By Gom Mirian
The World Bank says $1 trillion will be required annually for developing countries to transition to clean energy by 2030.
The World Bank Group in a statement made available to Africa Health Report, Friday, estimated that low and middle-income countries host 89 percent of the approximately $1 trillion in global coal-fired power generation at risk of being stranded.
The group added that funding a just power transition will require much higher capital flows than are being mobilized today in order to meet the growth needed in lower carbon electricity production.
According to the group, developing countries are being left behind because they simply cannot afford the high entry costs of renewable energy.
A new report by the World Bank titled “Scaling Up to Phase Down” has identified three key barriers preventing developing countries from accelerating their cleaner energy transition to include; First, renewable energy projects entail prohibitively high upfront capital costs.
Second, a high cost of capital distorts their investment choices away from renewables, and weak energy sector fundamentals, especially institutional capacities.
World Bank Group President David Malpass said: “Accelerating the energy transition toward lower carbon sources while providing reliable access to electricity for businesses and people will require verifiable emission reduction financing, close partnership with the private sector, and significantly higher funding, especially concessional resources.
According to him, “The World Bank Group is supporting reforms to strengthen the energy sector and business environment, investments in new capacity and energy efficiency, grid upgrades to absorb intermittent renewables, and funding and technical support to address the social challenges of the transition.
“Scaling Up to Phase Down” sets out the challenges facing developing countries seeking to transition their power sectors, in order to identify pathways to address these issues.”
On his part, the World Bank vice president for infrastructure, Guangzhou Chen said: “Widespread energy transformation in developing countries requires continuous, strategic engagement and far more coordination among governments, investors, and partners than exists presently.
His words: “The World Bank can play a vital role in getting the virtuous cycle started through supporting governments with low-cost and concessional climate finance for transition preparation, utility, and network strengthening, and funding affordable clean energy investments.”
The “Scaling Up to Phase Down” approach also offers solutions for the politically and financially complex challenge of phasing out coal-fired power. Deeper planning can help mitigate stranded asset risks.” said Guangzhou Chen.
