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Incentivizing investment in underfunded areas, including clean and affordable energy

The Addis Ababa Action Agenda calls for increased investment in sustainable and resilient infrastructure, including the areas of energy, water and sanitation for all, as prerequisites for achieving the Sustainable Development Goals.

The Addis Agenda:

  • Aims to ensure universal access to affordable, reliable, modern and sustainable energy services for all by 2030; to substantially increase the share of renewable energy; and to double the global rate of energy efficiency and conservation
  • Promotes public and private investment in energy infrastructure and clean technologies including carbon capture and storage; commits to enhance international cooperation to provide adequate support and facilitate access to clean energy research development
  • Commits to enhance international cooperation to expand infrastructure and upgrade technology for modern and sustainable energy services to all developing countries, in particular LDCs and SIDS
  • Calls for action on SE4All recommendations to raise over US$100 billion in annual investments by 2020, through market-based initiatives, partnerships and leveraging development banks
Latest developments

Technological change is influencing the choice of infrastructure by impacting costs. For example, the cost of electricity from solar PV decreased 77 per cent between 2010 and 2018, making clean energy competitive with fossil fuel alternatives, as demonstrated by the vast majority of new electricity-generation projects using renewable-energy sources (more than ninety per cent for projects with private finance). However, to make solar energy viable in frontier markets, regulatory changes and reforms need to accompany technological advancements. Countries could benefit from international support in this area (e.g., the Scaling Solar initiative from the World Bank Group).

Impact-based business models are also emerging. For example, a firm could improve the energy efficiency of private households and be repaid on-bill through the effective energy savings. This would be a more efficient solution than having individual homeowners figure out what is the most efficient investment to reduce their energy bill. It would also overcome liquidity and credit constraints for households that would not need to put the funds in upfront.

Relevant SDG indicator