible in particular thanks to technology and business model innovations, such as falling prices of solar photovoltaic [and] battery solutions and energy-efficient appliances,” said the World Bank spokesperson. “Acceleration will be also driven by an improving policy environment and encouraging the rapid development of markets and promoting private sector participation.
“Lastly, electrification programmes must be grounded in a broader agenda of economic and social transformation. Future electrification efforts need to be more inclusive.”