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POLICY BRIEF: Green growth and energy security – Fossil fuel-endowed middle-income countries at a crossroads

This policy brief synthesises the findings of political economy analyses (PEA) in the energy sector in three fossil-endowed middle-income countries (MICs): Colombia, Indonesia and Kenya. It is based on a research project on political economy constraints and enablers influencing governments’ decisions on green growth options in the energy sector, where policy directions for a robust green growth trajectory are explored.

The link between energy security and green growth objectives is a tenuous one, and involves many trade-offs. Tensions between fossil fuel phase-out (compatible with the objectives of the Paris Agreement) and use of fossil fuel for local consumption or exports is strong. We find that, amongst others, land issues, intermingled private and business interests and inconsistent energy policies as a result of conflicting stakeholders’ interests constrain green growth efforts.

As these countries struggle to marry their stated climate ambitions with a steep increase in domestic energy demand, they risk losing out in positioning themselves well in the future global economy. Colombia and Kenya already rely on renewable energy for two-thirds of their domestic electricity consumption, but either have strong coal and oil exports (Colombia) or have newly discovered fossil resources (Kenya). Indonesia is still highly dependent on coal and oil for its domestic energy supply and export income, while having large potential for renewable energy production and efficiency gains.

In all three countries energy security has been the overarching objective and is generally believed to be best served by available domestic fossil resources. This overrides the emerging desire for ‘greenness’ of growth, which could be fostered by support from international investors, mobilisation of citizens affected by climate change and a greater focus on the domestic co-benefits of green options such as employment and the future competitiveness position of a country.

Picture: Asian Development Bank