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Energy is at the heart of development. Energy makes possible the investments, innovations, and new industries that are the engines of jobs, inclusive growth, and shared prosperity for entire economies.

Yet nearly 675 million people still live without electricity worldwide. About 2.3 billion people rely on polluting traditional fuels and technologies to cook their meals.

Scaling up renewables and energy efficiency, and investing in electrification at scale, while avoiding new coal plant construction and retiring old ones, is critical to providing clean energy to power homes, schools, hospitals, and businesses.

Energy Shocks Are Hitting the Poor the Hardest

The COVID-19 pandemic and the war on Ukraine have made energy prices more volatile, exacerbating energy shortages and energy security concerns, and further slowing progress toward universal access to affordable, reliable, sustainable, and modern energy by 2030 as outlined in the Sustainable Development Goal (SDG) 7.

These shocks have impacted most countries but developing countries have faced the highest burdens. Energy-importing countries that carry the brunt of these burdens have limited capacity to mitigate energy price volatility, leading to energy rationing in some countries and escalating poverty.

Renewables are the Key to Green, Secure, Affordable Energy

Renewable energy can help countries mitigate climate change, build resilience to volatile prices, and lower energy costs. Solar and wind technologies are a game changer for many developing countries as solar and wind are abundant, cost-competitive, and a source of reliable power when combined with battery storage. Hydropower also provides clean, renewable energy that is one of the lowest-cost sources of electricity for consumers. 

Modern solar mini grids bring energy to remote populations not connected to the electricity grid, providing enough electricity for life-changing electric equipment—medical equipment in hospitals; pumping clean water in farming communities—becoming the least-cost way to bring reliable and clean electricity to remote communities. Connecting 490 million people to solar mini grids could cut 1.2 billion tons of CO2 emissions.

Financing the Energy Transition

Energy consumption accounts for more than three-quarters of greenhouse gas emissions. Financing the massive deployment of renewable energy and energy efficiency, while gradually retiring fossil fuels is critical to addressing climate change and providing the essential energy services that are the backbone of our economies.

To achieve net-zero emissions by 2050, investments in the energy sector in developing countries need to quadruple to $1 trillion in 2030, including a dramatic acceleration of solar, onshore wind, and offshore wind investments. However, in developing countries, constrained fiscal space and lack of access to finance make the costly upfront investments in renewable energy unaffordable. In addition, macroeconomic and political uncertainties discourage private-sector investors from supporting renewable energy.

Last Updated: Oct 04, 2023

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