Clean energy alone won’t uplift impoverished nations — we must invest in people

Last week at the COP 26 climate meetings in Glasgow, a consortium of philanthropies, led by The Rockefeller Foundation, announced a massive program to fund renewable electricity projects for impoverished people in developing countries. 

The establishment of the Global Energy Alliance for People and Planet (GEAPP) is welcome news. But when it comes to generating the strongest benefit for the impoverished, funding for clean electricity should be complemented by a substantial investment in the people themselves — one that is designed to enable them to best use these clean electrons to increase their family’s income and rise out of poverty. This is a thrust already embedded in GEAPP’s proposed approach that needs continued emphasis during implementation.

GEAPP is a multi-billion dollar program to help transition the energy system to renewables, with a focus on developing countries. It “aims to extend clean, productive-use energy to 1 billion underserved people, create tens of millions of green jobs, and avoid and avert over 4 billion tons of emissions.” A key component is investments to build distributed renewable energy systems that can be set up rapidly and located near consumers in impoverished, often rural, communities. Improving the lives of citizens is a key objective.

We can, however, easily be distracted by the magnitude of the money being proposed to build out clean power systems and forget that electricity, in and of itself, will not overcome poverty. Appropriately, the GEAPP points to the new jobs in renewables and other clean energy businesses its investments will generate. More significantly, it also emphasizes the even larger number of jobs it will create or improve in other sectors (such as agriculture and manufacturing) by providing electricity access to small businesses and other end-users quickly from nearby distributed generation systems. Giving more electricity to the energy-deprived will also produce health, education, safety and other benefits. For all these reasons, the GEAPP is an important anti-poverty initiative in addition to a climate one, and its multibillion-dollar mass is not only impressive but also what is needed.

The world’s most impoverished, unfortunately, often lack the tools to transform electrons into incomes. The barriers they face include a lack of technical skills to select, operate and maintain the most suitable equipment; lack of know-how about setting up micro-enterprises; lack of exposure as to how to grow these enterprises into small and medium-sized businesses that can employ more people; and importantly, lack of access to credit to purchase new equipment and other assets to grow their businesses. 

Impoverished entrepreneurs looking, with the benefit of newly supplied clean electricity, to set up a business or expand an existing one will need support in answering a variety of possible questions. Is there a potential market for a new tire repair store? Which equipment makes the most sense to buy, and is it available and affordable? With new access to locally provided, more reliable and cheaper electricity, does it make sense to expand a home-based business? Where can small or even micro-household entrepreneurs get the money to exploit that new distributed renewable electricity they now receive? Are there credit centers nearby and how do you apply for a loan? Does stable access to the internet powered through a reliable renewable electricity supply open up opportunities? To answer these and a myriad of other possible questions, many disadvantaged entrepreneurs need help. 

To aid them to overcome these challenges, the entrepreneurs would benefit from targeted capacity building and other assistance programs. This support will often need to cover soft skills, in addition to assistance with hardware and money. Just as there have been agriculture extension programs to help farmers, we need electricity extension programs to help under-resourced entrepreneurs. Vocational, technical and similar training programs, as well as mentorships, partnerships and twinning arrangements with more established businesses, are useful. Moreover, it is important to bring these services to the end-users, rather than requiring them to travel long distances, often to reach difficult urban centers. Distributed renewables generation needs to be mirrored by distributed training programs, together with local credit and equipment centers that bring support to the users in their communities.

These initiatives will not overcome all the barriers impeding poverty alleviation (such as the limited markets that can constrain business opportunities in many impoverished rural communities), but they can help. 

GEAPP has the breadth and the ambition to implement the necessary expansive capacity support programs at scale. The billions to be invested in building new distributed renewables and other clean energy systems need to be accompanied by a massive investment in strengthening the capacity of the impoverished end-users themselves. Experience, however, has demonstrated that it is often more difficult to bolster soft skills and successfully empower disadvantaged families than it is to build out electrical systems. Success will require not only substantial amounts of funding but also a large number of people on the ground in the communities and establishing complementary policies and programs for the impoverished. 

GEAPP’s plans to work with local partners in each market and engage development banks and other delivery partners can help establish the necessary foundation for advancing on these fronts. Maintaining focus and commitment on the softer capacity and programmatic areas for those in poverty will be important even as GEAPP funds its large-scale investments reshaping the electricity system itself.

Strengthening the capacity of impoverished people to transform electrons from renewables into incomes and other economic and social advancements can help these families produce their own better future. GEAPP provides a strong potential platform to advance this effort. Actual implementation will be key and empowering those experiencing poverty needs to remain a focus. 

Philippe Benoit has over 25 years of experience working on international development and energy issues, including in management positions at the World Bank and International Energy Agency.  He is currently managing director, Energy and Sustainability, with Global Infrastructure Advisory Services 2050.