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Moving Towards a Sustainable Energy Future in the Developing World

Developing countries present some special needs and opportunities when considering policies for advancing energy efficiency, clean and renewable energy technology deployment, as well as sustainable energy projects financing. First, developing countries often lack institutions and capacity for promoting and implementing these technologies on a large scale and in a sustained manner. Second, energy policies should take into account social and economic conditions and priorities such as job creation and poverty alleviation. Third, developing countries present opportunities for technology innovation and leadership since they are still putting into place their industrial, transport, buildings, and power infrastructures. It is therefore mandatory that for the world to achieve the anticipated energy efficiency, developing countries energy needs should be put into focus. And hence, comprehensive global energy policy, capacity building and strategy need to be developed. 

Capacity Building

Capacity and institution building is essential if energy efficiency, renewable and clean energy technologies are going to make a major contribution to future energy resource and service needs in developing countries. These countries require multi-disciplinary expertise in:

  • technology development, adaptation, and testing 
  • manufacturing and marketing 
  • deployment and behavioral issues 
  • monitoring and evaluation 
  • training energy managers and end-users 
  • policy development and implementation 

Capacity and institution building are needed to form and staff public sector agencies, research institutes, and the private companies that will produce, market, and install energy efficiency, renewable energy technologies. The Global Environmental Facility (GEF) could devote more resources to capacity and institution building.

Energy and Socio-economic activities

There are strong links between energy production and use on the one hand and social conditions on the other. Lack of modern energy sources (especially in rural areas) contributes to poverty, poor health and education, unemployment, and high population growth. Conversely, provision of clean, efficient, and modern energy sources reduces burdensome manual labor requirements, enhances education opportunities, lowers population growth, strengthens public health, and creates job opportunities. Providing renewable-based fuels and electricity, improved cook stoves, mechanical water pumping, and mechanized farming equipment should be given high priority in national and regional economic and social planning, not just energy planning. Likewise, energy policies and programs should pay special attention to serving the needs of low-income households in both urban and rural areas. 

Promoting Technological Innovations

Developing countries have some features that could enable them to be leaders in worldwide sustainable energy innovation. These features include plentiful renewable energy resources and energy efficiency opportunities; large, untapped markets; nascent industrial, transport, buildings, and power infrastructures; and rapid growth rates. As developing countries progress economically and socially, they have the opportunity to "leapfrog" over the inefficient, fossil fuel-based, and polluting energy production and consumption patterns commonly found in industrialized nations. The policies that can foster energy technology innovation and leadership in developing countries include: (1) supporting RD&D that emphasizes clean energy supply and energy end-use technology innovation; (2) encouraging development of new industries and introduction of new technologies through international joint ventures and other mechanisms; (3) adopting and enforcing strong energy efficiency and environmental standards so that new infrastructure is state-of-the-art rather than outdated; and (4) providing attractive financing, market development assistance, and government procurement to clean energy technology entrepreneurs. 

International Energy Policies Cooperation among countries can be useful in achieving market transformation, especially for mass-produced products that are manufactured and sold on an international scale. Cooperative efforts are underway to increase the energy efficiency of automobiles in Europe and office equipment in the United States, Japan, and the European Union. International policy cooperation faces a number of challenges including establishing key technical parameters, program coordination, and program administration. 

Technology transfer between industrialized and developing countries is one element of Renewable/sustainable energy development worldwide. Encouraging joint ventures, licensing, and technology acquisition can be effective strategies for transferring clean energy technologies to developing countries. Joint ventures and licensing can help developing countries obtain state-of-the-art technologies at attractive prices. Governments can encourage joint ventures and licensing of sustainable energy technologies and services by providing financing, tax incentives, and/or market development support. Furthermore, strengthening intellectual property rights protection can facilitate the flow of advanced technology to developing countries. 

A number of industrialized countries have increased their bilateral support for sustainable energy development and deployment in Third World countries in recent years. But bilateral assistance tends to be project-focused, controlled and carried out by industrial nation representatives, and driven by political considerations. Greater emphasis should be given to longer-term and multi-pronged efforts aimed at barrier removal, capacity and institution building, and market development in developing nations. 

The World Bank and other multilateral development banks are important lenders for energy development in the Third World. Historically, the vast majority of their energy sector loans went to large-scale hydropower, fossil fuel, and energy infrastructure projects. Very little lending was devoted to energy efficiency or smaller-scale renewable energy technologies. This is starting to change. But the World Bank and other Major Development Banks(MDBs) should devote a greater portion of their energy lending to Renewable energy projects and infrastructural development. As the markets for and capability in sustainable energy technologies grows, the MDBs should phase out their funding for conventional energy projects and focus entirely on Renewable energy technologies. To facilitate this transition in priorities, the MDBs should increase their own capacity and expertise in energy efficiency and renewable energy technologies. 

The Kyoto Protocol to the Framework Convention on Climate Change allows joint implementation between industrialized and transition nations. The Kyoto Protocol also provides for a Clean Development Mechanism that could foster additional investment in renewable energy, energy efficiency, and natural gas projects in developing countries. The Clean Development Mechanism allows parties in industrialized nations to receive emissions credits for investing in projects that reduce greenhouse gas emissions in developing countries.


While national policies and programs are the foundation for successful market transformation, the participation of state and local authorities and action at the regional and local level can be critical to the success of national policies and programs. Likewise, international agencies such as the MDBs and Global Environmental Facility can play a key role in financing national efforts, as well as in supporting capacity and institution building.

The private sector should be involved in policy development since it plays a key role in implementation. Private sector cooperation can determine whether not a policy (or set of policies) succeed(s). While some companies have a vested interest in maintaining an inefficient and carbon-intensive energy future, other companies are actively developing, producing, or investing in high-efficiency, renewable energy technologies. Policymakers can work with these innovative companies to develop and implement progressive policies and programs that will lead to a more sustainable energy future.


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