Multilateral Development Banks spend less than 2% of budgets on key energy access solutions
The world’s multilateral development banks (MDBs), taxpayer-funded institutions charged with helping end global poverty, are still not moving fast enough to scale up their support for energy solutions that would reach the world’s poorest the fastest, concludes a new report from Oil Change International.
The report was released today, as the UN Economic Commission for Africa’s Conference on Climate Change and Development gets underway in Nairobi.
One billion people around the world lack access to electricity, and nearly three billion still rely on polluting solid fuels like wood or charcoal for cooking. To address this challenge, the Sustainable Development Goals aim to deliver universal energy access by 2030.
But while the MDBs have endorsed this goal, this new report, titled 'Shortchanging Energy Access: A Progress Report on Multilateral Development Bank Finance', shows that from 2014 through 2017, MDBs directed just 2% of their energy finance toward the off-grid and mini-grid energy solutions that are the most impactful ways to close the electricity access gap.
According to the International Energy Agency, to achieve universal electricity access by 2030, off-grid and mini-grid solutions would account for more than two-thirds of additional electricity supply investment.
To the contrary, MDB financing for off-grid and mini-grid energy solutions declined significantly from 2016 to 2017, the report finds.
Support for clean cooking fared even worse: only 1.6% of MDB energy finance supported clean cooking solutions, according to the analysis released today.
“We need multilateral development banks to finance those energy solutions that can reach the poorest fastest. They shouldn't continue to pour money into fossil fuel projects, few of which have a clear link to energy access. Off-grid and mini-grid solutions should be a central part of these institutions’ plans, especially in regions with the lowest rates of energy access, including Africa,” said Thuli Makama, Africa Senior Advisor at Oil Change International.
“Good intentions won’t deliver energy access and clean cooking solutions to the billions of people who suffer without them today,” said Alex Doukas, Program Director at Oil Change International.
“If multilateral development banks keep directing only 2% of their energy finance toward the most-needed energy access solutions, there is little hope of meeting the global goal of universal energy access by 2030.”
Institutions assessed in the report include the World Bank Group, African Development Bank, Asian Development Bank, Inter-American Development Bank, and the European Bank for Reconstruction and Development.
Of the billions of dollars MDBs continue to provide to fossil fuels, the analysis found that just 9% contained elements that support energy access for the poor.
Some MDBs have argued that they are doing more to advance energy access goals than the numbers suggest. However, as the report notes, these institutions do not track finance for energy access or progress toward energy access goals in a consistent, harmonised way, making it difficult to assess claims about their energy access finance.
The analysis finds some bright spots: of the limited MDB finance directed at improving energy access for the poor, nearly two-thirds went to countries with the largest number of people without access; with nearly half of this finance targeting sub-Saharan Africa, the region with the greatest share of the global population without energy access.
The report also notes that, unlike the other MDBs, the AfDB has set quantitative targets for energy access, and tracks new connections from off-grid energy and household access to clean cooking in its Results Measurement Framework.
The report recommends MDBs (i) direct at least half of their energy finance to projects focused on advancing energy access for the poor and/or rural areas; (ii) support distributed renewable energy and clean cooking solutions so that these solutions receive at least one-third of total MDB energy finance; and (iii) set clear targets for energy access and collectively track energy access finance and its outcomes.