Helen Clark: Speech on Aggregating Financing for Low-Carbon Energy

Dec 8, 2015

UNDP is pleased to co-host this important event with the Global Environment Facility (GEF) and the Climate Bonds Initiative to highlight the importance of finding new and innovative ways of financing energy projects.

UNDP and the GEF have worked together on sustainable energy for over twenty years. GEF is a very important and much valued partner for us. Our collaboration with Climate Bonds is new.

The subject of this event, Aggregating Financing for Low-Carbon Energy, is an important part of discussions on how to address the current challenges faced in financing sustainable energy solutions.  

The scale of unmet energy needs is daunting. More than 1.1 billion people around the world currently lack basic access to electricity[1]. Huge investments will be required to meet these needs and to enable developing countries to meet rapidly growing electricity demand[2] - and to do so in sustainable ways. 

When we think about that unmet need for energy, let us think of the need of a child in a remote village who can’t study effectively in the evening because there is no adequate lighting; or of the need of a micro-enterprise which is held back from growing either because it has no access to modern energy at all, or because there are frequent power cuts.

Energy access is one challenge – sustainable energy is another. Energy production and use currently account for two thirds of the world’s greenhouse gas emissions. [3]

Now energy has been recognised in the new global development agenda as a critical enabler of sustainable development. Goal 7 seeks ‘to ensure access to affordable, reliable, sustainable and modern energy for all’. It recognises energy as an essential precondition for progress in many other areas, from education to health, jobs, and inclusive growth.

To this end, we are seeing a number of trends which are promising for increasing sustainable energy provision, including:

  • dramatic reductions in sustainable energy hardware costs; for example, solar panel costs have fallen sixty per cent in the past three years[4];
  • countries’ energy systems are in transition. Large, centralized power plants are being complemented by small-scale, decentralized energy generation to power  homes, businesses, and communities for which there are many sustainable solutions available;  and
  • innovative business models for renewable energy supply are emerging. Pay-as-you-go solar home kits in East Africa, for example, are disrupting long established markets for kerosene, and offering consumers sustainable energy alternatives.

UNDP, in partnership with the GEF, is already supporting innovative solutions for transformation of the energy sector so that the proportion of renewable provision in the mix can rise. For example:   

  • in Peru, we are assisting the government through a renewable energy Nationally Appropriate Mitigation Action (NAMA) to put in place policies which promote new business models for private sector investment in roof-top solar energy; and
  • in Uzbekistan, we are working with the Government and commercial banks to pilot a green mortgage scheme which will help rural home-owners get more affordable loans to enable them to have energy efficient homes. 

Energy system financing is in transition. In the past, it has tended to focus on large-scale projects, yet small-scale energy requires financing too.

Financial aggregation is an innovative approach which can support the funding of small-scale sustainable energy solutions. It works by bundling a number of small-scale, low-carbon energy activities, allowing developers to access new, low-cost capital. Ultimately this makes clean energy more affordable, reliable, and accessible.

The newly announced Climate Aggregation Platform aims to raise awareness of this approach, promote standardization, and showcase investments made. It can make an important contribution to building momentum for innovative sustainable energy financing.

Let me end by emphasizing that this is a promising time for growth in sustainable energy solutions around the world. Financial aggregation can play a key role in underpinning and accelerating this change. At UNDP, we stand ready to support countries to implement innovative approaches aimed at achieving sustainable energy for all.

[1] Source: World Bank, SE4All Global Tracking Framework Report (2015).

[2] Developing country energy demand is projected to increase by 56% between 2010 and 2040. Source: US Energy Information Administration (2013): International Energy Outlook.

[3] Source: International Energy Agency, Energy and Climate Change, World Energy Outlook Special Report (2015)

[4] Source: Deutsche Bank Market Research, 2015 Solar Outlook (January 13, 2015)

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