Financial Times

Developing a new approach to energy
By Dakshitha Thalgodapitiya

With public sector efforts alone not being sufficient anymore, recognizing the need to engage a broad range of actors and formulation of inclusive planning processes are needed to leverage government and donor resources by mobilizing the private sector, civil society organizations and other stakeholders to work towards implementation of an affordable and sustainable energy development initiative.Urgent action is needed to move beyond the ‘business-as-usual’ approach to energy. It is no longer sufficient to think of energy usage as being driven by economic development. The time has come to begin assessing the role of energy versus other inputs as a means of stimulating development.

Energy’s importance to development is not merely a matter of conjecture or wishful thinking. There is an empirical basis to the relationship between access to modern energy and development. Energy resources are not evenly distributed across the world nor are all of their different usages environmentally benign. Energy-importing countries face geopolitical, market, social and environmental forces that, in one or more ways, make securing adequate and affordable energy a challenge. This challenge is particularly important to countries such as Sri Lanka, where future energy demand is predicted to increase.

Without measures to increase the sustainability and availability of energy supplies through improved management and development of renewable energy resources, other financial shocks will continue to undermine our ability to service foreign debt and attract foreign investment. Having stated this, traditional commercial fuels are likely to remain the backbone of the countries’ energy infrastructure despite the decreasing costs of renewable energy.

Energy access issues are conspicuously absent, leaving important linkages with productivity and cross-sectoral applications unaddressed. Although energy is certainly important to the environmental agenda and to macroeconomic growth, it receives little attention within national development frameworks and reporting processes.

Productive uses of energy are particularly important to economic growth. Modern fuels and electricity, for example, help boost household income by providing lighting that extends livelihood activities beyond daylight hours. The “power-machines” generate valuable time savings, increase output and value additions, provide opportunities for employment, and diversify income sources. Energy is important in supporting productive activities of both the formal and informal sectors.

Although energy’s potential for catalyzing growth and development is unquestionable, current patterns of energy production and consumption are threatening the environment. The earth’s environment is intrinsically linked to how energy is supplied and consumed.

In most cases, environmental damage can be directly or indirectly mitigated by increasing energy efficiency, introducing modern technologies for energy production and use, substituting cleaner fuels for polluting fuels, and introducing renewable energy.Given the complex and imperfect nature of energy markets, market forces alone cannot be expected to deliver energy services that are sustainable while meeting the needs of the most vulnerable communities. Cooperation and partnerships between sectors and regions are needed to enable effective use of energy services.

Defining commonly shared problems and channeling resources and expertise requires effective partnerships among governments, public entities, development agencies, civil society, and the private sector. Without such partnerships it is difficult to secure the financial capital, knowledge and technology necessary to expand energy services. It is therefore critical that all sectors, public and private alike, cooperate together to ensure that cleaner, more efficient energy systems, and the markets that are needed to sustain them, are available to the poor.

Partnerships are particularly important in helping countries mainstream energy into broader development strategies and frameworks. Energy is a cross-cutting issue by its very nature and thus requires participation from all development sectors in order to maximize its impact on development. To ensure that the poor benefit fully from greater access to energy, energy planning should be linked to development goals and priorities in other sectors.

Partnerships are also quite important for mobilizing financial resources to expand energy investments and services. Public financing from both domestic resources and official development assistance, combined with private entrepreneurship and investment, are needed to develop energy services for the poor. New forms of risk sharing between the private and the public sectors should be developed under public-private partnerships as a way to attract private sector resources to the area of sustainable energy. Official development assistance should be used strategically to build capacity, assess and prepare projects, and support the creation of an enabling policy environment.

Developing a new approach to energy, where energy services are acknowledged not just as a result of development, but as an actual driver of development, will be crucial if energy is to play a more prominent role in the nation’s development agenda.

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