Published on: Jul 23, 2012
Achieving effective synergy between companies, governments and others is vital to ensuring sustainable energy, according to sustainability services director Jon Woodhead
For all those growing weary of grand proclamations, vision statements and big audacious goals that are made in the face of the world’s many sustainability challenges, consider this one: The United Nations General Assembly declared 2012 the International Year of Sustainable Energy for All, recognising that “…access to modern affordable energy services in developing countries is essential for the achievement of the internationally agreed development goals, including the Millennium Development Goals, and sustainable development, which would help to reduce poverty and to improve the conditions and standard of living for the majority of the world’s population.”
All very laudable as a high-level objective, but what does this mean in practice? The initiative has three interlinked objectives to be achieved by 2030:
- providing universal access to modern energy services
- doubling the global rate of improvement in energy efficiency
- doubling the share of renewable energy in the global energy mix.
The aim is to mobilise commitments from governments, the private sector and civil society partners to take actions that will make sustainable energy a reality for all, over the next two decades.
But let’s take a reality check. Providing universal energy access by 2030 is estimated to increase global energy demand by 179 million tonnes of oil equivalent (Mtoe) with 54% of this increase based on fossil fuels (IEA 2011). According to the IEA World Energy Outlook 2011, 1.3 billion people are still living without access to electricity. The IEA calculates the costs of reaching universal access to electricity at US$915 billion overall or almost US$46 billion per year until 2030. Clear and stable legislative frameworks and financial incentives are yet to be developed that will enable private sector support. Uncertainties abound over carbon pricing and differing attitudes to nuclear safety and renewable energy, hamper technical choices about how to invest in assets that will provide a return at an affordable cost of capital.
For multinational energy companies, this represents both a clear challenge and an enormous business opportunity. Achieving the UN initiative’s objectives will reach new customers, require construction of new distribution and generation assets, and yet these will need to be done without making energy unaffordable or increasing carbon emissions. But can the right market conditions be created to enable the private sector to invest? How should global companies engage with local stakeholders whose support is needed to ensure the investment thrives over the long term?
Good practice: EDF and Lafarge
A clear example of best practice is shown by EDF, whose Rural Electricity Services Company (RECSO) partnership with the French Environment and Energy Management Agency has created a series of locally owned companies in countries such as Botswana, Mali and Senegal. The strength of these RESCOs is that they are integrated in the local socio-economic fabric. They are companies governed by local law, employing local managers and personnel. Engagement with local stakeholders results in a business model that is supported by the communities it serves.
The RESCOs install, operate, maintain and renew the electricity supply equipment and installations (small diesel generators and micro-network, photovoltaic solar kits, hybrid solar-diesel or biofuel-diesel plants, connection to the national network, etc.).
EDF is involved as a 'start-up aide', providing the capital and skills required for the creation and operation of these companies. When the viability of a RESCO is guaranteed, EDF transfers its entire stake to its local partner, who will be responsible for the long-term running of the company.
Other examples of successful partnerships to address sustainable energy needs include the work of the UK-based organisation SolarAid. Supported by companies such as REC Solar and Vodafone Group, SolarAid helps with provision of solar study lights for students and their families living in southern and eastern Africa. In Uganda, SolarAid is installing a solar system on the community office of the Katine Project, a programme run by development charity AMREF and The Guardian and funded by Barclays bank. Linked to this initiative, Barclays is also funding a four-year programme to bring solar energy to community centres, schools, clinics and communal buildings in rural parts of Kenya. Other corporate involvement includes Scottish and Southern Energy, who are funding SolarAid’s Tanzania programme to train microsolar entrepreneurs.
Extending energy generation and distribution is only one element in making more energy available to more people. It has been estimated that by adopting cost-effective standards for a wider range of construction technologies, global projected electricity consumption by buildings and industry could be reduced by 14% by 2030. Sharing and adopting these practices more widely among nations and industrial sectors can make energy more reliable and less expensive to homes and businesses.
Examples of private sector action on building energy efficiency include the commitments made by global cement company Lafarge. Lafarge has pledged to develop 500 energy-efficient building projects worldwide by 2015, which would also contribute to its objective to achieve sales of €3bn per year of sustainable solutions, products and services by 2020. Lafarge has held a long-running partnership with WWF International, with sustainable construction as a core focus area.
The facts of the challenge speak for themselves. Without changing our current production and consumption patterns, the world economy is projected to need 80% more energy in 2050. For some, globalisation of corporate interests is seen as a danger to local stakeholders whose culture and independence is diminished as a result. But there are now clear examples of success by leadership companies, where realising a vision for commercial synergies, based on engagement and empowerment of local stakeholders, points the way towards achieving some of the grand objectives and challenges of sustainability.
This article first appeared on The Guardian Sustainable Business website