FOR IMMEDIATE RELEASE
Washington, D.C. (April 20, 2012) - The United States could boost U.S. exports, create good jobs, improve livelihoods globally, enhance energy security and reduce the risk of catastrophic climate change by helping to ensure poor people in developing nations have access to clean energy, according to a new report from the Center for Global Development, released Friday at an event that featured keynote remarks by UN Secretary General Ban Ki-moon.
Ideas that advance U.S. economic interests while promoting global energy efficiency, renewable energy and energy access are at the heart of recommendations put forward in the CGD report by Nigel Purvis, a CGD visiting senior associate and former U.S. deputy assistant secretary of state, and Abigail Jones, director of research and policy at Climate Advisers, a consulting firm headed by Purvis.
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“The U.S. government should act swiftly to ensure that U.S. companies have every opportunity to compete in growing global energy markets,” says the report. "Because of the widespread latent demand for clean, affordable energy among the poor, new energy markets in developing nations could be worth several tens of billions of dollars a year within a decade,” the report predicts.
The report was released ahead of 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.
The UN has announced that 120 heads of state and government plan to attend Rio+20, which will focus on implementation and action. The CGD report identifies a number of practical steps that will potentially improve access to energy for millions of people, increase their economic opportunities, and protect their health and the environment.
CGD president Nancy Birdsall praised the report for offering practical suggestions that could be adopted despite a challenging political, fiscal and economic climate in the United States. “The U.S. delegation to Rio+20 should take note,” she said.
“Because unmanageable climate change risks threaten to reverse hard-won development gains, efforts to end energy poverty must be compatible with climate goals,” Birdsall said. “Sustainable development, in other words, requires sustainable energy.”
According to the report, 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%, lack access to clean cooking fuels.
Purvis says that meeting their needs, with clean renewable energy, will require massive investment. “The problem is not lack of money but rather a lack of suitable investment vehicles,” he said. 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, the report says.
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 business-oriented agencies, such as the Overseas Private Investment Corporation (OPIC) and the Export-Import Bank (Ex-Im), the report says.
For example, 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 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 co-finance projects with counterparts in Germany, Japan and other high-income countries.
Recognizing the current budget squeeze in the United States, the report is not calling for U.S. contributions, but for self-financing activities, including taking equity stakes that would encourage other investors. “If managed well, these risks would also bring higher returns on investment for the U.S. government and thus strengthen the self-financing model that contains costs and ensures public support for agencies like OPIC and Ex-Im,” Purvis said.
The CGD report was funded in part by the Danish Embassy in Washington DC.
The report, Energizing Rio+20: How the United State can promote sustainable energy for all at the 2012 Earth summit, can be found on the CGD website.
The Center for Global Development: CGD works to reduce global poverty and inequality through rigorous research and active engagement with the policy community to make the world a more prosperous, just, and safe place for all people. As a nimble, independent, nonpartisan, and nonprofit think tank, focused on improving the policies and practices of the rich and powerful, the Center combines world-class scholarly research with policy analysis and innovative outreach and communications to turn ideas into action.
Climate Advisers: Climate Advisers is a consulting firm specializing in U.S. climate change policy, international climate cooperation, global carbon markets, and climate-related forest conservation. Climate Advisers is known for its vision, policy expertise, political acumen, and access to senior policymakers in the United States and Around the World.