26th Annual IAJBS World Forum 2021 SERVING THE WORLD WITH INSPIRED BUSINESS EDUCATION ITESO Universidad, Guadalajara Mexico

Experience level: 
Advanced
Intended Audience: 
All
Authors: 
Meenakshi Rishi, JH Bae, Dmitry Li

Energy Access, Economic Growth and Carbon Emissions- Sustainable Development in Sub-Saharan Africa:

Energy Access, Economic Growth and Carbon Emissions- Sustainable Development in Sub-Saharan Africa The World Bank has argued that achieving universal access to electricity is one of the most important goals in the energy sector of the developing world. While several developing countries are making significant progress and on track to reach universal energy access by 2030, the news is not as promising for the Sub-Saharan Africa (SSA). According to an OECD report, roughly 600 million people in SSA lack electricity and 890 million people utilize fossil fuels for cooking (OECD 2019). This dramatic lack of energy access stifles economic growth and sustainable development. Indeed, economic growth in the SSA stood at a meagre 2.8 percent in 2018, while South Asia recorded a 7.1 percent growth rate over the same period (IMF 2018). The International Energy Agency estimates that SSA requires an annual investment of 27 billion dollars per year to ensure universal access to energy (IEA 2018). Ensuring this financing will be challenging and underscores the vital role of energy aid in the electrification of the SSA region. Ensuring this financing will be challenging and underscores the vital role of energy aid in the electrification of the SSA region. A big concern of policymakers especially in developing economies is the impact of energy aid on economic growth and carbon emissions. Should today’s developing countries follow the “grow now, clean up later” logic that has characterized the development paths of today’s rich countries? Traditionally, energy aid for development has targeted two separate goals: economic growth or poverty reduction while policy prescriptions attempt to address problems of growth, poverty, mitigation and adaptation simultaneously. A reality check suggests that this multiplicity of objectives has not been very successful. This paper argues that environmental problems stemming from higher economic growth are very different from those pertaining to persistent poverty (energy access and adaptation) with important consequences for energy aid. We propose that energy aid discussion should be reframed to find solutions in two integrated but separate spaces - viz. green growth and energy access. The main objective of this paper is to empirically test this reframed discussion by answering three questions (Q1-Q3) for a sample of 25 SSA countries, over 1995-2014. First, is increased energy aid associated with mitigated carbon emissions (Q1)? Second, does energy aid promote economic growth (Q2)? And lastly, does energy aid improve access to energy (Q3)? We answer our research questions by examining whether energy-related aid (including renewable energy aid promotes climate-compatible development by studying the impact of energy-related aid on carbon emissions, per capita GDP, and electricity access. Viewing climate compatibility in terms of either green growth or energy access strategies rather than an overlapping mix of development, mitigation and adaptation strategies could help in designing effective development strategies. References: IEA. (2008) World Energy Outlook 2008. Paris: International Energy Agency. IEA. (2017) World Energy Outlook (WEO)-2017 Special Report: Energy Access Outlook IMF (2018) Data Mapper, World Economic Outlook, October 2018 OECD (2019) Achieving clean energy access in sub-Saharan Africa. Available- https://www.oecd.org/environment/cc/climate-futures/Achieving-clean-energy-access-Sub-Saharan-Africa.pdf