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NEW YORK UNIVERSITY

Evolving Trends in Climate Change and Energy & Their Impact on Development Cooperation

Luis Gomez Echeverri

August 2013

CENTER ON INTERNATIONAL COOPERATION


NEW YORK UNIVERSITY

The world faces old and new security challenges that are more

complex than our multilateral and national institutions are

currently capable of managing. International cooperation is ever

more necessary in meeting these challenges. The NYU Center on

International Cooperation (CIC) works to enhance international

responses to conflict, insecurity, and scarcity through applied

research and direct engagement with multilateral institutions

and the wider policy community.

CIC’s programs and research activities span the spectrum of

conflict, insecurity, and scarcity issues. This allows us to see critical

inter-connections and highlight the coherence often necessary

for effective response. We have a particular concentration on the

UN and multilateral responses to conflict.

Table of Contents

Introduction 2

Evolving trends in climate change 2Evolving trends in energy 3Evolving trends in development cooperation 3

Implications for development cooperation on climate change & energy 4

Climate change action as a legal obligation 4Climate change as a development concern 7Climate change as an opportunity rather than a cost 7Climate change as a bargaining chip 8Energy demand transformed 8Energy at the center stage 9Energy vision broadened 9New actors involved 10Geopolitics transformed 11

Coping with evolving trends 11

Past Reform Efforts 11The Demand for New Approaches 14

SE4ALL – How the UN must reform to deliver 17

New Models of Global Cooperation Required 19Implications for the UN 21The Main Areas in Need of Support 22

Conclusion 24


Luis Gomez Echeverri

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Evolving Trends in Climate Change and Energy

2


Introduction

The recent United Nations Conference on Sustainable Development (Rio + 20) marked 20 years since the signing of the UN Framework Convention on Climate Change (UNFCCC). The event – its the proceedings, thematic focus, the multiplicity of actors involved, and the debates demonstrated how much the world has evolved since the game-changing summit of 1992.

This paper first traces trends in climate change and energy, as well as in the broader development arena, over that 20-year period. It then assess the impact of changes on development on climate and energy, and its implications for reform and adaptation of development partners (particularly the UN). Have they succeeded in keeping up with changing demands? How can they address this rapidly evolving environment in the future? What role can the UN play in this fast evolving world?

Evolving Trends

Evolving trends in climate change

Initially seen as a remote, next-generation problem full of uncertainties, climate change is now a major priority for many countries: a phenomenon now accepted based on scientific evidence and observation, as well as on a better understanding of these impacts. There is also a greater sense of urgency, despite some recent pushback about its relative importance given the current global financial and economic slowdown.

Better scientific knowledge has brought with it a greater understanding of the menu of concrete measures needed to address climate change, particularly in mitigation (where energy plays a central role). Perhaps the greatest evolution in understanding has been in the acceptance that climate change and energy can be addressed effectively only through a cross-sectoral approach; that such an approach and the actions it entails need to be

integrated and embedded within overall development strategies and plans; and that to see results on the ground, collaboration is needed across ecosystems, jurisdictions, and borders. In parallel came the understanding that effectively addressing climate change and encouraging investment in alternative energy systems required emphasizing benefits and opportunities rather than only costs and risks. This shift in approach has been particularly important in facilitating the deployment of new energy technology.

The geopolitics of climate change has also changed dramatically. The traditional north-south organizing principle of 20 years ago no longer applies. When the Framework Convention was signed twenty years ago, the main political negotiating blocks were the developed countries and the Group of 77 and China. Negotiations today are much more complex, with very different interest groups pressing for positions that blur the traditional north-south divide. Like-minded groups now organize for climate change negotiations on the basis of themes that they would like to promote, vested interests or common principles.

These alliances are for the most part temporary and issue-bound. Regional alliances, while still important (particularly for African states, which meet regularly) are giving way to like-minded groups such as the BASIC countries (Brazil, South Africa, India, and China); the Environmental Integrity Group, which includes both developed and developing countries; and the Small Islands Developing States (SIDS), probably the most organized of them all. This latter group is showing that power comes not only from economic heft but the number of members organized around common issues. Frustration with the top-down grand deal approach continues to drive new alliances. More grassroots initiatives focusing on action on the ground are also becoming more important. One example of this is the C40 Global Leadership on Climate Change, a network of world cities committed to take action against climate change. This has opened new opportunities for actors that were not as active – or at least visible– to play more influential roles in climate change negotiations.

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Evolving trends in energy

Since the first Rio Summit, the two most powerful drivers of energy demand – population and income – have transformed the energy landscape. The world’s population grew by 1.6 billion people and is expected to rise by another 1.4 billion over the next 20 years, with growth concentrated in the developing world. Global real income has risen by 87 percent over the same period and is expected to rise by 100 percent over the next 20 years.1 Global integration and the rapid growth of middle-income and emerging economies have transformed the nature of energy demands. This rapid growth, including in low-income countries, is expected to be the trend over the next 20 years.

With the signing of the UNFCCC and the increased understanding of the role of fossil fuel combustion in the climate regime, energy has taken center stage in efforts to tackle climate change. This has brought a new wave of financing and technology development that has drawn in new actors outside of the traditional supply-oriented oil, gas, and power companies. These advances, originally promoted as a prerequisite for addressing climate change but perceived as costly, are now accepted as bearing long-term benefits – for business, health, quality of life, and the environment.

Indeed, discussions of energy increasingly recognize that demand and access to services are as important as supply. When speaking about energy access – now recognized as one of the major challenges of the 21st century – policymakers focus not only on getting energy to people but also on issues of affordability, reliability, quality, and productive uses. These new perspectives focus on the services that energy should provide and how to make these accessible, and on the benefits that these energy services bring to people, such as employment, income generation, gender equality, equality in general, and poverty eradication. Health issues are at the forefront of concerns: there is an urgent need to ensure access to clean energy for cooking so that women and children in the developing world are not exposed to indoor pollution caused by the incomplete combustion of dirty fuels. 1. British Petroleum, BP Energy Outlook 2030, London, January 2011

Similarly, outdoor air pollution caused by the combustion of fossil fuels is now a major concern, particularly in urban areas.

Data and information have made safety concerns a major in the introduction of any new technology. News of environmental accidents, such as Fukushima2, travel instantly and globally, causing a major impact on public perceptions. This applies not only to nuclear energy but to most energy sources, including renewables. Public perception with respect to safety, whether real or imaginary, is now a major factor to consider in any new significant energy investment and undertaking.

Evolving trends in development cooperation

The world of development cooperation has also changed significantly since 1992. Some changes have resulted from efforts to make development cooperation more effective and efficient; others from the entry of new actors. Development cooperation is no longer the exclusive domain of governments and the public sector. Private funding – philanthropy as well as private foundations such as the Gates Foundation3 - has become important, and comes with very different motivations and interests. Hybrid institutions bring together public and private partnerships such as Clinton Global Initiative and the Global Alliance for Vaccines. Such flows have grown dramatically in recent years, fast outpacing ODA and provoking new concerns about accountability and governance.4 For the energy sector and climate change mitigation alone, ODA now represents only one-tenth of foreign direct investment.5

Indeed, in the areas of climate change and energy, public-private partnerships are now more the norm than the exception. A long list of disappointments (and successes) with the privatization experiments of the 1980s and 90s in the energy sector triggered reflection and reform6 that resulted in greater recognition of the essential roles that

2. Reference to the accident caused in the Fukushima Nuclear Reactors by the earthquake and tsunami of 2010.

3. The Gates Foundation has financed some $17 billion USD for projects of global development and health

4. Metcalf Little, Heidi, The Role of Private Assistance in International Development, International Law and Politics: Volume 42: 1091, 2010

5. The Governance of Energy Finance: The Public, the Private and the Hybrid, Global Policy (2011) 2:51, London School of Economic and Political Science and John Wiley & Sons Ltd.

6. Roland, Gerard. 2008. Privatization: Successes and Failures. Columbia University Press, New York, NY.

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each – the private and public sector – plays. The public sector provides the vision, the strategy, and the policy and regulatory frameworks. The private sector offers not only financial resources and investments, but also the managerial and technological expertise not always found in the public sector. In practice, this set of responsibilities does not always apply, particularly in centrally planned economies where state enterprises often play the role of the private sector. There are also emerging roles for “international” public and private sectors, such as global professional associations in accounting, auditing and business practices. Global institutions that bring together public and private actors, such as the World Energy Council and IUCN in energy and conservation, are also more common. Governments and private sector actors are also seeking support from global public institutions such the International Organizations for Standardization and the World Intellectual Property Organization.

Major emerging economies have radically changed the landscape, the nature, and the geopolitics of development cooperation in general. The impact of the entry of these new large and powerful players goes beyond technical assistance and development cooperation. In everyday debates and negotiations on climate change and energy, the old north-south organizing factor has morphed into a much more complex division of groups brought together by interests that often cut across traditional north-south, east-west traditional alliances, and that are transforming the dynamics of international cooperation in general.

Implications for development cooperation on climate change & energy

These trends have transformed the environment in which development cooperation on climate and energy operates. It is not the intention here to document all of the changes and impacts, but rather to take some of these already mentioned trends and assess how these have changed the nature and the scope of development cooperation needs.

Climate change action as a legal obligation

The UNFCCC, signed in 1992 at Rio, entered into force in 1994. For the Annex I Parties (OECD and EU), this represented a series of obligations that, with the signing of the Kyoto Protocol in 1997, would later translate into concrete commitments to reduce greenhouse gas (GHG) emissions. The UNFCCC, strengthened by the Kyoto Protocol in 1997, also offered opportunities to address climate change by developing countries. However, the countries in question negotiated many of these opportunities over the ensuing years. This gave rise to a need to build up negotiating skills within a complex and science-based framework convention. This has created a challenge for all, but particularly for the smaller and poorer developing countries.

Under the Kyoto Protocol, and because of the trans-boundary nature of climate change, Annex I countries have the flexibility to make GHG reductions across borders. This includes through investments in developing countries to reduce GHG emissions, where credit for reductions can be obtained at a lower investment cost. This creates an incentive for investment and development cooperation with developing countries. The main instrument for these emission-trading schemes is the Clean Development Mechanism (CDM) of the Kyoto Protocol, which has brought additional investments and actions beyond the scope of ODA. As CDM investments are tied to obligations under the UNFCCC and to the UNFCCC’s regulatory framework, the rigor applied to these projects is unique – that its methodologies, baselines, and performance-tracking mechanisms that require special skills to be implemented is also a major challenge for developing countries.

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The CDM has also triggered other emission trading schemes, such as in the European Union and the many voluntary trading schemes, including in developing countries. These new mechanisms have firmly established the principle of “performance-based” financing, creating similar demands for baselines and tracking of performance requirements.

Criticisms of CDM revolve around its effectiveness and lack of universal coverage. A large proportion of projects go to a few large emerging economies and a narrow set of sectors. Some reforms are being introduced to address shortcomings and to make the CDM more flexible for smaller and bundled projects and more accessible to a larger number of countries. There are major current concerns about the future of the carbon market, both public as well as voluntary (not regulated under the UNFCCC): if it is to survive as a viable mechanism for climate change response, it will require major reform.

The GEF was established as an entity of the Financial Mechanism of the UNFCCC. The GEF supports developing countries in their efforts to address climate change, and claims to be the “largest public funder to improve the global environment.” Since its establishment in 1991, the GEF has provided over $US10 billion in grants and has leveraged over $US50 billion through some 2,700 projects in more than 165 countries. The GEF also has a Small Grants Program that provides funding directly to civil society and community-based organizations.7 It has created a stimulus and a mechanism for leveraging financing for climate change and energy in the developing world. In so doing, it has helped make climate change a key component of development programs in many countries. The process of approval for the GEF is rigorous and open to scrutiny by stakeholders; this has again created a demand for capacity and skills development.

7. www.thegef.org/gef

The UNFCCC has also facilitated the financing of action on climate change through bilateral, regional, and other multilateral channels. While generally positive, increased funds have contributed to an immense proliferation of funding mechanisms and dedicated funds that have placed a major burden for developing countries (see Figure 1 below). Many of the funding mechanisms are earmarked for specific purposes and have their own governance systems; as a result, developing countries have had to establish new capacities, assign human and financial resources, and often create special institutions. Development cooperation institutions, including the UN System and the World Bank (which recently created Climate Investment Funds8), have contributed to this proliferation. Ironically they also must keep up with the expanding funds and mechanisms so as not to create duplicates or leave important financing gaps. The Climate Investment Funds are made up of four windows to help developing countries pilot low-emissions and climate-resilient development. The CIF supports some 50 countries to pilot transformative activities in clean technology, sustainable forest management,, increased energy access through renewable energy, and climate-resilient development. This has created a supply-driven donor community, with recipient countries struggling to avoid the external distortion of their priorities and their sense of needs.

More recently, the Green Climate Fund (GCF) was established under the auspices of the UNFCCC as another entity of the Framework Convention’s Financial Mechanism. Its purpose is to help transfer resources from developed to developing countries to support activities that address climate change. It aims to raise as much as $US100 billion a year by 2020, with resources allocated through a number of thematic windows and subject to strict performance-based scrutiny. Agreement was reached among the Parties to kick-start the Fund with a $US30 billion Fast Start Funding. The Fund is expected to commence operation sometime in the near future. In anticipation of a major increase in resources for adaptation and mitigation activities, several countries have created

8. See http://www.climateinvestmentfunds.org/cif/home for the history and description of this important new source of funding – not all for energy as it also includes adaptation and which represents a new type of global partnership given that the Climate Investment Funds is established under the auspices of the World Bank but in partnership with multilateral development banks that include the Inter American Development Bank, the African Development Bank, the European Bank for Reconstruction and Development, and the Asian Development Bank

http://www.climateinvestmentfunds.org/cif/home

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dedicated national funding entities to tap, allocate, and manage the resources, thereby increasing demands for institutional capacity.

Figure 1. Finance for Climate Change mitigation and adaptation9

Financing for climate change and energy is expected to continue to increase. Still, the amount of funding needed by developing countries to address climate change is beyond even the GCF target. According to UNFCCC estimates,10 global additional financial and investment

9. Atteridge, Aaron, Clarisse Kehler Siebert, Richard J. T. Klein, Carmen Butler, and Patricia Teller. (2009). Bilateral Finance Institutions and Climate Change: A mapping of climate portfolios. Stockholm Environment Institute, Stockholm, Sweden

10. UNFCCC, 2007. Investment and financial flows to address climate change: an update. Bonn: UNFCCC Secretariat.

flows of some $US200-210 billion a year will be needed by 2030 for the stabilization of GHG emissions to 2005 levels. A large portion of this represents the needs of developing countries. If GCF funding projections materialize, development cooperation will need to increase its focus on capacity development, institutional building, skills development in policy, and regulatory framework formulation, and project and program development.

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Climate change as a development concern

Prior to 1992, many projects that addressed climate change were not categorized as climate change projects, and those that were tended to be exclusively environmental. Consequently, many of these projects originated from UNEP and operated independently of other country development programs. The emphasis of the 1992 Rio Summit on the importance of the environment-development nexus helped change this. Demand for sector specialists with a good general knowledge of other sectors continues to increase today.

Today, most climate change and energy projects and investments are designed for “mainstreaming.” Countries are expected to ensure that projects and actions are identified, formulated, and implemented within the context of the country’s development priorities, needs, and potential. Climate change is no longer treated exclusively as an environmental challenge but as a development concern requiring integrated approaches and coordinated policies across sectors. The science of integrated assessment has helped policymakers in their efforts to introduce policies and institutional mechanisms that promote a coordinated approach to implementation. Challenges increase every day as new knowledge higlights the complexity of the problems that countries face. New skills and capacities are increasingly and constantly required.

Some 20 years ago, climate change was not a top priority for policymakers in the developing world. With data gathered from observation, the urgent need to take action has become more commonly accepted. While funding has increased dramatically, so has the rigor applied to the whole cycle from project identification and formulation to implementation and measuring of impact. The allocation criteria have been tightened and the need for clear metrics and rigor became the order of the day, creating additional expertise and skill requirements. Public awareness has forced greater transparency and accountability on the part of those committing financial resources and those spending them. Demands for greater participation in decision-making and implementation have grown, and as a result the process has became more labor-intensive.

More rigorous participatory approaches have driven up the transaction costs but, for the most part, are considered to have enriched the quality and ownership of projects and programs.

Climate change as an opportunity rather than a cost

One of the biggest stumbling blocks to in addressing climate change has been resistance to making the needed investments because of perceptions of the “high costs” involved. More recently, and particularly since the debate triggered by the publication of the Stern Report,11the long-term benefits that can be derived from action have been given greater attention. Many now argue that investing in and responding to climate change threats in a timely and appropriate manner is good business and contributes to the overall well-being of society and the economy. This implies that the way costs and benefits are calculated need to be reformed.

This has had a significant impact on the policy and regulatory framework debate and on the identification, formulation, and implementation of climate change and energy projects, particularly those introducing new technologies. Businesses are now exploring and applying climate-oriented business models, often with the strong conviction that these will be good for the bottom line. A recent business survey in the UK showed that two-thirds of businesses in the UK see climate change as a business opportunity.12 Emerging economies such as China have profited from the changes by becoming leaders in renewable energy technologies.

The emphasis, or at least the accepted notion, that acting on climate change can bring other benefits has increased the importance of activities in conservation, recycling, energy efficiency, and sustainable management of resources in general. It has transformed the world of risk analysis for business, policy- and decision-makers, and for the insurance and banking industries. Economic development has also been enriched as the definition of “sustainable development” has been refined and operationalized. The promotion of the new concept of “Green Economy” at

11. Stern, Nicholas, The Stern Review of the Economics of Climate Change, UK Treasury 2006

12. UK Trade and Investment, Climate impacts mean big business for UK firms, March 2011.

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the recent Rio + 20 Conference further emphasized the intersection between the environment and the economy and investments.

Climate change as a bargaining chip

With the signing of the UNFCCC, climate change and particularly actions to mitigate climate change (e.g., energy policies) have become a political tool and a bargaining chip through which countries can negotiate in other areas, such as broader development cooperation, trade, and legal treaties on Intellectual Property Rights and competitiveness. Developing countries, armed with new scientific data, point to the fact that that developed countries have made the greatest contribution to the atmospheric stock of GHG emissions and argue that the responsibility for climate change rests on their shoulders. They claim that if they are to act and suffer sacrifices as a result, they need to be compensated financially and provided with easy access to technologies to ease problems.

The dynamics of this new political reality have had a significant impact on the relationship between developed and developing countries regarding the transfer of financial, technological, and other resources. Possible solutions that were formerly difficult to bring to the table – such as nuclear energy, carbon capture and storage, and the exploration of resources in pristine natural areas – are becoming more widely viewed as potential solutions. The same applies to other previously unpopular solutions, such as carbon taxes, which are increasingly seen as a potential way of achieving a low carbon economy and society. At the very least, these possibilities are being debated more than in the past.

Energy demand transformed

The fast pace of change in the energy and energy demand has created major challenges for policymakers struggling to keep up with complexities and changes. Following are some of the most significant trends:

• In the past 20 years, world primary energy use grew by 45 percent and is likely to grow by some 39 percent in the next 20 years13.

• Global energy demand has increased by 96% over the last 35 years and is expected to continue rising by some 36% between 2011 and 2030, with the greatest increases coming from developing countries, mainly China and India14.

• The investment required for maintaining and building new infrastructure to address growing demand is estimated to be some $US 26 trillion by 2030 to sustain current energy trends15 with much of this in the developing countries alone (with China and India contributing the most), and much of it to address the needs of the growing urban population

• An estimated 1.4 billion people today have no access to electricity and some 2.7 rely on burning traditional biomass (fuel wood, charcoal, and agricultural residues). According to projections by the IEA, without a major shift in policies and political will, this number will not change dramatically by 2030, with the biggest challenges in sub-Saharan Africa

• The bulk of the emissions contributing to the accumulation of GHGs in the atmosphere come from the combustion of fossil fuels in cities where, for the first time in human history, over half of the world population lives, a proportion that is expected to continue rising to some 60 % by 205016

• To achieve 50% reduction in CO2 emissions by 2050 will require investments of $US316 trillion, which would be 17% over the business-as-usual scenario17

13. Ibid

14. British Petroleum Energy Outlook, 2013

15. Project Transitions: The Investment Challenge for Creating a Sustainable and Secure Energy Infrastructure, IEA, www.iea.org

16. WHO Global Health Observatory, Urban population growth, www.who.org

17. International Energy Agency, Did you know?, IEA 2010

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• The technologies and resource base are available to address both energy access and climate change concerns; however, to realize their potential would require a major transformation in policies and regulatory frameworks as well as in institutional and skills development.

According to the IEA and the Global Energy Assessment, a report recently published by the International Institute for Applied Systems Analysis (IIASA),18 these trends call for a major transformation of current energy systems. Unless this happens, there is little chance that progress in addressing the challenges of energy access and climate change through clean energy supply, energy efficiency, and renewable energy can be achieved. The question is whether current actors and institutions are capable of addressing these challenges.

Energy at the center stage

International cooperation is key to addressing the energy challenges of the 21st century. The integrated solutions required to achieve goals on energy and climate change make it a pre-requisite. The UNFCCC has contributed to the increase in global energy activity and debate because of its promotion of mitigation actions, without which climate change will continue unabated. It is odd, therefore, that within the UN system, energy was until recently left out of center stage. Energy was not included in any of the goals of the MDGs for example. This is slowly changing. Most recently, at the Rio + 20 Conference, energy was one of the central themes and constituted one of the principal sections of the Outcome Document19. In response to a General Assembly Resolution that called for global action on sustainable energy for all, the UN Secretary-General launched the Sustainable Energy for All (SE4ALL) initiative to promote the attainment of three goals by 2030: universal energy access , doubling of the improvements in energy efficiency globally, and doubling of renewable energy in the global final energy mix. The year 2012 was declared the UN Year for Sustainable Energy for All.

18. Johansson, Thomas B, Nebojsa Nakicenovic, Anand Patwardhan and Luis Gomez-Echeverri, Global Energy Assessment: toward a sustainable future, Cambridge University Press, 2012.

19. http://www.uncsd2012.org/content/documents/, The Future we Want. Outcome document of Rio + 20 Conference.

With these new developments, energy is now more than ever at the center of the global agenda, and major partnerships and international cooperation is promoted as essential. The legitimacy and potential role of development cooperation agents and of the UN system in particular has also increased significantly. But this potential will be realized only if the UN system is successful in making the case for a special niche in a much broader narrative of the energy story. In other words, it must argue that energy is not just an issue of electricity or supply, but of access, affordability and quality. That means linking energy to issues like education, health, employment, and well being – essentially, the Millennium Development Goals. The UN is well-positioned to tell this broader story, one without which the energy story in developing countries is void of relevance and universalism. Without this, the UN will be marginalized once again, and with it, the chances of a more inclusive and relevant discussion of energy for the poor and its relation to development. In other words, Sustainable Energy for All will have the danger of becoming sustainable energy for a few.

Energy vision broadened

The shift from the common perception of energy as only related to electricity transmission lines, energy transformers, and the engineers to make them work, toward a concept that encompasses many other perspectives, sectors, and actors has enormous implications. This shift is still evolving and will take time to become established and broadly recognized by all actors. Many development and UN agencies have made strong initial efforts to link energy and broader goals such as the MDGs. These efforts include, among others, UNDP with its publications and work on energy and the MDGs, WHO on energy and health, FAO on energy and food security, IFAD on energy and rural development, UNIDO on energy and small and medium enterprises, and UNEP on energy and climate change and finance.

The shift to a broader narrative is not trivial. Whereas in the past the leaders of the energy debate were those responsible for supplying energy—the oil-producing countries, oil companies, power utilities, energy companies, and suppliers of loans for big infrastructure projects—the

http://www.uncsd2012.org/content/documents/

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New actors involved

Twenty years ago, the landscapes of climate change and energy actors were more clearly defined and simpler to navigate. The climate change negotiation regime was split between rich and poor countries: the rich were expected to provide all the resources for “the agreed incremental costs” of mitigation activities (whatever that meant), either through grants or on a concessionary basis. Today, developing countries seek to take matters into their own hands while still negotiating hard for new and additional resources.

Emerging economies with greater energy demands and developing countries demanding more reliable energy, are increasingly influential. India and China now account for some 70% of the increase in energy demand.21 Those seeking more reliable access include not only governments and specialists, but also non-governmental organizations (NGOs) and civil society, which play an increasingly central role given improved communications technology.

New actors have also emerged on the supply side. A small group of Middle Eastern or rich countries no longer hold a monopoly over resources. Oil-producing countries in Africa and Latin America have emerged to shift the power structure of the supply side. In some cases, they are bringing new technologies to bear in up-to-now inaccessible places, such as with deep oil exploration in Brazil. The purveyors of energy technology are no longer only the developed countries. In 2009 China leaped past Spain, Germany, USA, and Denmark to become the largest supplier of wind turbines, and it is also the largest manufacturer in the world of solar panels.22 It has more electric vehicles than the rest of the world combined.

These developments have transformed the markets and, in many ways, the potential for technological development. The entry of new actors has made the world of energy more complex, but also more balanced in the power structures that rule over it. These new developments are very promising in making technologies more accessible worldwide: China’s role not only has implications for the

21. IEA

22. Bradsher, Keith, China leading global race to make clean energy, New York Times, January 30, 2010.

new landscape is characterized by many new actors who are more interested in energy use and its impact. It is a more representative field but not all have equal voice – yet. The voice of new actors needs to be more organized, coordinated, and powerful to ensure that energy for the poor is also included. These actors have concerns including indoor pollution health issues caused by the incomplete combustion of fossil fuels; outdoor health issues related to polluted air mainly from dirty industries like coal-powered plants; unregulated pollution by transport; and energy security issues,. It is a powerful coalition but fragmented and all pulling in different directions.

The drive to reimagine energy derives from real needs and from preliminary evidence that much of the lack of progress on MDGs was due to the lack of energy access20. It also comes from a growing sense of obligation to correct the failures of past approaches focused exclusively on supply. The many success stories in broadening the energy narrative need to be studies and disseminated to encourage further uptake. A case in point is the agricultural sector in developing countries, which is not only one of the major users of energy but also a huge potential supplier of biomass for bioenergy. In the case of bionergy, the focus is not just on how much energy can be produced from agricultural projecstr. A much closer scrutiny is now being taken on the impacts on food security and other social implications of the exapanding bionergy market. Whereas in the past, the focus was almost exclusively on building infrastructure projects and making major investments, the energy access challenge is forcing a new approach—one that places an emphasis on the services that energy provides.

Still, there is still a tendency to gravitate toward large infrastructure projects, even when it is clear that much of the energy that will be supplied will neither reach, nor be affordable to large groups of the energy-deprived population for decades. These isolated investments do not address the energy problem as a whole and, in many cases, even work at cross-purposes to it.20. Mody, Vijay, Susan McDade, Dominique Lallement, and Jamal Saghir. 2005. Energy Services for the Millennium Development Goals. Millennium Project, UNDP, World Bank, ESMAP

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country itself – through job creation and environmental improvements – but for lowering commercial costs of production and distribution.

Geopolitics transformed

The entry of new actors has transformed not only markets and technological possibilities, but also the geopolitics of both climate change and energy. This has major implications for climate change negotiations and energy programs, and as a result on the range of options available for action.

The changes outlined above have contributed to a more participatory decision-making process in climate change area and energy activities. Though the governance of many institutions has been modified in response, it is unclear whether this is enough. Many of the changes have been reactive rather than proactive. Current events demand greater reforms and more participation in decision-making at all levels. Countries are now questioning the method of choosing the leadership of key global institutions such as the World Bank and the International Monetary Fund, and the governance of funds by these institutions is under greater scrutiny than ever. As a result, new formulas and partnerships are emerging, such as the Climate Investment Funds.

Climate change negotiations no longer revolve around two distinct two blocs. Today’s alliances cut across traditional divides; this has major implications for the way negotiations are conducted and decisions made. For example, this has impacted the debates over relative obligations, what activities are approved for funding, and who is eligible. Interest groups are now often divided based on specific issues of common concern and which bind parties that previously were divides on purely north-south views of the world. The challenge is that these alliances are more fluid and change over time. This makes it difficult for some developing countries most affected by climate change to keep up with new developments nor understand how they affect them.

Coping with evolving trends

The fast pace of change over the last 20 years has posed major challenges for development cooperation institutions, including those of the UN. There are many scholarly and other articles that aim to assess development cooperation and its effectiveness; many institutions themselves have carried out internal and/or independent evaluations and reform projects. The intention here is not to do a comprehensive assessment, but to address areas where changes in the external environment demand new approaches to development cooperation and to identify where it has been relatively more difficult for some, particularly the UN, to adapt.

Past Reform Efforts

The OECD/DAC23 has been active in continuously carrying out self-assessments that have led to major reforms throughout this period. In most cases, the reforms that have emerged from OECD/DAC efforts have influenced not only the development cooperation strategies of their own members but of the development community as a whole. Some highlights include: increasing the focus on the environment after the Rio Summit of 1992; increasing effort to curb tied aid; providing direct budget support for specific development outcomes; shifting from assistance to recipients to cooperation with development partners; making efforts to align this cooperation to country needs; engaging with the private sector; promoting global development goals, which contributed to the formulation of the Millennium Development Goals (MDGs); calling for a greater focus on gender; linking development to security; leading efforts to tackle major obstacles to development through the Paris Declaration on Aid Effectiveness of 2005 and the Accra High-Level Forum on Aid Effectiveness; carrying out major studies on aid effectiveness; and pledging to increase attention on Least Developed Countries (LDCs) and fragile states.

OECD/DAC reforms highlight a concern with adaptation to global trends, but do not address calls for more

23. OECD/DAC stands for Organization for Economic and Development/Development Assistance Committee whose members include the largest donor countries, the World Bank, the International Monetary Fund, and the United Nations Development Programme as observer and which acts as a forum to review and improve practices.

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participatory decision-making. The UN has also sought to improve aid through the UN Development Cooperation Forum. More inclusive than the OECD/DAC but not considered as effective in coordination, the Forum has a mandate “to review progress in international development cooperation efforts and promote greater coherence among the development activities of different development partners”24.

These efforts have contributed to making development cooperation more effective and relevant. But there are many remaining problems: fragmentation; proliferation of funds and organizations, including within the UN (the UNDP estimates that there are more than a thousand financing mechanisms and the World Bank lists more than 230 multilateral development agencies)25; lack of coordination; competition among agencies; supply-oriented as opposed to demand-driven programs; and frequent lack of agreement between development partners on the ultimate purpose of the development cooperation.

In the energy sector specifically, efforts to promote greater cooperation have also been strengthened. Building on a fairly weak agreement in the 1992 World Summit on Sustainable Development in Johannesburg, UN Energy developed into an influential institution. Established to exchange information, ensure system-wide coherence, and strengthen coordination, it initially lacked the resources and guidance to achieve these goals. In 2007 UN Energy was restructured to focus its work in clusters, energy access, renewable energy and energy efficiency. Major agencies were given the role to lead in each of the clusters and responsibilities were clear. This eliminated the ad-hoc nature of the work in prior years. Specific activities and investments were made to advance the agenda in each of the three cluster. The important work of the UN, albeit fragmented, began to be more visible (see figure below). The work of UN Energy led to the establishment of the Advisory Group on Energy and Climate Change, the report26 of which later influenced the formulation of

24. UN economic and Social Council

25. Dervis, Kemal, Homi Kharas and Noam Unger, Aiding Development Assistance Reform for the 21st Century, Brookings Blooms Roundtable 2010.

26. AGECC. 2010. Energy for a Sustainable Future: Summary report and recommendations. Advisory Group of the Secretary General on Climate Change.

the Sustainable Energy for All initiative of the Secretary General. In many ways, it is a success story that needs to be made more visible. The elements of success – vision, good leadership, and high quality focused work – created real action on the ground.

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Figure 2 - An overview of Activities by UN Energy and its Members

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s27

Note: The Colors indicate the main emphasis of the programs: multi-cluster programs are shown in pink, energy access programs in yellow, renewable energy in green, and energy efficiency in blue. The electronic version can be obtained from the UN Energy website to obtain more detailed information on each of the programs.28

27. UN Energy. 2010. Delivering as One: an overview of activities of UN Energy and its members.

28. www.un-energy.org

The governance of the Climate Investment Funds is also a sign of the times and the demands for new types of institutions. The system revolves around a global partnership of the financial institutions, each with nominally equal rights and responsibilities. Although the funds are to be channeled and delivered through multilateral development banks, the governance institutions include members of the UN system and others.

Figure 2 (cont) - An overview of Activities by UN Energy and its Members27

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The Demand for New Approaches

Demand for more integrated approaches, resulting from a greater knowledge on the science and the technological solutions: The science of climate change have advanced considerably over the last 20 years. This includes improved knowledge on on the various inter-linkages of climate change and various ecosystems; on the inter-linkages between climate change and development; on the most effective responses; and on which technologies are most appropriate. Keeping up with these advances in understanding has become a prerequisite for those providing development cooperation in climate change and related energy responses. This has resulted in an increased demand for high-level specialists who can converse easily on the science and related technologies, while at the same time being knowledgeable of the linkages with sectors other than their own specialty. Persons meeting this profile are both scarce and expensive, often out of reach of the UN system.

The politics and governance of the climate change regime also continues to evolve. Not keeping up with these changes may result in forfeiting opportunities for potential benefits – partnerships, international cooperation, and/or financial support. Climate change negotiations are increasingly linked to broader issues of development and energy, making them increasingly difficult to navigate. Furthermore, climate change finance increasingly involves not just public funding, but partnership and private finance making it more difficult for those countries with less capacities to be proactive in seeking investments within their borders. Here the major problem lies in countries’ and organizations’ abilities to introduce administrative and financial systems that can operate flexibly. The UN System faces a particular challenge here, as many view it as inflexible and bureaucratic. This virtual handicap, coupled by the difficulties in competing and attracting good expertise, puts the UN system at a disadvantage. UNDP has been in many ways the exception, setting up financial structures to attract and manage resources for the UN through the UN Multi-donor and Multi-Party Trust Funds. These structures are designed to have individual governance systems, address specific and dedicated areas,

and be time-bound to the attainment of specific objectives. While this provides for greater flexibility in attracting new funds, how much these have contributed to coordination among UN agencies is less clear.

Many UN agencies have established climate change units, with experts and specialists responsible for representing the respective agencies in various fora and to help mainstream climate change into agency work. However, reform efforts to breed better coherence across UN Agencies have had more success in ensuring exchange of information than coordination. The new demands for integrated approaches that can more easily be mainstreamed into development by definition require better coordination and joint programming. Though the UN Energy initiative has been partly successful, much more will be needed to “mainstream” climate change and energy issues into development cooperation.

Demand for new metrics and financial packaging: Project development has become a science of its own. The methodology of program and project development have become significantly more rigorous in the area of climate change and energy projects. Metrics for measuring the impacts of climate change and the effects of mitigation policies and new technologies have evolved considerably in recent years. Project development and formulation in climate change and energy requires teams of scientists, economists, sectoral specialists, financial specialists, and technology experts. Across project areas – levels of abatement of emissions to be achieved, sectors to be addressed with metrics for impacts in each, estimations of costs and benefits, and financial engineering – practices are becoming more complex and sophisticated. The only way to keep up with these developments is to invest heavily in building expertise. This has made it more difficult for UN agencies to compete, because of a lack of resources for project development and, more importantly, because of fragmentation.

Demands for capacity development: Advances in the knowledge about appropriate responses and their complexities have given rise to immense demands for skills in negotiation; institution building; assessments; project identification, formulation and execution; financial

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It is difficult to see how even a minor fraction of these investments will see the light of day without a major capacity development effort in developing countries to ensure that the proper policy and regulatory frameworks and institutions are put in place to facilitate them. As of today, no donor has come forward with resources for this purpose nor have major donor encouraged the UN to play a role.

Demand for transparency, communication and participatory approaches: It is here where the UN has perhaps the greatest advantage. Present on the ground, involved across issue areas, and with closer ties to a wide set of governments, communication and promotion of participatory approaches come naturally. However, the world of consultation has also become more demanding and requires specialized skills and resources to ensure that it is done well. Many see it as a burden to cope with and dispose quickly to appear responsive. But those that see these new approaches as ways to enrich and improve on program and project performance will be the most successful.

The challenge for the UN is the lack of resources. Consultation processes and communications systems to keep stakeholders involved and informed are costly and require specialized skills, not always available easily in a fragmented world of UN agencies. Greater advocacy of the role that the UN System can play in these areas could potentially allow more financial resources to be mobilized for this purpose. Without progress in these areas, the possibility of success of projects and interventions on climate change and energy are slim.

Demands for the private sector partnership: In the areas of climate change and energy, it is inconceivable to think of most responses to climate change without the active role and participation of the private sector. Most of the responses require millions if not billions of dollars of investment over a long period of time, as well as an influx of technology. Although the public sector role can make some of these investments and provide the enabling environment for these investments to thrive, the bulk will need to come from the private sector.

packaging; monitoring and evaluation; and audit and oversight. Raising resources for capacity development is not as easy as raising project funds that produce returns in a shorter period of time. In contrast to investments in infrastructure, for example, where investors come in with the expectation of a rate of return on their investment over a period of time, capacity development needs to be for the most part in the form of grants. Progress and improvements in capacity development are also more difficult to track. Capacity development also requires much longer timeframes and longer-term investments. Greater efforts are needed to advocate for the need for much more capacity development where the UN can and should play a greater role.

In the climate change regime and its resulting energy discussions, negotiations skills are becoming a necessity. For poorer developing countries, this has proven a major handicap in a highly competitive arena, where success depends on the ability to attract expertise and financial resources. This is worrisome for the climate change regime as a whole, since ensuring that facilities and instruments support the poorest countries is essential in minimizing the development ramifications of climate change and energy demand. National institutions to support efforts on climate change and energy in developing countries are weak or non-existent. The projected increase in financial resources will require national institutions to help mainstream and manage them. The current fragmentation of financial instruments and agencies places additional burdens on developing countries. It is difficult to see how many developing countries will be able to tap, allocate and absorb large amounts of new financial resources in the short tem without major efforts in institution and across-the-board capacity development.

The UN system is one of the best placed to help developing countries build these capacities over time. Unfortunately, the lack of resources, their fragmentation, their tendency to compete among themselves, and the relative lack of urgency normally given to capacity development vis-à-vis investments means that the UN cannot currently play this much-needed role. Thanks to promotion efforts, billions of dollars were committed at the recent Rio + 20 conference.

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Institutions that are able to work well and in partnership with the private sector will thus have an advantage. The UN system, and particularly UNDP, has made great strides to improve its capacity to work with the private sector. Through its Global Compact, the UN has been systematically promoting closer ties with the corporate world. But participation of private sector actors in UN projects is still not the norm, and financial rules and regulation are too rigid to facilitate this transition to more joint work. Unless this changes, the UN will have difficulties attracting partnership projects such as the SE4ALL (described in detail below), where the bulk of the action is expected to come from the private sector in the form of financial resources, technologies, and management.

SE4ALL – How the UN must reform to deliver

In September of 2011, the General Assembly declared 2012 as the UN Year for Sustainable Energy for All. It also called on the UN Secretary General to organize and coordinate activities to raise awareness and mobilize global action on energy for development. The GA resolution was meant to be an alert and an urgent call to reform our current energy systems, which are undermining global efforts to eradicate poverty and address climate change. As already mentioned, approximately 1.3 billion people lack access to electricity, at least 2.7 billion are without clean cooking facilities, and, if the world continues on its current path, global temperatures could rise to some 4 degrees Celsius by the end of the century, with tragic consequences for mankind (see figures below). In response to the GA call, the UN Secretary General launched the Sustainable Energy for All (SE4ALL) initiative.

Figure 3 - Trends in Electricity Access for Regions with Least Access

Source : GEA 2012, chapter 19, Shonali Pachuari

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Figure 4 - Recent Trends in Access to Modern Energy for Cooking

Figure 5 - Current and Projected Future Dependence on Solid Fuels



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The initiative is underpinned by three interrelated goals, all to be reached by 2030: ensuring universal access to modern energy; doubling the global rate of improvement in energy efficiency; and doubling the share of renewable energy in the global energy mix. These are ambitious goals that will require an immense effort to scale up investments several fold. According to recent studies, achieving universal access to sustainable energy by 2030 would require an annual investment of some $42 billion USD annually29. While this figure seems large, it represents only a fraction of annual financial flows for addressing emerging energy needs and maintaining existing systems. These investments are not only needed for electrification but also to address dependency on biomass and dirty fuels for cooking and heating (see figure below). They will need to be supported by policies specifically designed to ensure that energy access outcomes are delivered.

Without scaled up investments and policies to achieve these goals, the prospects of reversing current trends are remote. Projections made by the International Energy Agency in its recent special issue on energy access are that in a business as usual scenario, we will have more or less the same amount of people without energy access by the year 2030. And dependence on biomass will remain

29. Global Energy Assessment 2012

more or less the same30. (see figure 5) This story repeats itself for all the goals: with a business as usual scenario, the figures for those lacking energy access, the percentages of renewable energy as a share of the final energy mix, and the rates of improvement of energy efficiency will remain more or less the same in the year 2030. Major up-front investments are required across all sectors of the economy to change this.

According to the Stern Report31 investments in the order of some 2% of GDP are required. This includes the incremental costs of adopting cleaner technologies for new investments and retrofitting what already exists. According to most peer-reviewed scenarios, (see figure below), it is possible to stay below this target with the proper mix of investments, political commitment, policy packages, and technological innovation32.

Figure 6 illustrates some of the main pathways that could lead to or overshoot a 2 degree goal. According to these pathways/scenarios, GHG emissions will need to stabilize by the year 2020 and continue to reduce beyond that point. SE4ALL could help attain the stabilization of global emissions if successful in helping countries reach the three goals on energy access, energy efficiency and renewable energy.

30. World Energy Outlook, - 2010. How to make modern energy access universal., International Energy Acces, Paris.

31. Stern, Nicholas 2007. The Stern Report.

32. GEA 2012, Chapter 17.Figure 6 - Climate Change: Global CO2 Emissions

Source : GEA 2012, chapter 19, Rhiai et al

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New Models of Global Cooperation Required

Previous sections of this paper suggest that, despite reforms, the system still displays fragmentation, competition (often with the UN), lack of transparency, and lack of coordination. This breeds duplication, waste of human and financial resources, and exclusion of many developing countries. SE4ALL can help address these shortcomings, and if successful will be highly rewarded. However, if it fails, the negative consequences on the credibility of the UN System will be very high. Success with this experiment in global governance will be useful for many other future initiatives that require multi-disciplinary integrated approaches, participation of many stakeholders, and global networks of collaboration.

Because of the need to scale up investments (a pre-requisite for reaching all of the three goals and for stabilizing GHG emissions globally), the role of the private sector will be essential (see figure below for levels of private investment in clean energy). So as to make the point, the first year of SE4ALL was supported by a High Level Advisory Board, co-chaired by the head of a UN organization and the President of the Board of a major global private bank. Many of the members of this Advisory Board were Chief Executive Officers of major global corporations.

Figure 7 - Total world new investment in clean renewable energy p.a. 2004-2011

As SE4ALL goes into its operational phase, a Board is being established to provide overall strategic advice. This new Board will be chaired jointly by the UN Secretary General and the President of the World Bank. Membership will be composed of representative of the public and the private sectors. An Executive Committee composed of members of the principal funding organizations/governments will oversee and provide accountability and oversight. The implementation will be carried out through a network of institutions (e.g. UNDP, World Bank, European Commission, Regional Development Banks, and other organizations), “thematic hubs” housed in places throughout the world will provide substantive support and promote activities in different themes such as energy access (in different institutions throughout the developing world), renewable energy (in institutions such as IRENA), and energy efficiency (which Denmark has offered to host).

In addition, a number of High Impact Opportunities have been identified. Their purpose is to design specific programs that could be led by major corporations interested in promoting energy efficiency, renewable energy and/or energy access. Examples include clean energy solutions, renewable energy procurement, energy and women’s health, electric mobility, 2nd generation biofuels, energy efficiency in buildings, and many others. Networks of institutions will promote programs,

Source : Bloomberg New Energy Finance

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investments, policy reforms, and capacity building. This highly decentralized network and operation will be supported by a global team (Global Management Team) with its Headquarters in Vienna, an office in New York to handle the relations at the political level with the General Assembly, Permanent Missions to the UN, and other UN bodies. The core team will be housed in both Vienna and New York, but some staff and a network of consultants will seat in places throughout the world with specific responsibilities and to be used as required. Not all of the staff will hold contracts of the UN but rather be attached to corporations, institutions and governments that decide to offer staff on a “secondment” basis.

Needless to say, it is not a typical operation of the UN. It is also not a typical structure for a global initiative. In many ways, therefore, SE4ALL is an experiment in global cooperation and global governance. Can the UN system operate within and facilitate such a complex web of actors and implementation mechanisms? The degree of success will be highly dependent on the UN System’s ability to adapt and seize opportunities rather than act on “mandates” and “entitlements.”

Implications for the UN

The ambitious goals of SE4ALL require nothing short of a transformation of national energy systems and global cooperation. If successful, this global campaign will usher a new era of clean and sustainable energy. However, success will rest upon the ability of the UN to play a more flexible role in the financing, policy, and negotiations on climate change and energy. These new roles include being sometimes the facilitator, sometimes the convener, sometimes one of the partners, and sometimes the principal actor and leader. The UN system will need to recognize when each of these roles are most appropriate. There will not be mandates nor assigned roles but rather free standing opportunities that will need to be taken if and when appropriate.

Is the United Nations system geared to face this challenge? Is it flexible enough to gauge its role and adapt as needed so that its contribution is optimal along the spectrum and through different time lines? Does it have the structures

to collaborate internally within the UN System and with others externally? Does it have the culture to simply be a collaborator and facilitator without compensation or being in the “driver’s seat”? How the UN behaves will have a profound impact on its legitimacy in the climate change and energy regime.

Because of major efforts to strengthen international cooperation to tackle major challenges relevant to the energy area such as climate change, poverty eradication, and technology development, there is currently a much higher level of cooperation than ever before in all of these areas. Perhaps more importantly, there is recognition that the only way to address many of these challenges is through a strong system of international cooperation. Examples of these are the efforts of the climate change negotiations regime under the UNFCCC, the Millennium Development Goals campaign to tackle selected global development issues, and regional cooperation agreements to advance clean energy technologies and other trans-boundary challenges.

Yet despite major efforts, the system is still marred by problems and deficiencies. Fragmentation and competition at best reduce the impact of cooperation or, at worst, lead to counterproductive and wasteful activities. Cross-sectoral cooperation remains the exception rather than the norm.

Because SE4ALL addresses two challenges that are high on the global agenda (poverty eradication and climate change), requiring a large number of stakeholders and actors working collaboratively in a coordinated but loosely-ran network to address complex issues in an integrated way, SE4ALL is a good example to test the efficiency and effectiveness of the system that will be required to tackle many of the new, emerging and more complex challenges of our century requiring more innovative models of global cooperation.

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Under the best case scenario, the following will be the big rewards:

1. The UN system will be credited with having achieved what others considered impossible to achieve – to have advanced on the poverty eradication and equity agenda by helping developing countries achieve universal or almost universal access to modern energy and to have helped the world stabilize GHG emissions, improving the chances of keeping to the 2 degree Celsius mark agreed by the negotiators of the UNFCCC (and which many are now finding almost impossible to reach).

2. A new hybrid model of global governance and cooperation will have been created that can be replicated for other initiatives tackling complex and urgent challenges in areas such as water, food security, technological innovation, pollution, urbanization, and many others.

3. The UN System will be considered a more relevant and capable organization able to act in an integrated manner, combining action in the three pillars of sustainability – environmental, economic and social – while negotiating the political realm.

4. A network of partnerships and global initiatives will have been created to deal with recurrent problems in energy, likely resulting in a period of massive innovation in energy and technology. These innovations can be shared through platforms for mutual enrichment.

5. Cleaner production and consumption patterns will improve in the quality of life and human well-being.

Under the worst case scenario:

1. The UN System will be blamed for having distracted the attention and resources of the global efforts to address poverty eradication and climate change under the MDGs (later the SDGs) and the UNFCCC respectively.

2. Rather than strengthen the global cooperation system, an increase in competition, lack of trust, and a tendency to “go at it alone” will replace the hard won improvements achieved to date in aid effectiveness.

3. The UN System will lose relevance and become marginalized on issues of development requiring integrated approaches (most of them).

4. The vast network of partnerships and global initiatives will simply promote incoherence.

5. A wasted opportunity of a lifetime to make a major difference in sustainable development.

The Main Areas in Need of Support

Following are the main areas in which SE4ALL will need to support developing countries. In each of these areas the UN needs to gauge its capacities, build them in those where it considers it can make an important contribution, and leave to others where it feels it has no capacities to provide support. In theory, the UN system can provide support to all of those categories below.

The UN must also recognize where its contribution does not match that of other institutions, instead focusing on its comparative advantage. For example, the International Financial Institutions have more dedicated expertise such as in the areas of investments and financial markets. The UN system, however, has a potentially important role where the focus is policy advice (where a shared role with other institutions would probably be more effective) and capacity development. This latter category unfortunately, is the most challenging, the most long-term in its benefits and effects, and the most difficult to obtain support and funding.

Following is a list of the main categories of areas in need of support:

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1. Assessment of baselines for each of the three goals

2. Formulation of strategies and plans

3. Identification of needs and opportunities

4. Preparation of investment portfolios

5. Formulation of proper policy and regulatory frameworks

6. Establishment of mechanisms of coordination and promotion of linkages across sectors

7. Strengthening of institutions and institutional arrangements in the following areas:

• finance and financial markets;

• coordination and integrated approaches

• mainstreaming into development priorities, strategies and plans; and

• enhancing accountability and transparency

• implementation

8. Enhancing technological and process innovation across the various sectors of the economy and building capacity to develop and deploy products of innovation.

9. Building capacities and skills at all levels - individual, institutional and systemic – to support the transformation of the energy systems throughout the SE4ALL timeline for goals

10. Forging partnerships, joint ventures and alliances, nationally, regionally as well as internationally

Conclusion

With the leap in resources expected in the areas of climate change and energy, the opportunities for the UN System are immense; but in order to address global needs, the UN must reflect upon its present shortcomings and better understand its own niche among the multiplicity of actors currently involved. The SE4ALL immense needs and demands are unique in terms of the scale and the ambition. However, they are not unique in terms of the nature of the requirements for the UN to be effective in the 21st century. The level of complexity and urgency and the needs for strong coordination across sectors and various stakeholders apply to most the major challenges of today. If the UN is to play a role, it needs to reform in many areas to stay relevant and useful. The UN will earn a right to occupy a space in various development sectors only if it offers the right expertise and/or other resource of interest to the client. UN system agencies would be better served if a proper self-assessment of their capabilities lead them to a more realistic understanding of their activities in certain areas and to what extent they can complement rather than compete with either their peers in the UN, the IFIs, or bilateral institutions, most often with little success.

The tendency towards fragmentation and working alone still mars the effectiveness of most agencies. UN agency reward systems still revolve around promoting agency interests rather than delivery of results. Until these rewards systems change, the chance of eliminating fragmentation and competition among agencies are minimal. UN Energy offers some lessons for improving coordination: established for the purpose of sharing information and strengthening coordination, it was not until 2008 that strong leadership and restructuring along thematic areas allowed the UN to really coordinate in the area of energy. In fact, it is in the UN Energy where the origins of SE4ALL are found. Inventories of who did what were collected and updated regularly, and meetings were organized with some frequency. UN Energy also included the World Bank, which was active and supportive. Despite much progress, new demands mean that the UN system must continue to evolve.

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In climate change and energy, one of the most promising areas for improving the effectiveness of the development cooperation is by improving the working relationship between the UN system agencies and the World Bank. Considered difficult if not impossible by many, the Sustainable Energy For All initiative of the UN Secretary General is showing some promising signs that exploiting the complementary niches of the two may be a key to the success of the initiative particularly in the energy access area. But many other areas need to be explored.

The increasing role of the private sector for its technology, managerial skills and financial resources for much needed investments make the private sector an obligatory partner. Few public institutions, in or out of the UN, are adept at working with the private sector; yet SE4ALL will require heavy private sector involvement. The IFIs offer a potential model for UN agencies to identify lessons learned and good practices. The UN Compact and other experiences of the UN such as those of the UNDP, UNCTAD, UNEP, to name just a few, can also offer some good lessons. That is not to say that even these initiatives would need to be retooled and updated to be more relevant to the needs of the 21st century where the private sector will need to play such a key role. The first step would be for UN Agencies to recognize this and to build the capacities of their staff so that they can be more “private sector friendly”.

The UN has a potentially powerful role to play in shaping a new narrative on climate and energy, one of the most important objectives of SE4ALL. For many actors in the energy sector, energy needs relate to power transformers and transmission lines. For development practitioners and for communities throughout the developing world, energy is about services – not just supply. It is about the services that it can provide if and when that energy is accessible and affordable. This includes clean cooking, proper heating and lighting, energy for productive uses and for employment, and education and gender to name just a few. This is an ideal story for the UN to develop as a system, but it requires the UN address its fragmentation by developing a narrative that crosses health, food security, employment and other sectors. A coherent strategy that links these issues to promote infrastructure and sector

reforms (and which are also very much needed) is urgently missing.

Today’s complex problems require more integrated solutions. This creates major challenges for a UN system that works across sectoral and thematic lines. Hopefully, some day the UN system will take the step to drastically reform the UN Development Group along thematic lines to address the major challenges of our century. Until then, it must adapt its outdated structures to fit needs. Experts in renewable energy, for example, have to be skilled and knowledgeable about a specific technology, but at the same time also be conversant about overall development, rural development and institutions. These new experts are more difficult to find and more expensive to recruit. The UN faces a hiring disadvantage, as it often pays less and requires cumbersome recruitment processes. With these systems, the UN System had major difficulties competing in a world which requires quick action and quick advice, often following time lines that are more customary in private than public sector.

In areas where the UN has a particularly strong role to play on the ground, capacity and institution building, funding is more difficult to get. Results are long-term and difficult to assess. However, the excuse for the lack of funding is perhaps hiding deeper problems. If the credibility of the system were intact, the issue of funding would perhaps be less of a problem. The UN system, therefore, is in need of a major reflection to fine-tune the “niche” that can help justify larger levels of funding and a larger role for the UN in this area.

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Related Publications from the Center on International Cooperation

Annual Review of Global Peace Operations 2012

Review of Political Missions 2012

Shaky Foundations | An Assessment of the UN’s Rule of Law Support AgendaCamino Kavanagh and Bruce Jones

State Capture and Organized Crime or Capture of Organized Crime by the StateCamino Kavanagh

Engagement on Development and Security: New Actors, New DebatesEdited by Jake Sherman, Megan M. Gleason, W.P.S. Sidhu, and Bruce Jones

Building on Brahimi: Peacekeeping in an Era of Strategic Uncertainty

Strategic Trends, Dilemmas, and Developments in Global Peace OperationsAndrew Sinclair

Robust Peacekeeping: The Politics of Force

Implications of Peacebuilding and Statebuilding in United Nations MandatesJake Sherman and Benjamin Tortalani

Mandates and ModalitiesJake Sherman and Benjamin Tortalani

U.N. Peace Operations and State-building: A Case Study of HaitiDr. Charles T. Call with Gigja Sorensen

More information about these and other recent publications can be found at cic.nyu.edu.


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