Events during 2014 left little doubt that sustainable energy, long thought to be a luxury of the wealthy or technology for the future, is fast entering the mainstream.
Events during 2014 left little doubt that sustainable energy, long thought to be a luxury of the wealthy or technology for the future, is fast entering the mainstream. According to the Renewable Energy Policy Network for the 21st Century (REN21), the year began with government support for renewable energy in 95 developing countries, with renewables contributing over half of net power capacity additions worldwide.
By the end of 2014, clean energy investments reversed a three-year decline, rising to US$310 billion, a year-over-year increase of sixteen percent. Furthermore, the decrease in the cost of renewable energy meant that each of these dollars returned more energy than before, represented most dramatically by a fifty percent fall in the levelized cost of electricity (LCOE) from utility-scale solar photovoltaics (PV) over the previous four years.
Increased investment, falling costs and national initiatives, however, are just part of the 2014 story. In the first edition of its flagship publication, titled ‘REThinking Energy,’ the International Renewable Energy Agency (IRENA) found that “an alignment of economics, demographics, climate change and technology” has triggered a global transformation of the energy system.
This year in review examines how this alignment played out in and across the UN system and the growing network of private, national, regional and financial actors, as reported in our Sustainable Energy Policy & Practice knowledgebase. From efforts related to the UN Secretary-General’s Sustainable Energy for All (SE4ALL) initiative to unparalleled interest from regional development banks, 2014 saw sustainable energy policy make major strides towards becoming a fixture in global environmental policy making.
While energy lacks the dedicated policy space of climate change, biodiversity, chemicals, sustainable development or desertification, it is intimately tied to them all. As it enters the mainstream, it is giving rise to a de facto governing regime, built on a network of institutions and initiatives focused on policy advice, knowledge-sharing, implementation and deployment. This review highlights some of the most significant commitments and financial and capacity-building mechanisms for sustainable energy in 2014, with a focus on climate policy and sustainable development.
Ambitious Goals and Commitments
Ambitious sustainable energy goals are now commonplace. REN21’s ‘Renewables 2014 Global Status Report’ reveals that over 144 countries have renewable energy targets in place, and 138 have adopted policy packages to support renewables. These goals are increasingly being voiced not only at the national and sub-national level but the international level as well. Strong national goals are helping to mainstream sustainable energy and drive forward new partnerships among countries, international organizations and the private sector. For example, at their meeting in November 2014, G20 leaders, for the first time ever, called for greater international collaboration on energy efficiency as a cost-effective way to address sustainable growth and development. 
The year was especially notable for the growing recognition of clean energy outside of energy policy proper. The Clean Energy Ministerial, for instance, adopted a work stream on the energy-water nexus at its fifth meeting (CEM5), held under theme “Act Together, Think Creative.” The post-2015 development agenda and high-level climate policy brought further attention to sustainable energy policy, as highlighted below.
A Decade for Energy and Sustainable Development
In June, the SE4ALL initiative held its first-ever annual forum in New York, US. This event brought together 1,000 participants, who assessed the significant progress made towards a sustainable energy transition in the two years following the UN Conference on Sustainable Development (UNCSD, or Rio+20). The Forum also launched the UN Decade of Sustainable Energy for All 2014-2024. As one of the first steps to build ties between the energy and development communities, SE4ALL dedicated the Decade’s first two years to women and children’s health.
In July, the UNGA Open Working Group (OWG) included energy as one of 17 proposed Sustainable Development Goals (SDGs). The proposed SDG on energy echoes SE4ALL’s three goals to provide universal energy access, double the share of renewable energy and double the rate of increase in energy efficiency by 2030.
In October, SE4ALL presented the UN Secretary-General’s report on the UN Decade of Sustainable Energy for All to the Second (Economic and Financial) Committee of the UNGA, laying out steps to support the post-2015 development agenda. These steps include the preparation of a second SE4ALL Global Tracking Framework with the World Bank, International Energy Agency (IEA), International Renewable Energy Agency (IRENA) and others to help develop a tracking, monitoring and reporting system for a SDG on energy.
By the end of the year, a growing number of regions and countries had begun to integrate SE4ALL’s goals into energy policy. Energy Ministers to the Economic Community Of West African States (ECOWAS) and Economic Community for Central African States (ECCAS), for instance, endorsed SE4ALL’s vision by calling on the development of country-level Action Agendas and investment prospectuses at meetings organized by SE4ALL’s regional hub for Africa.
Sustainable Energy Gets a Boost at Climate Week NYC
In addition to the bridges built between energy and sustainable development, the year was remarkable in the range and number of new climate commitments made by various public agencies, private sector actors and countries. The 2014 Climate Summit, held on 23 September 2014 in New York City, US, was an unprecedented effort to catalyze climate action outside, but in support of, the UNFCCC negotiating process. The Summit was the main event of this year’s Climate Week NYC, during which further action on SE4ALL was announced, including an Efficient Appliances and Equipment Partnership among a consortium of public and private actors.
Climate Week also saw the launch of several initiatives in support of renewable energy. The Climate Group launched RE100, declaring that, by 2020, 100 of the world’s largest companies will have committed to using 100% renewable power across their operations. IRENA announced the commitment of 19 African ministers and 14 private, regional and governmental partners to create the Africa Clean Energy Corridor (ACEC), which will garner half the electricity produced along its 8,000-kilometer stretch from renewables by 2030. IRENA also launched the SIDS Lighthouse Initiative, under which SIDS and other partners commit to deploying 100 megawatts (MW) of solar photovoltaic (PV) capacity, 20 MW of wind capacity and significant quantities of small-scale hydro, geothermal and marine energy.
The UN Climate Summit’s Private Sector Forum brought together over 1,000 representatives from business and industry. These actors signed a statement in which they pledged to support carbon pricing and to work, alongside 73 country signatories, toward applying a carbon price throughout the global economy. Businesses also presented 11 Corporate Commitments to Climate and Energy. The Summit led to an announcement of the Portfolio Decarbonization Coalition (PDC), a commitment from the UN Environment Programme Finance Initiative (UNEP FI) and a group of institutional investors to decarbonize US$100 billion of investment by December 2015. As the policy update by Peter Doran and Anna Schulz on our Climate Change Policy & Practice knowledgebase indicates, some pointed to the momentum generated by private sector commitments to show that this Climate Summit was unique, and emphasized that “the bottom-up actions taking place will drive agreement within the UNFCCC process as governments ‘catch up.’”
US-China on Board
Just as the private sector has ramped up its commitments, the world’s two largest carbon emitters and energy consumers, China and the US, enhanced their collaboration. In February, the two issued a joint statement hinting that they were planning to take further cooperative action, especially through the US-China Climate Change Working Group (established in 2013), on the “twin challenges” of climate change and air pollution from fossil fuels. By July, the Working Group had launched eight demonstration projects: four on carbon capture, utilization and storage (CCUS) and four on smart grids. The projects were announced at the US-China Strategic and Economic Dialogue, where the two delegations engaged in discussions on emission targets for the post-2020 period. Then, in November, the countries’ leaders jointly announced their post-2020 targets, which will have significant implications for sustainable energy policy in the two countries: China intends to increase the share of non-fossil fuels in its primary energy consumption to around 20% by 2030 (with CO2 emissions peaking around the same time), and the US plans to reduce emissions by 26-28% below 2005 levels by 2025.
EU on Board
The US-China announcement came on the heels of the European Council’s October endorsement of the 2030 Climate and Energy Policy, under which the EU has committed to a binding target of reducing emissions by 40% below 1990 levels by 2030. The 2030 Framework also includes a binding target of reaching at least 27% renewable energy used at the EU level and an indicative target of increasing energy efficiency by at least 27%.
Finance and Capacity-Building Arrangements
2014 ushered in an array of finance and capacity-building arrangements needed to turn ambitious goals and commitments into reality. The widespread endorsement of SE4ALL’s vision was backed by the creation of a new institutional infrastructure to help countries meet their clean energy targets. Meanwhile, development banks and international organizations took innovative measures to share knowledge and expertise to support billions of dollars in additional finance for policy development and project deployment
Enabling a Decade of Sustainable Energy Access for All
SE4ALL broke ground this year by working with development banks and other international partners to inaugurate an array of institutions needed to coordinate, develop and implement sustainable energy policy in regional and national settings. In the run-up to the UN Climate Summit, SE4ALL announced plans to raise US$120 billion for energy access and sustainable energy solutions in partnership with development and commercial banks. In November, the initiative cut ribbons at its Global Facilitation Office in Vienna to coordinate regional launches of the Decade and SE4ALL hubs in Africa, Asia, the Americas, Europe and the Pacific, including a new capacity building hub at India’s The Energy and Resources Institute (TERI) and TERI University. The capacity building hub, called Specialized Training, Education and Experiential Resources (STEER), rounds out existing thematic hubs for renewables and energy efficiency, hosted by IRENA and the Copenhagen Centre on Energy Efficiency (C2E2). Partners also committed the necessary technical and advisory resources to achieve country-level SE4ALL Action Agendas, such as the web-based Pacific Regional Data Repository (PRDR) created by Pacific SIDS to support sustainable energy policies and projects.
Multilateral Development Banks Press Forward
If the range of newly announced initiatives, partnerships and pledges is any indication, 2014 could be a turning point in sustainable energy finance for both climate and sustainable development. The capitalization of the Green Climate Fund (GCF) exceeded expectations, with pledges amounting to over US$10 billion. In addition, Multilateral Development Banks (MDBs) were busy initiating new ways for developing countries to acquire finance for energy efficiency, renewables and energy access.
In September, six banks—the African Development Bank (AfDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Inter-American Development Bank (IDB) and World Bank Group—pledged to take coordinated and enhanced action to reinforce climate finance, leverage private sector resources and capitalize on innovation.
ADB and the Government of Japan announced a marketplace for connecting low-carbon technology sellers and buyers in Asia. A consortium of partners, including IDB and KfW Development Bank, announced a new Geothermal Development Facility (GDF) for Latin America. EBRD initiated its new energy sector strategy through 2018 and laid out plans to increase funding for clean energy projects in partnership with the Global Environment Facility (GEF) and World Bank’s Climate Investment Funds (CIF).
Prominent Public-Private Partnerships and Pervasive Private Sector Support
Many of the development banks’ initiatives are focused on fostering public-private partnerships (PPPs) and breaking down barriers to private involvement in the sustainable energy sector. The World Bank’s Energy Sector Management Assistance Program (ESMAP) created an Online Renewable Energy Project Resource Center to assist project developers in creating the necessary documents for projects. ESMAP, IRENA and AfDB have also undertaken renewable energy resource mapping in developing countries to provide the data validation that private developers require.
In a similar vein, IDB launched an Energy Innovation Center to help businesses, as well as public and academic entities, navigate the energy and regulatory landscape in Latin America. The World Bank and Government of Canada inaugurated the Caribbean Climate Innovation Center (CCIC), which will work with about 80 companies to develop locally-appropriate mitigation solutions, including solar and energy efficiency projects. The World Bank also started a pilot Readiness for Investment in Sustainable Energy (RISE) tool for helping countries identify the policy and regulatory frameworks that will signal “sustainable energy readiness” to the private sector.
In addition to implementing programs to enable private sector involvement in sustainable energy deployment, governments and multilateral agencies announced a plethora of partnerships to finance a transition to clean energy, including: US$413 million in pledges for clean cookstoves at the Cookstoves Future Summit; the inauguration of the Global Innovation Lab for Climate Finance to leverage private sector investments in low-carbon infrastructure in developing countries; and the launch of PPPs to provide 20,000 villages globally with renewable energy access.
An Inflection Point for Sustainable Energy?
The year marked many milestones for sustainable energy. The launch of the UN Decade of SE4ALL, the proposal to include an SDG on sustainable energy in the post-2015 development agenda, ambitious national targets, novel financial arrangements and private sector participation, all tracked in our Sustainable Energy Policy & Practice knowledgebase, suggest that a shift is underway. Indeed, the falling cost of solar and wind power has, in many countries, moved renewables to a practical option to deliver universal energy access and climate mitigation.
While 2014 suggests that sustainable energy is firmly on the policy agenda, it has yet to fully come of age. Over one billion people still lack access to electricity, renewables remain a minor share in the energy mix and inefficiencies still must be addressed. IEA concluded that policy uncertainty could slow growth in renewables over the next five years. A number of publications reviewing progress toward sustainable energy goals in 2014 stressed the importance of policy commitments and implementation to spurring both technological innovation and favorable market conditions.
2015 will be a bellwether for the years ahead. With key negotiations taking place on financing for development, the post-2015 development agenda and the climate change agreement, the web of institutions and initiatives outlined in this policy update will be put to the test. In 2015, Sustainable Energy Policy & Practice will be watching these actors’ efforts to scale-up projects and to meet global demand for sustainable energy.