Clean energy technologies are rapidly increasing their contribution to the world’s energy supply but most of the recent growth has been in developed countries and a few emerging economies. Many developing countries and countries in transition are at risk of being left behind in the coming “energy revolution” because they lack the readiness to adopt new and more efficient technologies. Without investment in renewable energy and energy efficiency, including the support that helps the targeted countries to select technologies and put in place policies to facilitate investment, the technology gap between rich and poor nations will grow.
Making investments in low-carbon energy alternatives and reducing emissions from inefficient energy consumption are among the best ways to achieve immediate and sustained reductions in greenhouse gas emissions. They also make economic and environmental sense. Many low-carbon technologies are already commercially viable but transferring these to new markets and mainstreaming their use globally is a challenge.
As countries work out the arrangements that will channel billions of dollars to mitigation efforts in developing countries there is a real need to ensure that recipients are able to use the funds effectively, and tap the opportunity to make cleaner energy technologies a cornerstone of their economies. UNEP has been promoting the development of clean energy markets in developing countries and countries in transition for over a decade. Successful activities that can easily be scaled-up have involved easing the costs and risks of entry of the financial actors that bring new climate-mitigation investments. This experience places UNEP in an excellent position to help developing countries and emerging economies to manage the challenging transition to a low-carbon economy.
UNEP’s Role in Energy Finance
It is well-recognised internationally that high levels of investment in the cost-effective implementation of clean technologies are required to enable the shift towards a sustainable low-carbon global economy. This dramatic change of focus is urgently needed to limit the potentially damaging climate change that will otherwise be caused by the anticipated level of carbon emissions. UNEP is not a bank and so is not able to address directly the level of finance required. However, UNEP is uniquely well-placed to stimulate the necessary level of investment, using our appreciation and understanding of the conditions required for the future commitment of such funds.
Investment must be pledged at a level that exceeds any previous allocation to clean technology implementation by at least an order of magnitude. But, to address the impending threat of climate change, a range of pre-investment services are required to ensure that any financial resources can be utilised effectively. Providing finance to fuel a new approach to clean tech implementation will not be sufficient without a compatible engine to drive the progress towards change. UNEP is well-equipped to develop this engine, tuned to the particular requirements in each target country.
UNEP aims to catalyze the sustainable use of clean energy applications by mobilizing sufficient finance to create new economic opportunities and increase sustainable energy access. By demonstrating the economic, social, and environmental viability of low-carbon development pathways in the energy sector, UNEP not only helps low- income countries provide energy access to their populations, but also improves market conditions and stimulates confidence for future clean tech investments.
The need to attract finance is a particular challenge for lower-income countries with limited infrastructure, and limited past experience with the implementation of clean technologies. Such countries represent a high perceived risk for the investors that are required to cover the upfront costs associated with clean tech applications. Building local resources to offer a conducive framework for investment is a pre-requisite that UNEP can provide to stimulate the introduction of clean tech.