More on the Global Solar Fund
Green Cross International proposes a new approach to the global energy issue – the creation of a US$ 50 billion Global Solar Fund to address the electricity needs of the world and reduce our global reliance on fossil fuels.
We have entered the 21st century much in the same way we entered the 20th century – billions of people have no access to affordable and reliable energy services. In an ever increasing manner, the link between affordable energy resources and basic human needs is being highlighted. The rationale in forging this link is clear: Half of the world’s population has no or inadequate electricity and is forced to depend on the use of unhealthy, labor-intensive and unsustainable fuels. Meanwhile, developed and emerging nations are evermore dependent on finite and dirty fossil fuels. The litany of environmental insults caused by our primitive energy practices includes global warming, severe local air and water pollution, acidification, deforestation, among many others.
Nearly two billion people lack access to electricity. In developing regions without grid access, photovoltaic (PV) systems offer an immediate solution with direct economic, social, and environmental benefits. For example, distributed solar energy can power water filtration systems, health care facilities or provide evening illumination that enables study and additional economic opportunities. In addition, solar equipment can often be manufactured regionally, helping local economies, reducing geographic supply barriers and cutting dependence on fossil fuel imports.
In urban areas, both in the developing and the industrialized world, distributed renewable technologies reduce peak demand and increase electric system reliability without the costs and environmental impacts associated with expanding the electricity grid. Increasing the installed capacity from multiple small-scale decentralized power generators is critical in enabling the creation of secure and reliable electricity grids.
Turning the light of the sun directly into electricity by PV cells, turning the wind directly into electricity by windmills offer our societies a clean, sustainable, reliable, and plentiful source of energy for the 21st century and beyond. They offer a sustainable grid-connected generation solution to large urban areas of both the developed and less developed economies, and an off-grid solution to rural areas across the earth. Further, the production, installation, and maintenance of solar technologies provide jobs and sustainable economic development.
Providing modern energy services to the developing world and increasing the use of distributed systems in developed nations globally are immense challenges, but ones where renewable energy can and must have a significant role. Green Cross International proposes the US$ 50 Global Solar Fund to address the most critical component of this challenge – raising the funds needed to help finance a vast deployment of solar energy resources and to support a progressive decrease in the price per unit of electricity produced.
Currently billions of dollars are invested annually in the development of global energy systems. However, these investments are made in short sighted and environmentally damaging fossil fuel options. Shifting these funds to a clean and reliable source such as photovoltaic cells and windmills while adding new innovative sources of financing, is essential for progressively driving down the cost of solar energy to the point that it is competitive with traditional sources of power generation.
The goal of the Global Solar Fund is to bring together US$ 50 billion over the next ten years to support the deployment of solar electric systems. The funds will be aggregated from governments and industry sources and will include, among other mechanisms, a combination of grants, buy-down programs, tax incentives, revolving loan funds, bond financing and micro lending. Investment at this level will substantially increase worldwide production -- historic trends have shown that each doubling of production capacity drops electricity price by 20%. For example, the US$ 50 billion dollar Fund will help generate the level of investment needed to increase production to bring the price of photovoltaic electricity down from its current level of approximately 30 to 25 cents a kWh to below 10 cents per kWh.
How the Fund Will Work
The Global Solar Fund will work with governments, financial institutions, solar companies, solar parts suppliers, and utilities to enhance the volume, technological advancement, and manufacturing efficiencies that unleash the power of the sun.
The Global Solar Fund will aggregate existing and new programs at all levels of government and industry, with the goal of raising a total of US$ 50 billion over the next 10 years.
In 2000, spending on photovoltaic systems totalled approximately US$ 120 million by the US, US$ 130 million by the EU, and US$ 250 million by Japan. Together, the 11 leading International Energy Agency governments spent US$ 675 million to support the use of solar energy. The Global Solar Fund will increase this number almost eight-fold using different sources of funding, including redirecting fossil fuel subsidies, which the World Bank estimates at $210 billion annually. The Fund will further leverage a 50% to 100% additional amount of private capital to invest in solar energy, resulting in at least US$ 75 billion to US$ 100 billion or more in purchases of solar energy over 10 years.
Green Cross International proposes that contributions to the Fund be correlated to each OECD nation’s energy use.
The Fund’s mechanisms will include but not be limited to:
- Direct subsidies and buy-down programs
- Revolving loan funds
- Micro-loan funds
- Low-interest credit lines
- Development bonds
- Corporate tax incentives
- Personal tax incentives
- Tax credits
- Commitments for government purchase
- New Public / Private Partnerships
An International Agency will coordinate and manage the multi-lateral fund, and will track unilateral and bilateral commitments toward the US$ 50 billion goal and create a forum for the sharing of successful programs.
Summary of the Benefits of the Global Solar Fund
The level of investment made possible by the Global Solar Fund will contribute to the creation of a future energy system that does the following:
- Meets human needs: More than 2 billion people in the world today lack access to electricity. In most sub-Saharan African countries, less than 20 per cent of people have electricity. The number of people without electricity has increased in the last 20 years and is projected to grow by 25 per cent in the next 20 years. Women and children are often spending hours each day collecting fuel, which prevents them from pursuing education or other economic activities. Without electric lighting there is reduced potential for studying or reading, especially in the evening, and without energy services, particularly electricity, local employment opportunities are limited.
- Combats climate change: If we are to prevent further climate change, the world must move to a clean energy economy. Solar power is a prime component in developing an affordable, feasible, substitute for fossil fuels. While the effects of climate change may persist for many centuries, due to the long life of greenhouse gases, an expansion of the solar market now can play a vital role in limiting both the rate and magnitude of climate change over the next century.
- Improves reliability and security: Strengthening the renewable energy sector is critical to providing global energy security, including preventing blackouts in urban centers. Fossil fuels, due to their finite availability, are an intrinsically insecure energy source regardless of whether they are from Alaska or the Middle East. Solar energy as a practically unlimited energy source will enable countries and the global community to achieve true energy security.
- Creates New Jobs: Renewable energy technologies generate new well-paid jobs in manufacturing and maintenance. Based on information provided by the industry, 20 jobs are created per MW (Mega Watts) of capacity during manufacture (assumed to fall to 10 jobs/MW of capacity after 2010) and about 30 jobs per MW during the process of installation, retailing and providing other local services. In the industrialized world, about 1 maintenance job is estimated to be created per installed MW. In the developing world markets, which are expected to play a more significant role beyond 2010, maintenance is expected to steadily increase up to 2 jobs per MW by 2020.
The proposed Global Solar Fund provides a vision of a sustainable energy future. It offers a mechanism for achieving that future by establishing a pool of financial resources both by aggregating individual sources and leveraging a fund to support the widespread deployment of distributed PV and windmill systems.
The Global Solar Fund represents the sort of development-oriented investment that will benefit developing and developed nations as well as the global environment. It is an idea whose time has come.
The Fund is a 10-year effort. Commitments to the Fund will be tracked by a central agency and managed under the auspices of the United Nations. Green Cross will also monitor commitments to the Fund and advocate for additional commitments. 50% or more of the Fund will be dedicated to the energy impoverished developing world - in rural areas and cities -- through the multi-lateral central agency, and coordinated bi-lateral commitments. Installations in urban centers in industrialized countries that are funded and coordinated locally will also be tracked by the agency.
The project is led by Green Cross International and Global Green USA, the US affiliate of GCI. They presented the call for a $50 billion global solar fund in Bonn at the intergovernmental Renewable 2004 conference