Businesses, individuals and not-for-profit foundations are leading a clean and affordable energy transition in developing countries, says Rachel Mountain from Energise Africa.
Investment from individuals, not-for-profit foundations and private companies can lead the transition to clean, affordable sources of energy in developing countries argues Rachel Mountain, Head of Marketing and Communications at Energise Africa.
Several reports were published in 2018 about the critical need for urgent action on climate change. First, the Intergovernmental Panel on Climate Change said in October that global warming could still be limited to 1.5°C but “rapid, far-reaching and unprecedented changes in all aspects of society” would be needed by governments around the world. The second was the UN’s Emissions Gap report published just before COP24, the UN climate change conference in Poland, in December. This concluded that all governments must triple their efforts after emissions increased in 2018 following three years of stability. One glimmer of hope in the report was that untapped potential from innovation and green financing offer pathways to bridge the emissions gap, even in the face of political intransigence.
COP 24 was, overall, a lesson in political intransigence. The rule book was agreed to implement the Paris climate deal, but there was no accord on much needed deeper greenhouse gas emission cuts or mechanisms to help underpin and deliver these.
So now what? Businesses, not-for-profit foundations and individuals working together can take action to fight climate change and move forward the energy transition. Platforms like Energise Africa, led by Ethex and Lendahand, two of Europe’s online impact investing platforms, are enabling people to invest directly in pioneering businesses that install life-changing solar systems in homes in sub-Saharan Africa. And accelerate universal access to affordable, reliable and clean energy for all as set out in the UN Sustainable Development Goal 7.
Energise Africa makes it possible to start investing from as little as £50 in bonds issued by solar businesses that are installing systems in rural, sub-Saharan African homes. This allows pay-as-you-go flexibility to households across Africa, bringing clean energy alternatives to families otherwise dependent on kerosene. The platform is also supported by a number of partners including UK aid, part of the UK government; Virgin Unite, the non-profit foundation of the Virgin Group; P4G, a network bringing together business, government, and civil society organisations in public-private partnerships; and the Swiss-based Good Energies Foundation. Many of these partners provide match funding to projects alongside individual investments.
The investments provide companies in Africa with the low-cost working capital they critically need to provide pay-as-you-go solar to low-income families. The collective impact of our community of investors, in only 15 months, has mitigated nearly 60,000 tonnes of carbon dioxide annually from the atmosphere and given nearly 250,000 people access to affordable solar energy in countries including Mali, Uganda, Burkina Faso, Mozambique, Uganda, Kenya, the Democratic Republic of Congo and Tanzania. In these countries, energy access rates can be as low as 17%.
Individuals who invest in projects via Energise Africa are able to track the social and environmental impact their investment is having on the ground and their own financial returns of around 6% annually. As with any investment, however, investors should be aware that their capital is at risk and returns are not guaranteed.
If enough people, supported and match-funded by foundations and private companies, invest some of their savings on the basis of environmental or social impact, and potential financial returns, we can create large pools of affordable finance to support mission-driven businesses and social enterprises across the world. Many of these provide innovation around low carbon technology which is critically needed.
We don’t need to wait for governments, individuals and businesses can use their money to drive real change today.