07 April 2014, Addis Ababa – Business should play a bigger role in financing renewable energy and green growth in low-income countries, to help build a buffer against climate change, experts told a recent conference in Ethiopia’s capital.
Nanki Kaur, a senior researcher with the climate change group at the London-based International Institute for Environment and Development (IIED), told Thomson Reuters Foundation the private sector isn’t yet doing enough, partly due to issues around the viability and costs of pursuing green economy strategies.
“The green economy is expensive and needs high upfront investment,” said Kaur on the sidelines of the conference. “When it comes to the role of the private sector in climate adaptation and resilience, most countries are asking serious questions about how they can have the private sector make a meaningful contribution.”
Schemes are needed that can benefit the majority of the population in developing countries, not just the better-off groups in society, she added.
The conference in Addis Ababa in late March shared the experiences of seven nations in moving towards low-carbon, climate-resilient development. It was attended by government and private-sector policy makers from Ethiopia, Nepal, Bangladesh, Gambia, Kenya, Rwanda and the island of Zanzibar (part of Tanzania).
Kaur said countries have varied approaches to building a more climate-resilient economy. In some cases, the private sector is seen as commercially oriented and hence not an attractive partner, while in others it is viewed as a welcome contributor to green growth, even if it might be lacking capacity.
One example of a major public-private venture is the recent signing by the Ethiopian government and the US-Icelandic firm Reykjavik Geothermal of a $4 billion agreement to construct a 1,000 megawatt (MW) geothermal project over the next decade.
Ethiopia, which plans to become a carbon-neutral, middle-income country by 2025, estimates it has the potential to generate up to 5,000MW of electricity from geothermal sources, in addition to wind and hydropower projects now on-stream or under construction.