The world is witnessing a significant shift in energy investments, with the transition to clean sources gaining momentum. According to the International Energy Agency (IEA) report called “World Energy Investment 2023”, global investment in clean energy is on track to reach an impressive US$ 1.7 trillion in 2023. This increase reflects a shift in investor priorities, driven by growing concerns about energy affordability and security, as well as the urgency to combat climate change.
One of the main reasons for increased investment in clean energy is the growing awareness about the negative impacts of fossil fuels on the environment and human health. The global energy crisis, with price fluctuations and shortages, has highlighted the vulnerability of these non-renewable energy sources. As a result, more countries, companies and individuals are opting for sustainable solutions that rely on renewable energy sources and clean technologies.
The report predicts a 24% annual increase in clean energy investment between 2021 and 2023. Renewables and electric vehicles are leading this trend, driving growth in this sector. Solar, wind, hydroelectric and biomass energy are receiving a significant portion of investments, boosting installed capacity and renewable energy generation around the world. At the same time, electric vehicles are gaining popularity, encouraging the development of charging infrastructure and the large-scale production of more efficient batteries.
However, it is important to note that more than 90% of this increase in clean energy investment comes from advanced economies and China. This concentration of investment creates a risk of deepening global divides in the transition to clean energy. To achieve a truly global energy transformation and address the challenges of climate change, it is essential that other regions also step up their efforts and invest in sustainable solutions.
The report highlights the need for clear policies and government support to drive the clean energy transition around the world. Furthermore, it is essential to promote international cooperation and share knowledge and technologies to overcome barriers that can hinder the adoption of renewable energy sources and clean technologies in different regions.
As global investment in clean energy continues to increase, we must seize this momentum and accelerate the transition to a sustainable future. Clean energy not only contributes to climate change mitigation, but also promotes economic development, the creation of green jobs and improved quality of life. The path to a more sustainable future is clear, and it's time to act together to make the most of the opportunities that clean energy offers.
The International Energy Agency defines energy security as the continued availability of affordable energy sources. Historically, discussions about energy security were mainly focused on the supply of fossil fuels, with emphasis on oil. However, with the ongoing global energy crisis, it is clear that energy security can no longer focus exclusively on traditional fuels.
The transition to clean energy requires a comprehensive look at energy security. Long-term security depends on timely investment in energy infrastructure capable of meeting growing demand. Short-term security is related to the ability of the energy system to respond quickly to sudden changes in the balance between supply and demand.
Currently, fossil fuels still represent around 80% of the global energy matrix, which highlights the importance of ensuring security in the supply of these fuels during the transition to clean energy. However, attention should not be diverted from the security of clean energy transitions.
The race towards net zero emissions will focus attention on the security of supply of clean energy technologies. According to the Net Zero Emissions Scenario by 2050, renewable energy will meet two-thirds of global energy needs by mid-century. Sources such as solar and wind will contribute more than a third of the energy mix, compared to just 2% currently. Furthermore, more than two-thirds of electricity generation will come from renewable sources.
In contrast, fossil fuels will only represent about 20% of the energy mix in 2050, with coal use declining significantly. By 2030, the combined market for key clean energy technologies will outpace the oil market. However, many of these technologies depend on domestic resources such as sun and wind, while equipment, critical minerals, materials and components needed to exploit these resources and manufacture related equipment often depend on global supply chains.
Ensuring energy security in this new era requires a comprehensive approach. This includes adequate investments in clean energy infrastructure, development of resilient supply chains, and incentives for local production of technologies and components. Furthermore, international cooperation and knowledge exchange are essential to face common challenges and promote a global transition.
International Actions Aiming at Energy Security and Equality
SDG 7 (Sustainable Development Goal 7) aims to ensure universal access to affordable, reliable, sustainable and modern energy services. However, to achieve this objective, it is necessary to establish interconnections between SDG 7 and other SDGs, recognizing that access to energy is essential for sustainable development in several areas.
In recent years, the pace of growth in access to electricity has been insufficient, leaving many people still without electricity. Between 2019 and 2021, the annual increase in the number of people with access to electricity was 114 million, down from the 129 million annually seen between 2010 and 2019. This represents growth of just 0.7% per year between 2010 and 2019, which fell to 0.6% per year between 2019 and 2021.
To achieve the objective of universal access to electricity by 2030, it is necessary to significantly accelerate the pace of growth. The annual growth rate in access to electricity should be at least 1 percentage point from 2021 onwards. This acceleration should be especially targeted at the Sub-Saharan Africa region, where advances of more than 5 percentage points per year on average are required. over the next nine years.
An important interconnection occurs with SDG 1 (Eradication of Poverty). Access to energy is fundamental to improving the living conditions of people in poverty. A reliable and affordable energy supply can boost economic growth, create jobs and improve productivity, contributing to reducing poverty and increasing well-being.
Furthermore, the interconnection with SDG 3 (Health and Well-being) is evident. Access to clean and reliable energy sources is fundamental to improving the quality of healthcare services. Electrical energy is needed to power medical equipment, illuminate healthcare facilities, ensure adequate storage of medicines and vaccines, and enable access to healthcare information and communication.
With regard to interconnection with SDG 4 (Quality Education), access to energy is fundamental to ensuring an adequate learning environment. Schools and educational centers need electricity for lighting, the use of educational technologies, internet access and the operation of audiovisual equipment. Access to energy contributes to improving the quality and equity of education.
The interconnection between SDG 7 and SDG 8 (Decent Work and Economic Growth) is also crucial. Access to energy is an enabler for sustainable economic growth. It allows the development of productive activities, promotes entrepreneurship, improves the competitiveness of companies and creates decent employment opportunities.
Furthermore, SDG 13 (Action against Global Climate Change) is also interconnected with SDG 7. The transition to clean and sustainable energy sources is essential to mitigate the impacts of climate change. Investments in renewable energy, energy efficiency and clean technologies contribute to reducing greenhouse gas emissions and building a more sustainable future.
To promote these interlinkages between SDG 7 and other SDGs, it is necessary to demonstrate political commitment and adopt policies that maximize the socioeconomic benefits of energy access. Significant investments are needed to achieve universal access to electricity by 2030, according to International Energy Agency projections.
The 2022 Off-Grid Solar Market Trends Report, produced by several organizations, reveals important information about the off-grid solar energy sector. The report highlights that solar technologies have proven to be the most economical and viable solution to achieving universal access to electricity by 2030, with these technologies expected to be used in 55% of new household connections over the next five years.
The report reveals that more than 490 million people had access to solar power kits at the end of 2021, an increase from 420 million in 2019. Many people are getting the highest level of access (Tier 2.a) through of the Pay As You Go (PAYG) business model.
However, the report highlights that the PAYG model may not be enough to close the affordability gap, as between 177 and 277 million people without access currently cannot afford a Tier 1 solar system due to higher prices and income limitations.
The off-grid solar energy sector has a significant impact on job creation, especially in rural areas where the supply of job opportunities is limited. The report points out that hundreds of thousands of jobs are created by companies in this sector, more than half of which are located in rural regions. This contributes to increased income and offers opportunities for the young population in these areas.
Additionally, governments, investors and development partners are increasingly recognizing the potential of off-grid solar energy solutions to power public institutions such as rural schools and health clinics. Off-grid solar lighting systems and power packs are designed to promote the productive use of electricity and are powering more than 10 million micro and small businesses around the world. There is also a significant opportunity to harness solar energy into productive uses in the agricultural sector, such as solar water pumping or solar-powered cold storage, which could rapidly improve the livelihoods of an estimated 22 million smallholder farmers in sub-Saharan Africa. and in India.
Electrical energy is an essential prerequisite for socioeconomic development, improving the quality of life and achieving the Sustainable Development Goals. It boosts education, healthcare, entrepreneurship and productivity, and provides opportunities to address the challenges of climate change through the use of renewable energy.
Therefore, it is crucial that stakeholders decisively redouble their efforts to ensure that access to electricity is a reality for all.
Increasing Access to Climate-Resilient Energy: Interconnections Between SDG 7 and SDG 13
Increasing access to climate-resilient energy is a fundamental challenge that is interconnected with Sustainable Development Goals (SDG) 7, which addresses access to clean and affordable energy, and SDG 13, related to climate action. To meet international obligations on climate change and achieve universal access to energy, especially in least developed countries, it is essential to build more resilient energy systems.
Expanding electricity through mini-grids or standalone systems can play an important role in addressing energy challenges in a climate-friendly way and sustaining livelihoods, especially in remote and hard-to-reach areas. However, it is necessary to recognize that these modern electrical infrastructures are vulnerable to climate change, which puts at risk the advances already made in access to modern and affordable energy.
Adapting to climate change can also increase demand for energy, and meeting this demand with renewable energy requires a strong integration of renewable sources into the adaptation agenda. Therefore, it is critical to undertake lower-cost integrated planning that meets consumers' needs for reliable and efficient energy services.
Governments play a crucial role in creating an enabling environment to attract and manage the private capital needed to drive clean electrification on the grid, while leveraging public funds to encourage private sector investment in decentralized electricity access. Incorporating climate change considerations into national energy access policies, strategies and planning is critical to strengthening resilience and adaptive capacity to climate-related hazards and disasters.
However, one of the challenges faced is the acquisition of high-resolution climate, energy and socioeconomic data, especially in regions such as Africa. There is a need to build the capacity of public and private stakeholders to collect, manage and utilize this data in planning, financing and policymaking related to access to climate-resilient energy.
Therefore, it is essential to strengthen the capacity of local, national and regional stakeholders to acquire, manage and use relevant data, taking into account issues of privacy, ownership and data sharing between entities. By doing so, it will be possible to expand access to climate-resilient energy and move towards achieving SDGs 7 and 13, contributing to a more sustainable and climate-resilient future.
Promoting Sustainability: The Interdependence Between Energy Access and SDGs 7, 4 and 3 in Schools and Healthcare Facilities
Increasing access to energy in schools and healthcare facilities is closely linked to Sustainable Development Goals (SDGs) 7, 4 and 3, which are, respectively, “Affordable and Clean Energy”, “Quality Education” and “Health and Well-being". This interconnection between the SDGs shows how access to energy is fundamental to improving the quality of education and promoting well-being in communities.
Access to modern, reliable energy in schools plays a crucial role in promoting high-quality education. The availability of energy allows for adequate lighting, heating and cooling of classrooms, the use of information and communication technologies, and the use of educational resources. This contributes to a more conducive learning environment, attracting new teachers and increasing student retention.
Additionally, access to energy in schools facilitates school administration and access to teaching resources and classroom materials. This improves the efficiency of schools and contributes to quality education, as teachers have access to the tools and materials necessary to provide an enriching learning experience.
The availability of electricity in student homes also plays an important role in access to education. Many children face difficulties in collecting fuel for household use, which is time-consuming and negatively affects their academic performance. Additionally, a lack of electricity at home can limit students' study time, especially after dark. With access to energy, students have more opportunities to study, increasing school attendance, academic performance, literacy and completion rates.
Millions of children have been prevented from continuing their education due to a lack of these resources, negatively affecting their learning and putting them at risk of not returning to school. Regions such as Sub-Saharan Africa have low rates of access to electricity in schools, highlighting the urgent need for improvements in this area.
Faced with these challenges, it is important to leverage technology to overcome educational barriers. Some countries are already implementing innovative programs to promote access to education. For example, in Sierra Leone, “SMS Dictionary” allows students to have access to electricity even without internet access, allowing them to charge their phones and learn new words. Radio instruction, which was used during the 2014 Ebola crisis, also played a crucial role in keeping children in school during the pandemic. Additionally, the use of tablets, which can be charged via off-grid power solutions, is also being adopted.
Accelerating funding for affordable mini-grids and autonomous systems, including battery storage technologies, is an important step towards providing quality education, with significant implications for several other Sustainable Development Goals (SDGs). It is essential to adopt innovative solutions that expand energy access in schools as part of an integrated strategy to make education accessible and inclusive for all, especially for previously marginalized groups such as pregnant students, rural students and people with disabilities.
Investing in improving energy access in schools empowers the next generation of technology leaders, providing them with the skills needed to drive the energy transition. It is important to include ecological and energy education aspects in the curriculum, preparing young people to be agents of change in facing the energy challenges of the future.
Additionally, the availability of reliable electricity is crucial to power life-saving medical and emergency operations. The lack of reliable power compromises the operation of medical equipment and instruments, the supply of water for sanitation, the maintenance of immunization systems that depend on the cold chain, and other fundamental amenities. Therefore, ensuring adequate electrification in healthcare facilities is extremely important.
Recently, a study highlighted the importance of electrifying healthcare facilities and presented priority actions for governments and development partners. Investing in the electrical infrastructure of these medical facilities is critical to improving healthcare and ensuring access to vital medical services, especially in remote or resource-poor areas.
In short, accelerated funding for affordable mini-grids and autonomous systems, along with the use of battery storage technologies, is an essential measure to increase energy access in schools and healthcare facilities. These innovative solutions play a fundamental role in promoting inclusive and quality education, as well as ensuring the proper functioning of medical and emergency services.
Connecting Energy, Equality and Peace: The Interconnections between SDG 7, SDG 5 and SDG 16
Increasing access to energy is a crucial issue that involves interconnections between Sustainable Development Goal (SDG) 7, which aims to ensure access to clean and affordable energy for all, SDG 5, which seeks to achieve gender equality, and the SDG 16, related to fragility, conflict and violence.
Access to electricity plays a key role in women's economic empowerment and promoting gender equality. Gender-responsive electrification policies and regulations are more likely to be successful and an inclusive approach, with women's participation in energy policymaking, driving more comprehensive solutions to electricity access.
In several sub-Saharan African countries, gender-sensitive energy policy frameworks have been adopted to promote the expansion of electrification. However, the lack of gender-disaggregated data limits the ability to develop inclusive policies and strengthen female entrepreneurship in the energy sector.
Fragility and energy poverty are closely linked. Instability and conflicts hamper the development of infrastructure and investments in electrification, worsening existing vulnerabilities.
People living in situations of fragility, conflict and violence (FCV) or in remote areas face additional barriers to accessing energy, along with higher costs. Displaced people also face significant challenges, with minimal access to electricity and, when available, often relying on expensive, inefficient, unsafe and environmentally harmful energy sources. Logistical and technical challenges make it difficult to provide access to energy in displacement contexts, increasing risks and reducing potential benefits.
Camps and settlements for displaced people are particularly difficult areas to reach with electricity, due to the poverty of their residents, remote location, and high initial capital costs. As a result, most water, healthcare, and education facilities in these locations lack reliable, modern access to energy. A solarization effort is currently underway in these areas, with the aim of providing renewable energy, such as solar power, to water pumping stations, healthcare facilities and schools in displacement contexts.
Investing in renewable solutions, such as solar energy, in these areas is crucial to advancing progress on SDG 7. These solutions can provide reliable and sustainable access to energy, improving the living conditions of people in situations of fragility and conflict
To sustainably address the vulnerabilities of forcibly displaced people and their impacts on local communities, energy access projects in displacement settings require differentiated approaches to standard development. It is necessary to implement evidence-based and lower-cost programs that include support for the deployment of mini-grid technologies and autonomous systems. These programs must recognize vulnerable populations as key decision-making agents and put people at the center of attention, rather than focusing solely on emergency aid programs.
To achieve meaningful improvements, it is important to link energy access to program incentives, integrate vulnerable populations into specific funding windows, and support the development of technologies and skills that address the specific access challenges faced by these vulnerable populations.
Focusing energy access efforts and financing on people suffering from fragility, conflict and violence, as well as women and girls, has multiplier effects on reducing poverty, promoting social inclusion, reducing gender inequality and achievement of other Sustainable Development Goals (SDGs). It is therefore crucial that national energy access plans, infrastructure and regulatory frameworks integrate these populations in an inclusive, effective and sustainable way into the broader energy access strategy.
To ensure the success of these initiatives, it is essential to strengthen the favorable environment for energy access, promoting policies and regulations sensitive to the needs of vulnerable populations. This includes the active participation of these populations in policy formulation, the collection of gender-disaggregated data, and the promotion of training and skills development programs that address the specific challenges faced by these communities.
Connecting Energy, Work and Infrastructure: The Synergies between SDGs 7, 8 and 9 for Sustainable Access to Energy
To increase access to energy in an efficient and sustainable way, it is necessary to stimulate markets and improve the regulation of existing structures. This approach links Sustainable Development Goals (SDGs) 7, 8 and 9, which cover affordable and clean energy, decent work and economic growth, as well as industry, innovation and infrastructure.
The UN convened the High-Level Energy Dialogue in 2021, with the aim of accelerating the implementation of SDG 7, along with other goals of the 2030 Agenda and the Paris Agreement. The dialogue resulted in recommendations to make universal access to electricity a political, economic and environmental priority, strengthening enabling policies and regulatory frameworks, and directing the financing needed to achieve universal energy access by 2030.
Many developing economies face challenges of scarce financing, limited resources for risk mitigation, inadequate public services and low capacity in relevant agencies, which make it difficult to finance energy access projects. To overcome these challenges, specific policies must be implemented to expand infrastructure, upgrade technology and achieve goals for modern and sustainable energy services, within an appropriate regulatory framework. Each country needs to establish conditions that support new and innovative ways to promote transparency, ensure accountability and reduce investment risks. Furthermore, it is important to close the gap between commitments and disbursements, reduce inefficient subsidies, and identify predictable and viable methods to leverage public resources, especially to boost the vitality of small and medium-sized enterprises.
Regulatory and policy frameworks for electricity access must be designed in a way that supports innovation in energy technology and attracts financial investment, aiming to provide affordable and reliable electricity while driving economic growth. The World Bank's Regulatory Indicators for Sustainable Energy (RISE) is a tool that measures the political and regulatory environment for public and private investments in sustainable energy. This assessment helps identify performance on electricity access and adapt policies and regulations to promote a more enabling environment.
By stimulating markets and improving regulation, we can create enabling conditions for the development of innovative energy solutions, attract investment and ensure universal and sustainable access to energy.
Good regulatory and policy frameworks are fundamental to boosting the productive use of electricity, generating income and employment in local communities and thus contributing to poverty reduction. Integrated energy access planning, with a special focus on the expansion of mini-grid and off-grid systems, is essential for the development of these structures. In addition to promoting productive uses at the local level, policies and regulations informed by integrated planning can meet the energy demands of industry, especially small and medium-sized companies, attract private investment into the energy sector and multiply the positive effects of this sector on the economy as a whole.
A concrete example is the ongoing effort in Africa to integrate mini-grid tariff setting tools and methodologies across regulators. This integration can boost the deployment of mini-grids across the region, stimulating economic activities that depend on access to modern and reliable energy. To explore interlinkages with Sustainable Development Goals (SDGs) 8 (Decent Work and Economic Growth) and 9 (Industry, Innovation and Infrastructure), it is crucial that the policy and regulatory environment for energy access incorporate incentives for cross-sector collaboration : Supporting technological innovation and digitalization can reduce costs, increase efficiency along the value chain, and improve billing and accountability. This, in turn, encourages investments that expand opportunities to close the energy access gap, while generating significant impacts across multiple sectors. For example, technology platforms that connect developers, investors and suppliers in large-scale mini-grid tenders can drive mini-grid projects. Additionally, utilizing machine learning and artificial intelligence for load management, planning and maintenance can minimize costs and allocate resources more efficiently, enabling the expansion and improvement of the grid and other energy services.
Governments should consider implementing digital technologies and component interoperability when strengthening and updating national institutional network systems and legal frameworks that guide standards and regulations for energy products and services. In this way, it is possible to create an environment conducive to advancing access to energy in an efficient, sustainable way and with positive impacts on multiple sectors of the economy.
The Need to Target Support Measures to those Most in Need
Since the start of the global energy crisis, governments have allocated a significant amount of resources to short-term consumer affordability measures, in addition to existing support and subsidy programs. It is estimated that around US$900 billion has been allocated to these measures, with approximately 30% of the spending announced in the last six months. However, despite calls to better target these resources to families and industries most in need, only 25% of the accessibility measures are directed to low-income families and industries most impacted.
The European Union stands out as responsible for two-thirds of government accessibility support worldwide. As a result, it has faced significant increases in electricity and gas prices in 2021. Additionally, levels of consumer support spending have also increased in emerging and developing economies, primarily through governments compensating energy companies for operational losses incurred. during the energy crisis, keeping prices stable. This has resulted in more resources being directed towards consumer affordability measures (US$ 140 billion) than supporting clean energy investment (US$ 90 billion) since 2020.
While emergency measures play an important role in protecting consumers against high energy price spikes, they have a significant impact on government balance sheets. Fossil fuel subsidies, for example, reached an all-time high in 2022. This situation could threaten the ability of some countries to balance short-term relief with simultaneous efforts to address energy security and affordability through increased energy efficiency and investment in clean energy. This balance is particularly challenging in emerging markets and developing economies due to pre-existing financial tensions.
Consequently, the majority of spending on affordability and clean energy remains concentrated in advanced economies. These savings currently account for 93% of total government support for clean energy investment and 85% of consumer affordability support. This disparity highlights the need for a more equitable distribution of resources, in order to ensure that emerging and developing economies can also benefit from measures that promote accessibility to energy and investment in clean and sustainable sources.
It is essential that governments consider efficient and balanced strategies, seeking to mitigate financial impacts and direct resources appropriately, aimed at both immediate relief and long-term efforts to address the challenges of energy security, accessibility and sustainability.
In 12 countries representing nearly 60% of the global population, average households saw their share of income going to household energy increase in 2022, even with substantial government intervention, as energy prices outpaced wage increases. This impact was even greater for poorer families, who typically spend a greater proportion of their income on energy.
European Union countries are mainly responsible for total spending on accessibility, representing two thirds of this total. Germany is the biggest single contributor in this regard, and is estimated to be on track to spend around half of its 200 billion euro budget approved in October last year. Croatia, Poland, Italy and the Czech Republic are also among the European Union countries that have implemented significant packages of accessibility measures. Outside the European Union, Australia recently announced in its 2023-2024 budget the release of 3 billion to reduce energy prices, if approved.
Measures adopted by governments, such as tax reductions, fuel subsidies and regulation of energy prices, have largely benefited the general population, rather than being targeted at those most in need. Around 75% of the amounts allocated globally are being directed to the general population, rather than low-income households or economic sectors most exposed to rising energy costs. This indicates that previous calls to better target support measures have not been fully heeded.
The majority of government spending on consumer affordability measures, around 70% globally, is being directed to supporting electricity, natural gas and heating. These measures have been mainly concentrated in Europe and Southeast Asia, with the aim of offsetting high electricity and gas prices. In other countries, especially in emerging and developing economies (EMDEs), transport fuel prices have increased more sharply. In response, governments in these countries are directing 65% from consumer supports to discounts on transportation fuels. Some regions have adopted reduced fares for public transport, such as the launch of fixed-price trains and regional bus passes in Spain and Germany.
While these fiscal interventions are theoretically short-lived, the lack of specific targeting raises questions about whether countries are sending sufficient signals to consumers to reduce unnecessary consumption, increase efficiency and seek alternative energy sources. Some European governments have already hinted at their intention to extend key support programs until the end of next year, as a way of preparing for possible disruptions in energy markets during the upcoming winter in the northern hemisphere.
This lack of specific targeting in support measures raises concerns about the ability of countries to send appropriate signals to consumers, encouraging the reduction of unnecessary consumption, increasing energy efficiency and the search for alternative energy sources. It is essential that governments strike a balance between protecting consumers against price increases and promoting sustainable behaviors. This way, it will be possible to face energy challenges more efficiently and move towards a more sustainable future.
