Rachel Kyte is one of the world’s leading voices for sustainable energy. Previously the World Bank’s vice president and special envoy for climate change until December 2015, she is now chief executive of Sustainable Energy for All, a multistakeholder initiative that advocates for clean and inclusive energy solutions.
Launched by the United Nations secretary-general in 2011, SE4ALL has three objectives — ensure universal access to modern energy services, double the global rate of improvement in energy efficiency and double the share of renewable energy in the global energy mix.
Devex interviewed Kyte at the annual board of governors meeting of the Caribbean Development Bank last week in Montego Bay, Jamaica, to discuss just how those goals can be met.
In one regard, SE4ALL and similar initiatives have the unprecedented support of the global development community following the landmark agreements for sustainable development of 2015. But the task at hand requires nothing short of a full transformation of the global energy system — with no prior model to follow and the milestone climate change commitments agreed in Paris, as they stand, falling short of the global 2 degrees Celsius target.
Caribbean islands are ground zero for the effects of climate change, from rising sea levels that threaten coastal infrastructure to prolonged drought that undermines the water intensity of the region’s power generation. The Caribbean depends heavily on imported fossil fuel products for its electricity, leaving the region exposed to extreme price fluctuations in global energy markets. Its electricity prices are among the highest in the world, which lowers the competitiveness of its economies and leaves many Caribbean islanders living in “energy poverty.”
In an interview with Devex, Kyte explained how this scenario can be reversed and points out that many of the energy technologies to accelerate the reversal are already well-developed. She highlights the kinds of partnerships that need to be brokered as well as the different ways that governments and financial institutions should approach their roles in achieving universal sustainable energy access.
Here are the highlights of the conversation, edited for clarity and length.
You began this position shortly after global development entered into a whole new world, post-Addis Ababa, New York and Paris. What new approaches is the SE4ALL initiative taking in response to the momentum that those agreements leant to sustainable development?
It’s one thing to agree to it, it’s another thing to do it. The nationally determined contributions filed with the Paris agreement are contingent upon an enormous amount of finance. About 40 percent of the commitments in the NDCs need external financing which are not identified. This energy transition that every country needs to go through is something that nobody has ever gone through before. So it’s not like there is a road map or a great universal success story that everybody else just has to follow. Just the amount of management from a government perspective is extraordinary, without thinking through the details of where we are, where we need to be, how we get there, and the financing and public-private partnerships that it will require.
What we’ve done is stood back and [assessed] what we can do as a platform of partnerships. We’re going to work with leaders and we’re going to broker partnerships. These can be very specific around geothermal energy in the Caribbean or much more general around the questions of energy efficiency finance.
Then we’re going to unlock the finance. The general view of the finance — the $90 trillion that is missing in infrastructure finance — is well known. But when you get down to the specifics of any one market or any one jurisdiction, there may be perversities in how you have to unlock that. And we need to be able to bring the conversation down and have the right people in the room to fix the problem.
In order to do those things we will marshal the evidence. We will benchmark progress. We will try to amplify the voices. We think the voices of the energy poor have to be in the room when the solutions are being designed.
And then we’re going to tell stories. People just don’t know how much is already happening or what’s not happening and why. The prices of renewable technologies have dived so much. The cleaner alternatives are a much more robust alternative earlier than people [thought it would be]. Tomorrow is not all the way out there.
How specifically have the conversations changed since the celebratory signings, agreements and commitments of 2015?
I will separate the world into different groups.
There are countries who have put the energy transition front and center of what they have to do, either from a perspective of closing the access gap or shifting the energy mix, or both. In the NDC they wrote, that is fully explained and there is political buy-in.
There are countries where this has been raised as a significant priority but perhaps the country has not really got a process in place to think through what that means.
And then there are countries where I don’t think it was very well-elaborated and they probably don’t know exactly how to get from A to B.
What I hear from leaders from the private sector is about getting down now into the detail of this. If you’re a country with an energy access gap it means knowing who doesn’t have access to what energy and knowing what possible avenues of approach you can take; understanding what is already available as a business model for a technology that is being used in other places; what is the business enabling environment and the regulatory long-term strategy that you need to put in place to encourage investment in closing that access gap? That will be both centralized grid down and decentralized off-grid up, and how the two will meet in the middle.
People are starting to ask very specific questions around targeted strategies to deal with specific pieces of the puzzle. I think that the policy and the finance have to catch up with the technology. The question that we’re asking the financial institutions is — do you understand that it’s not business as usual? And if you are in the business of helping your clients close their energy access gap cleanly and affordably is that what you are lending for? Are you pivoting too?
As people really focus on how to do this, there are conversations that are not happening and discussions between groups not happening easily. People are coming to SE4ALL saying “you’ve got to help us.”
How do we change the financing for energy efficiency? It’s not available but it’s urgent. There’s not much innovation going on there.
How do we broker real agreements around the fact that, for example, clean cooking technology produces good quality cheap devices but the tariffs and the trade rules might make them expensive at the port of entry? Those little conversations that aren’t happening.
The trade ministers need to be in the room to understand that sustainable energy can actually happen if they were to do X, Y and Z.
Finance and energy ministers are still not fully briefed on what the NDCs mean. Large energy companies are wanting to come in and have a conversation to understand what a just [energy] transition means.
What are the most concrete, readily achievable actions that can be done now in order to initiate the transformative impacts on sustainable energy that were needed yesterday?
Every country, no matter how developed you are, should be putting efficiency first.
If you take an efficiency first view to your energy system, you can actually cut the energy needs that you have sizably. And then we would be looking at how to install clean and affordable power in a much more productive environment.
Two: access. If we’re not going to leave people behind, which is what we promised last year, then everyone has to have access to clean affordable power. And that shouldn’t be in 2030. That has to be mid-2020s. Is it tough to do? Yes. But this is not technologically beyond us, not at all. When it comes to renewables, do people understand that there was a Dubai solar project selling electricity for 2.99 cents per kilowatt hour? Chile is doing it for 6 cents, Texas for 4 cents and South Africa for 5 cents.
Yet by most projections fossil fuels will still remain the dominant energy source for the next several decades. Is the glass really half-full for renewables?
There is inertia in the system. The energy system is built around fossil fuels and there’s huge inertia around there. Every country and region needs to be looking really hard at the climate science and the disruption to the economy, the wisdom of being overinvested in carbon at a time when it will become a greater risk ... Understanding the capital and financial contours of renewable energies versus fossil fuels, I think, is an essential prerequisite for government leaders to understand how to spur the switch to cleaner energy sooner rather than later.
If we are serious about what we said in Paris then we need to be peaking even earlier than we said we will under the NDCs, which means we need to be peaking closer to 2020 rather than 2025. That’s not the aggregate of the plans at the moment. There are abundant sources of clean power that we understand the technology of, and the associated technological risk is much less than it was a few years ago. So the question is, what kind of public policy will drive investment in your jurisdiction into cleaner sources of power?
Other than carbon pricing, what can significantly change the business-as-usual scenario of how energy is generated and consumed?
There’s got to be a cleanly run, transparent, robust off-take for renewable energy. That will either be large corporates or a government offtake.
You’ve got to have the institutions for the transition of the energy system. You’ve got to set clear performance standards for efficiency, especially for buildings and transport. That’s not something you do once you’re developed. You do that wherever you are in the development curve.
If you have to provide subsidies to the poor in order to secure access to energy, make sure that you’re not subsidizing access to dirty energy if you can afford to subsidize clean energy. So encouraging off-grid, clean cooking and clean lighting.
The most important thing is that you’re not sending mixed signals. If you’re sending clear consistent signals, the private sector responds.
And you have to create a bipartisan agreement about this being the right thing for the country because this is a long-term plan. This is going to live beyond one political cycle. This is the future of the economy of any country.
What priority does the Caribbean play in SE4ALL’s global strategy?
The “For All” piece of it means that I’m here. If we can’t help a region which is highly vulnerable to climate change manage an energy transition so that it has access to clean affordable energy then the “we the peoples” part of the U.N. mission is less than it should be. Some people in the Caribbean have experienced energy prices north of 40 cents per kilowatt hour. This is punitive. The fact that you can now get wind energy for 8 cents per kilowatt hour is a revolution. We need this to be happening everywhere. We also have pockets of lack of access in Haiti. This is an immediate problem that has to be solved.
These islands have very difficult economic circumstances. We have to make sure that as we drive to combat climate change we don’t penalize the countries of the region even more. If their investability is questioned even more because they are so highly vulnerable to climate change — if they are becoming a bigger risk — that’s a perversity. We have to be able to work with the international financial institutions to make sure that we’re not doubly penalizing a region which is already at risk as they try to find the investment necessary for the cleaner energy solutions.
The good news is, there is abundant solar, wind and geothermal. If we can get the economics and the finance right this is a region that can do well.
Naki is a former reporter for Devex Impact based in Washington, D.C., where he covered the intersection of business and international development. Prior to Devex he was a Latin America reporter for Energy Intelligence covering corporate investments and political risks in the region’s energy sector. His previous assignments abroad have posted him throughout Europe, South America and Australia.
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