Energy poverty has been and still is an existential threat

Billions of world denizens do not have access to electricity, modern cooking and heating fuels, and efficient transportation. Under initiatives such as SDG7, there has been progress but too slow and uneven. Importantly, having access as tracked under SDG7 progress reporting does not mean that those with "access" consume sufficient energy to lift themselves out of poverty. As a result, about half of the world population who live in low-income countries face the risk of illnesses and death due to indoor air pollution, and the lack of sanitation facilities, clean water systems, and health care just to name a few of the conveniences we take for granted in the developed parts of the world. Every year, several million people die due to illnesses related to these conditions, almost all preventable and rarely seen in the developed world for decades. Increasingly, we are made aware that poor living conditions around the world have global, not just local, environmental, health and sociopolitical impacts.

Energy poverty has been a target of the development community for decades. It is well understood that energy is a necessary albeit insufficient condition for improving the standard of living. Unfortunately, when I compare conditions in countries I visited in Africa and South Asia since the early 2000s, I cannot see sufficient progress. Population growth is one challenge. But, governance and institutional deficiencies, driven by local sociopolitical and cultural forces, are dominant obstacles. Significant rents offered by energy projects are key to understanding energy politics in any jurisdiction.

I presented on these issues in an IAEE webinar. I estimated the level of one-time investment necessary to bring everyone to 2018 global average electricity and liquids consumption per capita (3,700 kWh/year and 0.01 barrels per day) in the range of $5 to $10 trillion depending on the technology choices. These rough estimates do not include the cost of replacing aging infrastructure, new investment to keep up with growing demand, or energy transitions. IRENA estimated up to $130 trillion to be necessary between 2016 and 2050 (or about $4 trillion per year) to achieve a decarbonized system with every world citizen having access to energy.

Unfortunately, historical record is not promising:

1- energy investments have been below $2 trillion a year for the last couple of decades;

2- only $50 billion or so went into power generation in low-income countries;

3- 80-90% of energy investment in low-income countries are done by state-owned enterprises and/or public funding (domestic public banks or bilateral and multilateral lending).

Low-income countries have to develop native solutions to their governance and institutional deficiencies that kept investment levels so low. Only then, domestic capital can be accumulated and dispensed to domestic private entrepreneurs and international private capital can be attracted to develop large scale energy projects to address their energy poverty problem.

SDG7 goals are not ambitious enough. In fact, they can be constraining with their focus on renewables, energy efficiency and distributed resources. These are certainly worthwhile options for many locations but they simply are not scalable to help low-income countries modernize fast enough to eliminate poverty. For example, see the article from Energy Institute at Haas: "Real" Electricity Still Comes from the Grid. And, bilateral or multilateral funding from traditional sources will continue to fall short even if there are no SDG7 strings attached.

Finally, current trends of rising political and economic nationalism are concerning. They may create a vacuum of influence in low-income countries that is getting filled by China and other emerging powers. But these investments are not always transparent or sufficient. They often provide little benefit in terms of local employment or technology transfer.

Global problems require honest global cooperation. So, these trends are unfortunate but they may prove to be a blessing in disguise if they lead to a break from the dependence on international assistance and force the hand of many countries to become more self-reliant. Human and natural resources are there. For example, natural gas can be a game changer for Africa in a relatively short time if governments can create a transparent environment for investment and cooperate regionally to develop the necessary infrastructure of gathering, processing, pipelines, storage, power plants and grid, and industrial facilities that use methane and NGLs as feedstock. Here's to success of those who pursue these visions.