For Energy Transition, How To Create Climate For Change
Recent multilateral events, including the COP28 at Dubai, have underscored the imperative to transition towards renewable energy for achieving net-zero emissions.
The call to triple renewable energy has been highlighted by both the COP presidency and the New Delhi Leaders’ Declaration of G20, in addition to the Nairobi Declaration’s push for a five-fold increase in Africa’s renewable energy capacity by 2030. These objectives not only serve as a catalyst for intensified collective efforts but also emphasise the urgency of addressing the well-being of the poorest and most vulnerable.
Currently, around 8 per cent of the world’s population — approximately 675 million people — lack access to affordable and reliable energy, impeding human and economic development. This energy gap has profound implications for income generation, health, education, transportation, equity and overall well-being.
While the decreasing costs of solar photovoltaics (PV) have enabled electricity access through off-grid systems, it is not enough. Tripling renewables is crucial to achieving the well below 2-degree Celsius target and ensuring clean energy access for all. According to analytics from various international organisations, a minimum of tripling the investment in clean energy is necessary, with the actual requirement potentially reaching up to five times the current level to meet the necessary scale.
To enable and sustain this transition, strengthening partnerships between governments, the private sector and multilateral institutions is essential. This involves facilitating technology transfer, mitigating long-term investment risks and fortifying regulatory and institutional frameworks. A three-pronged agenda, focused on tripling impact, convened and led by multilateral institutions (MLIs), is imperative to advance this transformative initiative.
First, the tripling of renewables is key for energy access, energy security, and improved wellbeing. Earlier this year, the IPCC reported that the past decade has seen cost reductions of about 85 per cent in solar power generation, making solar (together with storage) the energy of choice with the highest mitigation potential among all renewables at 4.5 GtCO2e per year. While this fact is well known, increasing solar and other renewables to boost access to affordable and reliable round-the-clock energy in some of the remotest parts of the world remains a challenge. A key impediment in low-income countries often is high borrowing costs, and the ability to provide loans to people and businesses at the bottom of the pyramid.
Second, multilateral institutions are equipped to overcome the challenge associated with mobilising long-term low-cost finance for clean energy. Mechanisms like payment guarantee and partial-risk guarantees have been instrumental and will be more relevant for scaling up in emerging economies.
The ISA’s Global Solar Facility, aiming to leverage $250 million for 1,600 MW of solar projects in Africa, is an example of such risk mitigation strategies. In addition to this, MLIs using their convening power can drive energy transitions towards strengthening regulatory support, institutional mechanisms, conducive business models and access to low-cost finance.
Third, a trifecta of partnerships is needed to ensure that no one is left behind and no one bears the brunt of addressing it alone. Increased collaboration between governments, multilateral institutions and the private sector is essential.
In addition to facilitating finance, business models, and partnerships, multilateral investment institutions hold the potential to streamline technology transfer through the creation of patent pools. An example of the impact of patent pooling is evident in the early 20th century when the Wright Brothers made groundbreaking strides in aviation technology. However, during World War I, the urgent need for fighter aircraft was impeded by major patent holders — the Wright Company and the Curtiss Company — leading to ac production bottleneck.
Recognising the critical demand for increased aircraft production, the US government, prompted by the National Advisory Committee for Aeronautics, compelled the aviation industry to find a solution. This resulted in the establishment of the manufacturer’s aircraft association, a cross-licensing organisation or patent pool. All aircraft manufacturers were mandated to participate, contributing a modest blanket fee for each airplane manufactured.
The majority of these fees were allocated to the primary patent holders, the Wright-Martin and Curtiss companies, until the expiration of their patents. Despite being initially conceived as a wartime measure, this arrangement played a pivotal role in expediting airplane manufacturing, surmounting patent-related obstacles, and ensuring a more efficient response to wartime demands.
Applying this historical context to the contemporary energy transition discourse, technology transition groups, within the broader framework, could comprise interested countries, the private sector, experts, and NGOs. These groups would be tasked with providing regular reports on the status and dissemination of relevant technologies, facilitating and enabling technology transfer. This includes the pooling of intellectual property rights, offering increased visibility, utilisation, and fostering widespread adoption on a large scale. Such collaborative efforts, drawing from historical lessons, can significantly contribute to advancing technology transitions and addressing global challenges.
In recent years, the decelerated progress on all Sustainable Development Goals (SDGs) amid compounding poly-crises has fostered a trust deficit in the efficacy of the multilateral system. Our collective goal should be to harness the potential of both existing and new multilateral institutions, steering global communities toward a more promising trajectory. Noteworthy multilateral initiatives such as the Bridgetown Initiative, launched by Barbadian Prime Minister Mia Mottley, and the inclusion of the African Union in the G20 have pushed the envelope.
As we move ahead, a critical emphasis must be placed on developing strategies to view energy transitions through the lens of energy access. This foundational indicator has the potential to catalyse transformative action on a scale and at a pace necessary for enhanced global well-being. By prioritising energy access, COP meetings can address a key aspect of sustainable development, contributing to the broader efforts of achieving meaningful progress across all SDGs.