Energy

Overview

The energy supply sector is one of the top contributors to the emission of greenhouse gases (GHG) into the atmosphere, accounting for 35% of the 49 GtCO2eq released in 2010. Reducing emissions from electricity generation and use through renewables and increased energy efficiency is a central part of the climate change mitigation challenge. A second challenge is to seize the significant mitigation potential associated with increased access to low-emission energy technologies.

Large-scale deployment of low-emission electricity can reduce fossil fuel reliance and mitigate climate change. Immediate gains are possible by shifting investment towards low-emission energy, including the scaling up of wind, solar photovoltaic, and mini-hydro. In LDCs, there are potential savings of 1 GtCO2eq per year to be gained by replacing conventional biomass cooking methods with cook stoves alone. Small-scale electricity generation technologies for lighting and cooling can also be cost-competitive against fossil fuel expenditure.

Increased access to low-emission energy may be especially relevant in LDCs where an estimated 2.6 billion people are still using biomass for cooking and more than 1 billion people still lack access to electricity. Lighting and cooking are the two key needs usually highlighted. The mitigation potential from such interventions is smaller than others, but significant: up to 1 GtCO2eq per year, by replacing conventional biomass cooking methods with cook stoves alone. Co-benefits, however, are substantial and can help to support the transition to lowemission development, particularly in LDCs.

Clean technology costs are falling rapidly, particularly for solar and wind. The costs of wind energy have fallen by 15%, and crystalline solar by 53%, since 2009; and, in many African countries, renewable technologies are already less expensive than conventional power

Costs and financing needs

The support of renewable energy industries was the top mitigation need identified by developing countries in their technology needs assessments, and feature prominently in countries’ own climate change action plans.

The costs of extending access to clean energy to the over 1 billion people living without it have been estimated at USD 50 billion per year – possibly less with greater use of distributed renewable energy.

Distribution is key to advancing access to energy for consumers; but poorer consumers may have difficulty accessing financing for such services, and the up-scaling of schemes to promote such access is urgently needed, not least for the co-benefit potential for health benefits and enhanced quality of life.

GCF's value

Renewable energy investment has been heavily concentrated to date in just a few key developing country economies, particularly Brazil, India, and China. There is a major market for private investment in renewables in Africa, while support for Latin American countries may help keep their energy mix clean and away from fossil fuel dependence.

Seventy percent of all mitigation funding to date from climate funds has been spent on renewable energy. However, this has mostly been for particular projects or the provision of credit to financial intermediaries. Much funding to date has had limited risk tolerance and has not funded innovation. There is also a need to link projects to initiatives that strengthen underlying policy, regulatory, or enabling environments.

Of the over 1 billion people worldwide without electricity in 2010, nearly 90% were in Sub-Saharan Africa and South Asia, most living in rural areas. By contrast, only 7% of the population in Latin America still lacks access to energy. Dependence on polluting biomass for cooking is highest in the rural areas of South Asia and Sub-Saharan Africa, particularly the LDCs.