Interview with United Nations – UNEP – by the European Energy Centre (EEC)
During a visit to the UNEP Offices in Paris to discuss 2014 opportunities, EEC Director Paolo Buoni conducted a short interview with UNEP Energy Finance Programme Manager, Dean Cooper, to discuss the current opportunities and challenges for the adoption of clean energy technologies.
European Energy Centre (EEC): How should the private and public sectors work together towards clean energy adoption?
Dean Cooper, United Nations UNEP: The private and public sectors can both benefit by working together in order to develop clean energy investment opportunities. Scaling up investment into clean energy technologies, particularly in developing countries, is a key objective for many public organisations. Involving the private sector is an important part of that because funding from the public sector is relatively limited. Funding from the public sector is useful for some new clean energy activity but, if we want sustainable results, we need commercial investment and an increased scale of investment over a period of time.
So, from the public sector point of view, it is important to involve the private sector at an early stage. Vice versa, there are also interests for the private sector to link with public funders in preparation for clean energy investment, particularly in unfamiliar countries. Developing countries are not always aware of the clean energy technology available and don’t have the necessary policy frameworks. This creates uncertainty for investors, which often means unacceptable risk.
It is therefore useful for the private sector to work with the public sector, which will provide some form of financing for new concepts and consequently the private sector is more capable of investing in new projects.
EEC: What are the opportunities for stakeholders investing in clean energy technology?
Dean Cooper: From our point of view, it’s important to look at three related issues that define the opportunities for clean technology investment: the policy framework, technology use and financing conditions. I’m not a policy maker but I know that a stable policy is essential to ensure a stable environment for any investors.
Based on such policy, there will be a range of clean energy options. But these may not be effective without a good understanding of the most appropriate technologies to meet the policy objectives. Therefore, we need to connect with technology developers so that they can understand the needs of potential users and adapt the technology in the most efficient way to address these needs.
I think it’s very important to recognize that clean technology applications need to be market-driven in order to be sustainable. It’s not a question of imposing new technologies but rather of understanding the market and matching the appropriate technologies accordingly. In short, clean technologies have great potential if there is a relevant policy framework. But from my point of view (as UNEP Energy Finance Programme Manager), the most important element is the source of finance and this comes down to the investment opportunities we have just discussed. To realise such finance we need to have identified relevant clean technologies and enabled the necessary policy frameworks to develop the financing mechanism that will be most effective under local conditions – this policy, technology, finance mix is a key to any sustainable outcome.
EEC: What is the current situation in the clean energy technology sector?
Dean Cooper: This is a very broad question so I will focus entirely on my interests! I can mention four particular areas of activity which I think have great potential in the future for clean technologies to be adopted in a sustainable fashion, particularly in developing countries where the need is greatest.
In 2011, the IEA’s World Energy Outlook suggested that over 40% of new connections in Africa would need to be based on mini-grids. On this basis, there is a lot of potential if we work out how users can finance such mini- grid development and use clean energy technologies.
Decentralized mini-grids using energy efficient applications would increase energy access and minimize transmission losses from central grid expansion. As well as our plans to develop clean energy mini-grids, we have a programme in Asia (Indonesia and Vietnam) to show how farmers can finance and use biogas technology. This has drawn a lot of interest from Africa and we are planning approaches there to allow potential end-users of clean energy systems to have access to appropriate technologies.
Energy efficiency is an issue that was given particular focus during the 1980s and is now on the agenda again. Energy efficiency in buildings is a key focus for UNEP, and financing models to encourage relevant clean technology applications in buildings is an area that we are very keen to pursue.
Certainly the international experience over the past 20 or 30 years provides many lessons and best practice that can be very interesting to build upon today. The fourth area is policy risk insurance - I am trying to develop a new mechanism to facilitate clean energy investment by providing a guarantee for investors against any changes in policy that will affect their returns.
The aim is to introduce a mechanism that will underwrite the risks involved and so provide the necessary security to encourage greater clean energy investment in developing countries. These four initiatives could all have a great impact over time.