Four Reasons to Focus on Energy in Developing Countries

By Elsa Le Borgne

If you’re in an energy-rich country, you can simply flip a switch to reliably power-up your appliances and switch on your lights. But what about the 775 million people worldwide who lack access to electricity? Here are four reasons why solving this problem is essential.

Reason One: The lack of electricity is still trapping many people in poverty. ?Although one billion people have gained access to electricity in the past decade — most of them in Asia — that improvement still falls far short of what is needed. The slow progress is undermining hopes for achieving Sustainable Development Goal 7, which aims to ensure energy for all by 2030. Crucially, reliable energy systems are the engine of economic growth, higher-productivity industries, and higher-paying jobs.

Reason Two: Climate change is turning up the heat. As evidenced by the extreme weather of last summer, our fossil-based economies are emitting unprecedented levels of heat-trapping emissions. That surge in emissions is causing a rise in global temperatures and is triggering disasters in nearly every corner of the world. According to the International Renewable Energy Agency (IRENA), an effective carbon-emission-reduction plan should entail transitioning 90 percent of the world’s electricity generation to?renewable sources by 2050. The good news is that wind and solar energy are setting new global records and will probably surpass coal as the world’s primary electricity source by 2025.

Reason Three:? Although the initial investment in a green transition may seem expensive, if adequately capitalized, it could lead to at least?$12 trillion in savings by 2050, compared with the cost of mitigating the damage caused by burning fossil fuels. The green transition also holds the potential to create?25 million direct jobs?by 2030 in the power sector alone, across Africa and Asia. But to achieve these savings and realize the economic benefits, investments in clean energy within emerging markets?will need to?dramatically?increase,?from $770 billion annually in 2022 to about $2.8 trillion by the early 2030s. These sums are vast, and the public sector alone cannot bridge this investment gap. Scaling up private financing is key.

Reason Four: Energy inequality disproportionately impacts women and girls, causing more harm to them compared to men. Women and girls are more adversely affected than men because of women’s predominant responsibility for household chores in many countries. On the other hand, women who have access to electricity are at least 10 percent more likely to gain paid work outside the home — a huge boost for productivity and the overall economy.

IFC’s role.?To accelerate the clean-energy transition and increase access to electricity, IFC invested and mobilized over $32 billion in the energy sector over the past decade.??IFC supports the expansion of proven clean-energy solutions, including onshore wind and solar energy generation, while also deploying new technologies like offshore wind, battery storage, and green hydrogen.

Related Links:

• IFC’s Work in Energy
• IFC Climate Business
• IFC’s Impact in Energy
• IFC/IEA Report: Scaling Up Private Finance for Clean Energy in Emerging and Developing Economies
• Scaling Solar
• Scaling Mini-Grid
• A Clean Energy Transformation in Emerging Markets