Brazil has made great strides in renewable energy through clear national policies while Nigeria has lagged due to weak financing and political will, says new study co-authored at the Energy Policy Research Group at Cambridge Judge Business School.
Developing countries seeking to meet rising energy demand with clean energy have much to learn from the success of Brazil in developing renewable energy projects, says a new study co-authored by an academic at the Energy Policy Research Group at Cambridge Judge Business School.
How Brazil has successfully moved to renewable energy sources
The study in the journal Energy, Sustainability and Society looks at the largest economies in South America and Africa, comparing Brazil’s clean energy achievement with fitful efforts in Nigeria which have produced scant results.
Brazil’s transition toward renewable energy sources has been “driven by catalytic finance from the Brazilian Development Bank”, price transparency and a national drive for universal electrification. Renewable energy financing in Nigeria, in contrast, has been largely done through bilateral agencies and multilateral development banks, and progress has been stymied by disaggregated projects and duplication of donor efforts – so Nigeria’s clean energy projects have been plagued by “high policy risks, insufficient political will, limited financing instruments, and weak public-private partnerships among financial stakeholders”, the study says.
Four ways to boost investment in renewable energy in Nigeria
“We conclude that robust policy frameworks, a dynamic public bank, strategic deployment of blended finance, and diversification of financing instruments would be essential to accelerate renewable energy investment in Nigeria.”
The study – entitled “Financing renewable energy: policy insights from Brazil and Nigeria” – is based on structured interviews with energy experts, official publications and other sources.
“We focused on Brazil and Nigeria for several reasons,” says study co-author Ramit Debnath, Cambridge Zero Fellow at the University of Cambridge and Research Associate at the Energy Policy Research Group at Cambridge Judge Business School.
“Both Brazil and Nigeria possess substantial renewable energy resources and they are, respectively, the largest economies and most populous countries in South America and Africa. So the energy transitions in those countries are clearly relevant to global climate objectives and hold lessons for other low- and middle-income countries and global efforts to meet climate-change targets.”
Current investment levels won’t achieve net zero emissions
Achieving net zero emissions by 2050 will require $4 trillion in annual clean energy transition investments by 2030, but current investment levels fall far short, the study says.
Brazil pushed hard for wind and solar development beginning in 2002, when a drought caused electricity shortages. The introduction of auction mechanisms in 2007 allowed developers in Brazil to compete for renewable energy contracts through frequent tenders, increasing transparency through clear price signals and fostering collaboration between developers, the national utility, and regulators.
Efforts to electrifying the Amazon region through off-grid solar
Renewables led by hydroelectric power accounted for about 80% of Brazil’s energy mix as of 2019 (the study factors out the pandemic’s effect on the energy transition). A programme called Light for All (Luz Para Todos) brought universal electricity access in 2014 through deployment of off-grid solar technologies in remote communities and particularly in the Amazon region. While non-hydro renewables are still a small part of Brazil’s energy mix they have been growing in the past decade and help point the way forward for other countries seeking to meet climate-change commitments.
“Brazil has one of the least carbon-intensive power sectors in the world,” the study says.
In contrast, Nigeria’s hoped-for transition to cleaner energy has been stymied by “institutional bottlenecks” and policy reversals, so the country’s electricity mix is dominated by gas-fired power plants which contributed 81% of electricity generation as of 2019, with hydroelectric dams at 19% and solar and wind technology contributing less than 1% of electricity generation.
The importance of understanding clean technologies in developing countries
The study has implications for other low- and middle-income countries (LMICs) in Africa and beyond. Meeting rising energy demand with clean energy in those countries “could play a substantial role in decoupling future growth from high greenhouse gas emissions,” yet previous policy research on energy transition finance has mainly focused on Europe and North America, the authors say.
“Understanding the unique risk profiles, policy mixes, and stakeholder perspectives around clean technologies in these (LMICs) could inform policymaking to achieve energy and climate targets.”
The study
The study – entitled “Financing renewable energy: policy insights from Brazil and Nigeria” – is co-authored by Abdulrasheed Isah of ETH Zurich; Michael O. Dioha of the Carnegie Institution for Science; Ramit Debnath of Cambridge Zero, the Energy Policy Research Group at Cambridge Judge Business School, and California Institute of Technology; Magnus C. Abraham-Dukuma of Just Transition Network in Indonesia; and Hemen Mark Butu of Kyungpook National University in Korea and the Africa Policy Research Institute in Berlin.