Discussion Paper

No. 2019-37 | June 03, 2019
Advancing a global transition to clean energy – the role of international cooperation
(Submitted as Global Solutions Paper)

Abstract

International cooperation in support of a global energy transition is on the rise. Initiatives and venues for multilateral cooperation are complemented by growing bilateral engagement to foster international lesson-drawing and exchange. Official development assistance (ODA) in the energy sector is increasingly being directed to renewable energy sources. Despite these promising developments, it is widely acknowledged that investment towards achieving the Sustainable Development Goal (SDG) 7 on clean and affordable energy is insufficient. A recent report by SE4ALL estimates annual investments in support of SDG7 at USD 30 billion. This is well below the USD 52 billion that would be needed (SE4ALL and Climate Policy Initiative, Energizing finance: Understanding the landscape 2018, 2018). Moreover, investment in clean energy remains heavily concentrated in a small number of frontrunner countries. In terms of technologies, investments in clean energy still overwhelmingly target grid-connected electricity generation. Despite their proven ability to provide rapid and affordable access to clean energy in many country contexts, off-grid technologies account for only 1.3 percent of investments (SE4ALL and Climate Policy Initiative, 2018). Worryingly, a significant share of international public sector financing, most notably by export-credit agencies, is still allocated to coal and other fossil-based technologies. Against this background, this paper makes three recommendations for strengthening international cooperation in support of a global energy transition: 1) Promote investment in clean energy and end support for coal-based energy infrastructure. 2) Tackle the socio-economic dimension of the global energy transition. 3) Provide early market support to promote challenge-based energy innovation.

JEL Classification:

F5, O3, O38, P18, Q01, Q4, Q48

Assessment

  • Downloads: 102

Links

Cite As

Rainer Quitzow, Sonja Thielges, Andreas Goldthau, Sebastian Helgenberger, and Grace Mbungu (2019). Advancing a global transition to clean energy – the role of international cooperation. Economics Discussion Papers, No 2019-37, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2019-37


Comments and Questions


Jörg Peters - Evidence on socio-economic dimension of energy transition
June 15, 2019 - 12:52

This is an interesting paper and it makes well-substantiated and appropriate claims. The focus seems to be on electricity, though, while the energy transition in the Global South also encompasses the challenge of disseminating more efficient or clean cooking technologies. This could be emphasized further.

My main comment is ...[more]

... on the empirical substance that is provided in Section 4. There is a growing literature on the socio-economic impacts of electrification that should be included. The bottomline, roughly, is that grid extension is hardly cost-effective while off-grid technologies, especially home-scale solar are sufficient to meet demands in rural areas – and thus is somewhat in line with paper’s call for less coal and more renewables. Expensive infrastructure extensions could focus on selected areas where high demand can be expected. Here are some key references:

Bos et al. (2018). Benefits and challenges of expanding grid electricity in Africa: A review of rigorous evidence on household impacts in developing countries. Energy for Sustainable Development, 44, 64-77.

Grimm et al. (2019). Demand for off-grid solar electricity–Experimental evidence from Rwanda.
http://ssrn.com/abstract=3399004
Lenz et al. 2017. Does large scale infrastructure investment alleviate poverty? Impacts of Rwanda’s electricity access roll-out program, World Development 89: 88-110.
Lee, Kenneth, Edward Miguel, and Catherine Wolfram. 2019. Experimental evidence on the economics of rural electrification. Journal of Political Economy, forthcoming.
Peters/Sievert. 2016. Impacts of rural electrification revisited – The African context. Journal of Development Effectiveness 8(3): 327–345.

For Asia and Latin America, the evidence is more mixed, see for example
Lipscomb, M., Mobarak, A. M., & Barham, T. (2013). Development effects of electrification: Evidence from the topographic placement of hydropower plants in Brazil. American Economic Journal: Applied Economics, 5(2), 200-231.
van de Walle et al.. 2017. Long-term gains from electrification in rural India. World Bank Economic Review 31(2): 385-411.