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Opportunities to achieve poverty reduction and climate change benefits through low carbon energy access programmes

This report presents the preliminary results of a survey commissioned and funded by DFID, conducted on international low carbon energy access (LCEA) projects that won the Ashden Awards for Sustainable Energy. The following are the findings:

  • there are substantial direct benefits to the poor from low carbon energy
  • scale and impact are achievable by small and medium enterprises
  • scale brings wider environmental benefits
  • LCEA SMEs can contribute to growth in local economies
  • LCEA SMEs face trade-offs in delivering direct and wider benefits
  • ‘hybrid’ business models combine commercial and non-profit attributes to reach poor and low-income users and achieve benefits
  • LCEA SMEs are drawing on the carbon finance market, with potentially significant effects on direct and wider benefit trade-offs
  • affordability and the opportunity cost of using LCEA technologies are key determinants in reaching the poor
  • LCEA SMEs face high costs of innovation.

With regards to policy implications, the report states that accelerating the growth of LCEA SMEs so that they can play a more substantive role in low carbon energy strategies across a range of developing countries will be dependent on the following:

  • coherent energy policies that specify the desired contribution of LCEA in achieving equitable energy access
  • new and additional financial instruments and approaches are required to meet the objectives of LCEA SMEs to achieve direct benefits for the poor and wider environmental benefits.

The paper presents areas where further research is needed:

  • more detailed qualification of benefit streams
  • analysis of trade and investment constraints
  • revenue generation options from LCEA
  • incentives for innovation
  • novel enterprise finance
  • deeper analysis of experiences with subsides for LCEA
  • carbon financing support design