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Center for Global Development has Announced a 'New Rich Energy Program'

Jul 06, 2012 | Updated Sep 05, 2012

I found out that the Center for Global Development has announced a "New Rich Energy Program." In fact, the full name of their program should be "The Center For Global Development Rich Energy Program."

Here is how I discovered it.

I just read a blog post by Todd Moss, vice president for programs and senior fellow at the Center for Global Development (CDG). The core message of his post is "apparently, some people who appear determined to fight climate change on the back of the world's poor." ("Some people" refers to OPIC -- the U.S. Government's development finance institution -- more about that later.)

First, a word about Moss. According to the CDG website, "Moss oversees the Center's fundraising efforts and relations with external partners. In addition to his institutional responsibilities, he directs The Emerging Africa Project and his work focuses on U.S.-Africa relations and financial issues facing sub-Saharan Africa, including policies that affect private investment, debt, and aid. He is currently working on cash transfers in new oil economies."

The "cash transfers in new oil economies" is focused on a poor country's ability to cash in on oil. For example, Moss has a "Wonkcast" entitled: Implementing Oil-to-Cash --Todd Moss. The bottom line is that in this program "a government would transfer some or all of the revenue from natural resource extraction to citizens in a universal, transparent, and regular payment." A noble goal -- one that hasn't worked in decades.

So, why is it so important to Moss to help extractive industries become more efficient through OPIC money? More importantly, whose back is he actually doing this on?

Now, a word about me. I am working in Africa to bring renewable solutions to places where the lights are out. I am also an outspoken capitalist. I am also a pragmatic environmentalist. I am also for an end of poverty and creation of equal opportunity. I also have found that being a capitalist, environmentalist, and a creator of equal opportunity are not at odds. After all, I founded the largest solar services company in the world, SunEdison. It had helped create a multi-billion dollar global industry and help deliver energy to places where GRID lines come up short.

I am also pragmatic. I understand that the developed world must evolve to clean energy solutions. In fact, I recently wrote a piece on U.S. oil independence where I see natural gas (NG) as part of the solution. NG is certainly not a perfect environmental solution.

So, why is Moss suggesting that OPIC promote central station power plant efficiency investments?

It is like saying: "Trust us, these efficiency projects will ensure that poor will get more energy - once we provide enough to all the rich people and extractive industries." In others words, let me make another empty promise to poor people while getting ever more accolades from my peers. It extends the global deception further into every country in Africa. I call it the "Center For Global Development New Rich Energy Program."

About Energy Access, Not the Climate

The first thing to understand is that this has nothing to do with climate and everything to do with energy access. Today, there is annual global consumption of fossil fuel based subsidies totaling $409 billion. Of this amount, $88 billion is consumed by the top 11 countries with the highest "unelectrified" populations -- more than 1 billion people.

If you talk to entrepreneurs who are delivering energy access today (in areas, by the way, that centralized fossil fuel infrastructure have failed to reach), they will tell you that the only technology that makes sense for the rural poor is distributed clean energy. That's why they are pioneering off-grid clean energy business models to get energy into the hands of the poor. They are not doing it to solve climate change -- but it is a wonderful side benefit.

What our friends at CGD clearly don't understand is that decades of pouring billions into grid extension have failed Africa. Worse, according to the International Energy Agency (IEA) if we continue with this failed approach, people will still lack access to electricity -- the vast majority of those will live in sub-Saharan Africa. Calling for increased investment in 'business as usual' -- centralized fossil fuel infrastructure and grid extension -- is not only foolhardy, it's irresponsible and a waste of scarce development dollars. The truth is the only way we will solve this problem is rapidly scaling micro-grids and other off grid clean energy access that actually serves the poor.

More importantly, if you ask the same entrepreneurs, "what their biggest barrier is to scaling up their heroic efforts," you will hear a similar refrain -- access to finance. That's why 20 of the world's leading entrepreneurs sent a letter to World Bank president Robert Zoellick asking the institution to make good on its mandate to eradicate poverty and deliver energy access by ponying up $500 million for their sector at Rio+20.

OPIC Started Funding for Equal Opportunity -- "The OPIC Equal Opportunity Program."

Unfortunately, the Bank failed to put its money where its mouth is. But you know who did? OPIC. While small, they started with a commitment of $15-20 million to clean energy access finance for Africa in Rio. Plus, they have $200 million in private capital for future projects. That's a positive step forward for an institution that has dramatically ramped up its commitment to clean energy over the past few years to more than $1.1 of $3.2 billion in renewables -- money that leverages private sector investments. That's ~1/3 of its total portfolio.

Compare OPIC to the U.S. Ex Im Bank with a portfolio eight times its size, or the World Bank with a portfolio more than 10 times its size (both of which continue to fund substantial amounts of fossil fuels) and it is clear OPIC is punching above its weight on clean energy.

Which is exactly why actions like CGD's are misinformed and dangerous. OPIC has a tiny budget that is nothing more than a drop in the bucket when you are talking about global fossil fuel investments. 'Unleashing OPIC' on the global fossil fuel market means throwing a coin in the vast river of financial flows fossil fuels enjoy. More importantly, there is no shortage of capital for oil, gas, and coal, which is leading to an increasingly loud global call to end subsidies for these mature technologies.

Those calls grow because the technologies are mature, and because fossils are bankrupting us. Employing significant numbers of local people and democratizing energy are foreign concepts for the oil, gas, and coal guys. Because where coal and gas are installed in Africa, all of the power goes to the wealthy and the mining industries -- look at the World Bank's Medupi coal plant which essentially subsidized huge industries on the back of average citizens.

Worse, these industries are huge consumers of fresh water -- an increasingly scarce commodity worldwide. In the U.S., 49 percent of all fresh water is used by coal, gas, and nuclear power plants. Why would we possibly want to use scarce OPIC dollars to make it harder for the poor to access to clean drinking water -- next you are going to be asking for money for desalinization plants?

On the other hand using OPIC's small portfolio of scarce development dollars to help leverage private finance through de-risking capital can have an outsized impact on the under-financed and far more effective off grid clean energy market -- a market that will deliver universal electrification for the 1 billion people that oil, coal, and gas has failed and will continue to fail.

The best part is that is exactly what OPIC is doing -- catalyzing clean energy investment that will actually serve the poor. We don't need to 'unleash' them; we need to tell them they are doing a good job. What we really don't need to do is divert these scarce dollars for a fool's errand and dump yet more money into the fossil fuel trough. Using climate arguments to support more fossil fuel investments is just shameful, stop distracting us and focus on the job at hand -- delivering off grid clean energy services - and let OPIC get back to work.

So, are you for "OPIC Equal Opportunity Program," or the "Center for Global Development New Rich Energy Program?"

Think long and hard before your answer. There are over 1 billion people without energy access waiting to hear the answer.