Embedded as SDG7 in the 2030 Agenda for Sustainable Development, access to modern energy services is universally accepted as one of the most powerful catalysts for both human and economic advancement. Without energy, it is impossible to provide healthcare and education, end hunger, supply clean water, mitigate climate change or, ultimately, eradicate poverty. The enabling power of energy access is underlined by its direct links to all other 16 SDGs.
Regardless of this growing recognition, an estimated 1.2 billion people still live without electricity, while some 2.7 billion people are without clean cooking facilities. Among the latter group, around four million people die prematurely every year from household air pollution caused by the burning of biomass. More than 95% of these people live in either sub-Saharan African or developing Asia, the vast majority of them in rural areas.
Now that the importance of energy has been firmly established, the challenge moving forward is how to achieve the stated objective of SDG7—“ensure access to affordable, reliable, sustainable and modern energy for all”—within the 2030 time frame. Key will be the development of innovative technical and financing solutions, together with an appropriate mix of energy sources that respond to local situations on the ground. According to the SE4ALL Global Tracking Report 2015, the annual investment required to achieve universal energy access by 2030 is $50bn. Other estimates are considerably higher, depending on the degree and quality of access.
OFID has assumed a lead role in global energy poverty alleviation efforts, following a direct mandate from its Member Countries in 2007. Working with like-minded partners, including the UN SE4ALL initiative, OFID was instrumental in securing an explicit goal for energy in Agenda 2030. The institution is committed to using all resources at its disposal and pursuing all viable solutions in a bid to make modern energy universally available. The strategic framework for these activities is OFID’s eight year-old Energy for the Poor Initiative, which is funded through a revolving endowment of US$1bn, a sum pledged by the institution’s supreme body, the Ministerial Council, in its June 2012 Declaration on Energy Poverty. In cooperation with all stakeholders, including the energy industry, OFID takes a nexus approach to energy poverty, addressing it alongside food and water security. This nexus forms the central pillar of OFID’s Corporate Plan 2016–2025.
As of end-2016, energy operations accounted for almost US$4,280m, or 22%, of OFID’s cumulative commitments. These resources have been distributed among 90 countries—including three new in 2016—for projects ranging from infrastructure and equipment provision to research and capacity building.
With US$412.4m in new financing, the energy sector attracted close to one-third of aggregate commitments in 2016. The sum is almost double that approved in 2015 and will directly benefit 21 countries. More than half the total (US$233.3m) was approved through the private sector window for operations focusing chiefly on the construction of photovoltaic, hydropower, thermal or heavy fuel oil power plants. The beneficiary countries are: Bangladesh (US$12.6m), Côte d’Ivoire (US$26.4m), Egypt (six loans totaling US$98.5m), Jamaica (US$20m), Jordan ($40m), Mali (US$15.8m), and Uganda ($20m). In the area of trade financing, around US$99.3m was delivered for the import of petroleum products under a scheme run by the ITFC in Cameroon (US$24.3m), Egypt (US$50m), and Pakistan (US$25m).
The public sector attracted an aggregate US$77.6m for projects:
Resources provided through OFID’s grant program totaled US$2.3m and will support a diverse range of small-scale renewable energy schemes as well as knowledge development and exchange.
OFID maintained its advocacy efforts throughout 2016, working both independently and with other lead actors to move forward the energy poverty agenda. A key achievement was the launch in March of the OFID- and WPC-led Oil and Gas Industry Energy Access Platform. The EAP will serve as a framework for the industry to harness its vast pool of expertise, technologies and capital, and collaborate with other stakeholders in support of universal energy access. In July, eight parties signed up to the EAP Charter.
Among the high-level events utilized as advocacy platforms in 2016 was October’s World Energy Congress, where OFID Director-General Al-Herbish highlighted the important role of DFIs in building bridges to the private sector. “As DFIs, our role is to help developing countries recognize the risks and barriers that deter private sector investment [in renewable energies] and help them gain investor confidence,” he stated. Other events attended included the COP22 climate change conference and Oxford Energy Seminar, as well as meetings of the Arab Energy Club and the Vienna Energy Club.