The dependence on fossil fuels is often cited as a central factor that needs to be addressed in the move towards a green economy. Addressing problems related to overreliance of economies on fossil fuels has the added advantage of not only providing cheaper energy sources, but also reducing greenhouse gas emissions which are responsible for climate change- of the good kind.
So it comes as no surprise that more focus has been directed to alternative fuels, especially renewable energy. For instance, in the period 2004-2010, new investment in renewable energy reached a record of USD 211 billion(KES 1.79 trillion). In line with this, a number of initiatives have been developed over the past few decades that aim to bridge the perceived gap between economic growth and environmental conservation. Green taxes, carbon finance, stimulus funds, microfinance, weather-indexed insurance products and so forth.
The Green Economy Report, compiled by UNEP, states that investing 2% of global GDP (USD 1.3 trillion – a lot of KES) per year into ten key sectors (of which energy is among them) in the next 40 years can initiate a transition towards a green economy. The main challenge to this is how to finance the 2%, which should come from both public and private sectors. UNEP’s Financial Initiative is responsible for bringing together and partnering with over 200 financial institutions that aim to address the financial challenges of financing a green economy. The aim is to come up with ideas that address the relationship between finance and the environment. UNEP is also involved in a number of initiatives such as the Green Climate Fund which aims to mobilize funds from private and private sectors, the Climate Investment Fund, and the Global Environmental Facility.
This debate is spurred by factors such as high risks on green markets that have a long payback period. Investors want to have their returns in good time, but in green investment this takes decades. Other factors are the absence of policy and regulatory measures and low access to finance especially in developing regions.
According to the report, the point of the shift is that a green economy creates employment and economic growth while still avoiding the risks of climate change, water scarcity and the loss of ecosystems. The report further argues that a green economy produces a higher GDP and GDP per capita, as demonstrated by a model which contrasted a green investment scenario against a business as usual scenario. Another advantage of a green economy is the possibility it offers in poverty alleviation, especially through the proper management of natural resources. This in turn increases benefit flows from natural capital that are received directly by the poor.
How Does All This Affect Kenya?
One way through which Kenya has been involved in this global discussion is through the implementation of some of the policies developed by UNEP in regard to energy, finance and the environment. UNEP introduced a policy known as Feed-in tariff (FiT) to encourage the use of renewable energy across the world. According to the UNEP FiT report, so far fit it is the most widely used policy on renewable energy, with 50 countries around the world having adopted it.
Kenya is among the countries which have implemented FiTs. The Ministry of Energy website defines a feed-in tariff as a policy for promoting generation of electricity from renewable energy sources. FiTs allows power producers to sell Renewable Energy Sources Generated Electricity (RES-E) to a distributor at a pre-determined fixed tariff for a given period of time. If you have been watching the news you must have seen billows of smoke from Olkaria, and heard about the wind farm planned for Turkana. Apart from geothermal and wind power, other renewable energy sources are biomass solar and biogas.
Renewable energy has a number of advantages, the most obvious of which is that they reduce the overdependence on oil imports (and hear I’m speaking with regard to Kenya), thereby controlling the negative effects volatile oil prices have on the economy. They also create jobs as factories are set up to generate the energy. Exploiting renewable energy is crucial if the world is to achieve a green economy