Which are the European Union initiatives for developing countries that focus on energy?

-- Reprint from EUCERS Newsletter No 39 --

As the new year is quickly approaching it is good to look at the challenges that it has in store for us. For the   European Union, 2015 has been dedicated to the Europe Development (EYD2015) (1) - a unique opportunity to  engage with EU citizens and to show case the work that is being done by the European Commission, Member States and other European actors towards eradicating poverty worldwide (2). The importance of this decision can  be understood if one considers that for the last EU has been dedicating a year to the promotion of a area it is the first time that it has been dedicated to an external policy area.

The EU is the biggest donor of the official development assistance (ODA) in the world. However, i will focus on just one sector of the work that is being done by the EU to eradicate poverty worldwide energy sector - as this is crucial for development. the golden thread that connects economic growth, increased social equity, and an environment that allows the world to thrive. Addressing the lack of access to clean, reliable and affordable energy services for billions of people has  become one of the most critical development challenges in the against poverty.

Lets first of all look at the  magnitude of the challenge. Worldwide, about 1.2 billion people have no access to electricity and an additional billion only have access to unreliable electricity networks. More than 2.6 billion people rely on solid fuels, such as traditional biomass and coal, for cooking and heating. A well-performing energy system that improves efficient access to modern forms of energy would strengthen the opportunities for the poorest people on the planet to escape the worst impacts of poverty. energy is central to providing opportunities for inclusive, equitable and  environmentally friendly economic growth, creating new job opportunities and contributing eradication while  moving towards low-carbon and resource efficient energy models.

The magnitude of the challenges means that  actions and initiatives at all levels are needed: international, regional, national, local.

At a global level, the United Nations General Assembly unanimously declared the decade 2014-2024 as the decade of Sustainable Energy for All (SE4ALL) (3), underscoring the importance of energy issues for sustainable development and for the elaboration of the post-2015 development agenda.

Sustainable energy provides new opportunities for growth. It enables businesses to grow, generates jobs, and creates new markets. Children can study after dark. Clinics can store life-saving vaccines. Countries can grow  more resilient, with competitive economies. With sustainable energy, countries can build the clean energy  economies of the future. Transforming the world’s energy systems will also lead to new multi-trillion-dollar investment opportunities.

Sustainable energy for all is an investment in our collective future. Universal energy access, increasing the use of renewable energy, improved energy efficiency and addressing the nexus between energy and health, women, food, water and other development issues are at the heart of all  countries’ core interest, which must be deeply integrated in the development agenda.

At the European Union level, for already a decade, the fight against energy poverty has been a driver of the EU
development agenda. In 2004,the EU Energy Initiative was created as a collaborative platform between the  European Commission and its Member States in order to join forces in the fight against energy poverty. In 2007
the cornerstones of the Joint EU 2007, it was made one of the cornerstones of the joint EU-Africa Partnership and integrated energy issues in the last programming cycle (2007-2013) (4), the European Commission  contributed more than €2 billion to energy, of which a large part was dedicatred to the African continent because of its massive needs in that area.

In April 2012, European Commission President Barroso committed to providing access to sustainable energy services for 500 million people by 2030 in developing countries. As a step towards this objective, for the period 2014-2020 around

€3.3 billion will be dedicated to supporting sustainable energy in the EU’s partner countries around the globe, through bilateral and regional cooperation. This is expected to leverage between €15 and €30 billion in loans and  equity investment to fill gaps in energy infrastructure and power businesses, schools, homes and hospitals.

Following the adoption of the policy document 'Agenda for Change' (5) and the strong commitment to support the  goals of the Sustainable Energy for All initiative, the EU developed a comprehensive set of actions and rolled out  more than €600 million - over the last two years alone to end energy poverty. Now efforts will be further reinforced together with about 30 countries that have chosen energy as a focal sector for their bilateral cooperation with the  EU.

As a strong legacy of commissioner Piebalgs and his role in the advisory Board of se4all the access to   electricity is and will be a fundamental poverty focussed aspect on which the Commission is studying innovative approach (ElectriFI) close to market functioning involving massively the private sector and Development financial institution in a large scale.

Particularly with Africa, the EU has signed an Energy Partnership (AEEP) (6) which provides a long-term framework for a more structured political dialogue and cooperation on energy issues of strategic importance to Africa and Europe, in particular energy security and energy access. Through the Partnership, Africa and Europe are developing a shared vision and a common approach to address today’s  rapidly changing geopolitical, economic and ecological reality. Together, the EU and Africa will address the energy challenges of the 21century. As part of this Energy Partnership, a high level meeting took place on 11-13
February 2014 in Addis Ababa, Ethiopia, on the theme “Taking the Next Step: Africa and the EU are tackling energy challenges together.” The meeting which was jointly hosted by the Ethiopian Government, the AEEP  Co-Chairs at that time the Governments of Austria, Germany, Mauritius and the African Union,: over 450 key stakeholders were present.

The challenges are numerous. Developing energy markets still face many barriers to sustainable energy services. Lack of technical qualification of the workforce undermines the effectiveness of public authorities and power companies. Poor payment recovery performance and non-cost-reflective tariffs can jeopardise the financial stability of utility companies, and a small customer base makes it difficult to assemble  the necessary funds for rapid expansion of the electricity grid.

This is why the EU is considering to adopt a  comprehensive and long term approach that will be discussed with all stakeholders. The aim is creating an  enabling environment to allow for transparency, policy and regulatory reforms, cost-recovery and reinvestment. At  the same time it is necessary to catalyse investments through innovative financing schemes that use EU  grants and loans in a strategic way to make large energy infrastructure projects bankable, through our blending  instruments. Change will happen only through combined efforts, thought bilateral and multilateral dialogue and a strong regional cooperation with partner countries.

More recently, in September 2014, at the margins of the UNGA in New York, the EU built further on energy commitments by signing Joint Declarations with five partner countries a set of new initiatives has been taken (7):

• EU Commissioner Piebalgs and President Barroso, signed joint declarations to reinforce energy cooperation with five African countries: Cabo Verde, Côte d'Ivoire, Liberia, Togo and Rwanda. These agreements will increase access to sustainable energy sources, even in rural areas, where the needs are the greatest. The agreements will also aim to strengthen the political ties between energy policy commitments of signatory countries and the financial support by the EU and other co-signing donors. The following European countries will equally co-sign the joint declaration:

       - Cabo Verde: Austria, Luxembourg, Spain and Portugal

       - Ivory Coast: France

       - Liberia: Norway

• A new declaration to boost cooperation in renewable energy and energy efficiency in the Caribbean was also signed between the European Union, the Inter-American Development Bank (IDB) and the Kingdom of Spain. The declaration, includes a commitment to improve the coordination of policies and activities in renewable  energy and energy efficiency with Caribbean states in order to promote best practices on energy throughout the region. It will also focus joint efforts in the area of energy efficiency,  renewable energy and the green economy in order to promote ‘climate compatible’ development (i.e. one which takes climate change into account.) It’s clear that sustainable energy is crucial for the continued development of the Caribbean;  enabling businesses to grow, health facilities to function smoothly, and transport and infrastructure to be put
  in place to allow people to get their goods to markets. The Commissioner stated that the ‘ declaration is a good example of how we’re working with our partners to make sure that our work on sustainable energy is as efficient and wellcoordinated as possible in order to achieve our goal of helping developing countries to provide access to sustainable energy services to 500 million people by 2030. (7bis)

The Joint Declaration approach has proven to be a formidable policy traction for climate change commitment being a WIN-WIN and it be replicated upon requests already coming in with other interested partner countries. It is estimated that in order to meet the SE4ALL goals investments of the order of 48 billion dollars per year will be needed. These are massive investments. Only the cooperation of public and private sectors can possibly mobilise such funds.

The European Commission is well aware of this and therefore is not working on this alone. Together with the Member states as well as with UN relevant bodies, on the 29-30 September 2014, a workshop was organised in Brussels on ‘Empowering Rural Electrification’ where apart from EU Commissioner Piebalgs, my colleague Roberto Ridolfi DEVCO Director for Sustainable Growth and Development and the coordinator of this action in the Commission, Kandeh Yumkella, UN Under Secretary General , Adnan Amin, Director General of IRENA (international Renewable Energy Agency) but also a packed conference room of representatives from both energy sector, policy makers, industry, rural electrification associations, private sector, utility companies, think tanks, universities, development banks, investors, European Investment Bank, World Bank and also representatives from developing countries. The objective was to exchange views on a potential new
initiative being considered that is aiming at leveraging more private investments in addition to the funds set aside by the EU to accelerate rural electrification (ElectriFi).

The challenges are many:

• rural electrification requires mini-grids but how to make these mini-grids viable long term ?;
• how to tackle the barriers to investment such are the lack of capacity and training, lack of legal frameworks, lack of transparency as well as financing and payment risks;
• how to ensure sustainable economic and social development;
• how to make sure that the electrification projects will benefit all the population; how to integrate a gender perspective;
• how to ensure that local civil society is a partner in the effort; and many others.

The valuable contributions of the participants are currently being analysed and the European Commission is currently assessing the conclusions of the workshop  and discussing with the Member States on the next steps.

You can find more information on the work of  EUROPEAID at: https://ec.europa.eu/europeaid/home_en

DISCLAIMER : Views expressed are strictly personal. Follow at http://Akaminara.wordpress.com & Twitter: @akaminara

Footnotes

1. http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2014-0269+0+DOC+XML+V0//EN
2. http://ec.europa.eu/europeaid/european-year-development-2015_en
3. http://www.se4all.org/decade/
4. the European Commission development cooperation financial instrument decided on a 7 year basis
5. http://europa.eu/rapid/press-release_IP-11-1184_en.htm?locale=en
6. http://ec.europa.eu/development/icenter/repository/africa_ue_energy_partnership_fiche03_en.pdf
7. http://europa.eu/rapid/press-release_IP-14-1026_en.htm