My guest on this week’s Wonkcast is Nigel Purvis, CEO of Climate Advisors, a visiting senior associate at CGD, and the co-author of a new CGD report “Energizing Rio+20: How the United States Can Promote Sustainable Energy for All at the 2012 Earth Summit.” We spoke last Friday following the launch of the report at a CGD event that concluded with a keynote address by UN Secretary-General Ban Ki-moon.
“The Secretary-General spoke convincingly and from the heart about his experience growing up in Korea, having to study by kerosene light, using candles only when they could afford them,” Nigel tells me. “It’s clear that he understands, in a way that is unprecedented for a person in his position, the connection that energy has to solving development problems.”
About 1.3 billion people, one-in-five people in the world, lack access to electricity, while another billion people have only intermittent access. Roughly 2.7 billion people, some 40 percent, lack access to clean cooking fuels. The UN’s Sustainable Energy for All campaign to address this unmet need in a way that is compatible with averting a climate catastrophe. The campaign will feature prominently in the a UN conference on sustainable development in Rio de Janerio on June 20–22 that will mark the 20th anniversary of the Rio Earth Summit, a milestone in international efforts to address environmental problems.
Nigel is hopeful that the sustainable energy for all approach will succeed where climate negotiations have not.
“When we frame energy efficiency and renewable energy as part of the solution to energy poverty, it really speaks to developing countries,” he says. “They understand that this is not something that we're asking them to do for the globe, but something that they want to do for themselves to help their own people. And when we talk about renewable energy and expanding energy access we get developed countries excited…because it helps not only with poverty agenda but it helps with the climate agenda.”
“That has catapulted the Secretary-General’s initiative into being the centerpiece of this upcoming conference.”
The new CGD report, co-authored with Abigail Jones, director of research and policy at Climate Advisers, offers practical suggestions for ways that the United States can help to support these goals while also creating jobs at home and strengthening the U.S. economy. The United States is a leader both in climate friendly technologies and in large-scale project finance needed to rapidly deploy them, the report notes.
Nigel points to the rapid spread of cell phones around the world, driven by consumer demand and private sector investment, as a model for rapid electrification. “We need to see the poor around the world who don't have access to energy as potential customers, as consumers,” he says.
“These are people who want energy and who are willing to pay for it,” just as they have found cell phones to be worth the expense. “It empowers them and connects them to the modern economy. It allows them to be far more productive.”
The problem is not lack of money or technology, but rather a lack of suitable investment vehicles,” Nigel explains. Institutional investors, sovereign wealth funds, and banks hold trillions of dollars in assets, and institutions and companies that are interested in earning investment returns on clean energy projects manage a healthy portion of these funds.
What’s missing are investment-grade opportunities that can attract big money by being large scale, liquid, and clear about the level of risk involved. To overcome these barriers, new investment vehicles and institutions are needed, he adds.
The United States is the logical country to lead an effort to address these problems, given the size of its venture capital and investment community, the prominence of its financial markets and exchanges, and its tradition of support for agencies such as the Overseas Private Investment Corporation (OPIC) and the Export-Import Bank (Ex-Im).
For example, Nigel says, the United States could announce at Rio+20 its commitment to work with other nations to develop a new “deal flow generator”—a new mechanism within existing international financial institutions that would connect long-term investors, such as pension funds and sovereign wealth funds, with sustainable energy for all investment opportunities.
The new CGD report also suggests a suite of actions to further increase the impact of OPIC and Ex-Im, including new financial products focused on sustainable energy and greater willingness to cofinance projects with counterparts in Germany, Japan, and other high-income countries.
Will Rio+20 serve as a catalyst to push these ideas towards implementation? Nigel is realistic but hopeful in his expectations.
“These global conferences are not the solution to poverty, or climate change, or any of our other global ills. What they are is an opportunity for leaders to educate the public about the challenges of the day, and to reframe the solutions in a way that compel both public and private players to take action,” he says.
“What we need to do,” Nigel adds, “is find ways of connecting private capital, which is eager to get in and finance energy projects, with a portfolio of projects country by country. It's really the glue between those two that we're missing most, and that's the vital role of policy.” And, he might have added, of leadership.