Humanity is waking up to the damage that fossil fuels inflict on our planet, and financial institutions are becoming aware of the economic unsustainability of our addiction to coal, oil and gas. This is taking place at a critical juncture, when investors’ decisions will affect our world for generations to come.
In less than a year, historic strides have been made by global banks and governments changing how they spend their money for the greater good. The United States announced it would virtually stop funding coal power overseas. Nordic countries did the same, including Norway, Sweden, Denmark, Iceland and Finland – with the United Kingdom joining shortly thereafter. The World Bank and two other major development banks – the European Investment Bank and the European Bank for Reconstruction and Development – followed suit.
What is now clear is that energy development must be done in a way that does not hurt or reverse that very same development – and there is still much to be done.
The window of opportunity for the world to make investment decisions towards a positive, sustainable energy future is closing fast. The International Energy Agency (IEA)’s 2012 World Energy Outlook warns that all allowable CO2 emissions could be locked in by existing fossil fuel energy infrastructure by 2017. We must take action quickly on our energy choices.
Investing in oil, coal, and gas is no longer an acceptable way to fuel growth. The only responsible course of action for our planet and our economy is a total transformation of global energy systems from highly polluting fossil fuels to clean, renewable energy. That transformation must start now. – John Podesta, founder of the Centre for American Progress
Energy is a means to an end. But it’s more than that. Creating livelihoods is part of the story. Ending poverty is part of this story. Building renewable energy into rural communities is a part of this story. Governments like South Africa committing 1% of its GDP to renewable energy are part of this story. And the African Development Bank is a part of this story. The cornerstones of development must be clean, fair and just as we move forward.
The mandate of the African Development Bank is to reduce poverty, and promote economic and social development in Africa. Like the World Bank, it lends to governments and invests in companies across the African continent. This funds energy infrastructure and regional partnerships. In 2008, the African Development Bank lending in Africa surpassed that of the World Bank for the first time in history, making it the biggest energy lender in Africa.
In this leading position, the African Development Bank is looking at financing for reducing emissions causing climate change by investing in renewable energy.
A major tool for meeting the challenge of providing more renewable energy – and more reliable renewable energy – in a truly sustainable way will be through the Sustainable Energy Fund for Africa. This will include the whole picture: hydropower, geothermal, off-grid solar power and biomass.
The challenges moving ahead, include moving away from coal, oil and gas, and doing this in a way that allows for a fair and just transition: enabling development and also taking climate change fully and equitably into account. This can be done by working in close collaboration with multilateral development banks globally, particularly in the lead up to the United Nation’s climate leader’s summit this September in New York.
UN Secretary General Ban Ki-moon has called on governments and financial institutions to step forward with innovative and ambitious commitments to acting on climate change, especially in the form of renewable energy investment.
Wangari Maathai, Kenya’s Nobel Peace Prize winner for her work on sustainable development across Africa once said the generation that destroys the environment is not the generation that pays the price:
That is the problem. Those generations will also feel the impact of global investment decisions made today. – Maathai
I agree with Wangari’s comments. The world has a responsibility to now choose clean, renewable energy as the demand for energy grows across Africa and as efforts are made to ensure energy access for all. The costs of coal, oil and gas are increasingly clear while the costs of renewable energy are dropping. The world is changing. Multilateral development banks can, and must change too.
Samantha Smith is the leader of WWF’s Global Climate & Energy Initiative and also co-leads the WWF’s global campaign Seize Your Power which calls on investors to act on climate change by committing new investments to renewable energy and phasing out investment in coal, oil and gas – fossil fuels.