The philanthropic disparities in clean energy funding

©Stiftung Solarenergie

Western philanthropies, including foundations, funds, and others, spend billions of dollars annually to help countries adapt to climate change by investing in clean energy.

However, compared to the funds dedicated to projects in poor countries in the world, the disparities are so huge that one gets a sense of an apartheid-like culture among private donors engaged in initiatives to reduce greenhouse emissions around the world with the aim of placing it well on the trajectory to achieving Net Zero by 2050.

Poor countries are the least emitters of greenhouse gases yet they continue to bear the burden of the impact of climate change, with Africa, for instance,  accounting for only 2–3 percent of the world’s carbon dioxide emissions  compared to 80 percent for the rich and upper-income countries.

According to the United Nations , the effects of climate change are worse among poor and low-income communities, in part because many live on the margins of society, in unstable structures, and areas more susceptible to flooding, landslides, and earthquakes, but also because of inadequate capacities, inadequate resources and reduced access to emergency response systems.

It is an established fact that switching to clean sources of energy will go a long way not only in addressing climate change but also in air pollution and health.

Most developing countries have an abundance of clean energy sources, which include the sun, wind, water, ethanol, waste, and heat from the Earth (geothermal). In total, they account for more than half of global renewable power potential but most of its population lacks electricity.

At the same time, most of them, especially in Africa, still rely on fossil fuels – coal, oil, and gas – to power their energy needs despite their detrimental impact on climate change. For instance, South Africa, the African continent’s third-largest economy, is currently undergoing an energy crisis that has resulted in devastating load shedding.

While the country has other sources of energy, including clean ones such as solar and wind, coal remains the mainstay of its power generation, accounting for more than 80 percent of supply.

In countries such as Kenya, which is blessed with massive clean energy sources, that account for about 90 percent of its power supply, aging and inadequate state of the electrical infrastructure mean the country continues to suffer from random power blackouts.

At last year’s COP28 in Doha, Qatar, Kenya’s President William Ruto pledged  that the country would triple renewable energy capacity, and double energy efficiency by 2030, alongside a significant reduction in fossil fuel dependency, in line with the goal of keeping global warming below the 1.5°C ceiling.

He also unveiled an ambitious plan to expand the country’s current energy capacity of approximately three Gigawatts to 100 Gigawatts of entirely renewable power by 2050, as a cornerstone of the country’s green industrial strategy.

Kenya is also pushing for other clean energy initiatives including cooking and public transport. But such grand plans to counter climate change, which are replicated across the developing world, will continue being pipe dreams unless there is adequate funding from both rich countries and moneyed philanthropies.

In recent years, many of them have launched initiatives to support poor countries to both mitigate and adapt to climate change but the impact is barely felt in most of them.

For instance, in 2021, the IKEA Foundation and The Rockefeller Foundation joined forces to set up a US$1 billion Catalytic fund , committing $500 million each to scale up distributed renewable energy around the world.

The initiative aimed to finance the generation of power from sources such as mini-grids and off-grid sources that are located near the point of use, rather than centralised sources like power plants.

The combined funds were put under a new global platform whose aim is to rapidly channel development funds to projects on the ground.

In May 2022, at the Sustainable Energy for All Forum in Kigali, Rwanda, UN Special Envoy on Climate Ambition and Solutions Michael R. Bloomberg announced US$242 million to expand Bloomberg Philanthropies’ efforts to accelerate the clean energy transition in developing countries.

In addition to energy transition efforts in seven countries and the European Union, Bloomberg Philanthropies also said it was developing programmes and partnerships in Bangladesh, Brazil, Colombia, Kenya, Mozambique, Nigeria, Pakistan, South Africa, Turkey, and Vietnam.

Last year (2023), IKEA partnered with the Global Off-Grid Lighting Association (GOGLA) to help the off-grid solar sector in Asia and Africa advance solar PURE technologies that can help to modernise agriculture, improve food and water security, power micro, small and medium-sized enterprises (MSMEs) and electrify health infrastructure. IKEA said  it had funded the initiative with €4 million over four years.

These representative investments, while impressive, do not, by any range, compare to what some of these charities have done in rich countries.

For instance, a study conducted in September last year by Indiana University Lilly Family School of Philanthropy, titled Mapping Nonprofit Spending on Climate Change, shows that US charities spent between US$7.8 and US$9.2 billion annually on programmes and activities that address climate change.

Of these, greener energy use (energy from wind, sun, geothermal, etc) and green and resilient energy (energy that is renewable and sustainable such as hydropower, solar energy, etc) supply topped the list of total climate expenditures (35 percent and 34 percent, respectively).

‘Notably, while this survey focused on US-based non-profits, the results indicate that these organisations spend 54 percent of their climate expenditures on strategies focused on the US and Canada. An additional 14 percent is allocated to work focused on global issues. A total of 22 percent focused on climate issues in the rest of the world (with no other single country or regional grouping in the survey receiving more than 5 percent of allocations). Ten percent of funding was not identifiable by region,’ the report said.

The 54 percent of total expenditure translated to between US$4.2 billion to Sh4.9 billion, indicating clear philanthropic disparities in funding climate change adaptation, including increasing the use of clean energy.


Closing the gap

There is no doubt that poor countries can address climate change, boost their social economic development and address other challenges that their populations face such as health.

However, this can only be achieved if there is adequate, reliable and sustainable funding for clean energy projects in these countries.

According to the African Development Bank, for instance, Africa is blessed with an almost unlimited potential of solar capacity (10 TW), abundant hydro (350 GW), wind (110 GW), and geothermal energy sources (15 GW).

It quotes International Renewable Energy Agency (IRENA) estimates, which show renewable energy capacity in Africa could reach 310 GW by 2030; which would put the continent at the forefront of renewable energy generation globally.

‘There is huge scope for Africa to build a climate-resilient and low-carbon continent, with attractive investment opportunities in climate-resilient infrastructure, climate-smart agriculture, and the sustainable management of natural resources,’ the lender concludes.

But this cannot happen in an environment where philanthropies are openly biased in favour of their home countries.

Apart from funding, supporting campaigns that would boost climate adaptation are also vital but as it is, not adequate lobbying has been witnessed in poor countries.