Public and private financial institutions are not responding adequately to meet global energy goals as finance, particularly in sub-Saharan Africa, remains drastically below levels needed to deliver universal access.
This is according to new Energizing Finance research released by Sustainable Energy for All (SEforALL).
The Energizing Finance report series, now in its third year, tracks finance flows across developing countries in sub-Saharan Africa and Asia with the largest energy access deficits, representing nearly 80% of those living without access to electricity and clean cooking.
The new data shows urgent, substantial action and investment is needed to meet Sustainable Development Goal (SDG7) by 2030.
This year's findings on electricity however, show a slightly positive trend with $36 billion committed - up from $30 billion tracked in the last report.
However, only $12.6 billion of total tracked finance commitments for electrification actually benefits residential customers, representing just one quarter of the estimated annual investment of $51 billion required to meet universal access.
The story for clean cooking is much bleaker. An annual investment of $4.4 billion is required to close access gaps, yet only $32 million in finance commitments for clean cooking solutions were tracked - representing less than 1% of the estimated finance required for universal clean cooking access by 2030.
The research highlights that the gap in electrification and clean cooking finance across sub-Saharan Africa is putting the continent's status as an upcoming economic powerhouse on hold.
Four of the 13 sub-Saharan African countries tracked reported an absolute decline from last year's report, and ten of the 13 each received less than $300 millio in 2017.
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Speaking on the launch of this year's research, Zouera Youssoufou, managing director and CEO of the Dangote Foundation and member of the SEforALL administrative board, said: "The African continent is the next economic frontier. As such, achieving universal energy access by the year 2030 is a vision that we must ensure comes to light. Not only would this guarantee the region's economic prosperity, transform her health outcomes and accelerate prosperity for millions of Africans, it will also see to the fulfillment of the Sustainable Energy for All's drive to leave no one behind."
In the midst of a global climate emergency, the report also shows ongoing investment into fossil fuels as a way to support energy access. Finance commitments for grid-connected fossil fuel fired power plants, specifically coal, decreased from $8.1 billion tracked in last year's report to $6.6 billion.
Energizing Finance strongly underscores that coal will not reach vulnerable, remote populations and continued financing of new, non-renewable power is incompatible with the Paris Agreement, meeting the SDGs or responsible investing.
Energizing Finance recommendations
As the world enters the final decade of the SDGs with a major void in finance and political urgency, Energizing Finance recommendations include:
- The international community must overhaul its current approach to clean cooking and significantly increases investment. Government commitments, target-setting and allocation of domestic budget as evidenced in Uganda, Madagascar and the Philippines, are needed to enable households to afford high quality, cleaner solutions.
- The overall decline in international public finance must be urgently addressed. International public financial institutions must fulfill their commitments to fill the financing gaps for electricity access, with a focus on serving the most vulnerable populations, especially women and displaced people.
- Policy makers, particularly in sub-Saharan Africa, must prioritise emissions free, non-coal fired electricity as part of their integrated energy planning and investment plans. This should be underpinned by fiscal and other incentives as necessary, possible and appropriate to give private investors the confidence required for long-term investment in energy infrastructure and assets.
Click here for the full report and details concerning recommendations.