Promoting global trade in renewable electricity can help countries to achieve their goal to mitigate the effects of climate change and cut the cost of transition from fossil fuels to low-carbon power systems, according to a recent report by the World Trade Organization (WTO) and World Meteorological Organization (WMO).
The report notes that while the world is endowed with renewable energy sources – such as solar, wind and water – these resources are not equally distributed. This means that developing clean electricity in countries with high renewable energy potential could open up new trade opportunities for such nations and facilitate the transfer of surplus power to areas with limited renewable energy sources. For example, Africa is blessed with 60% of the world’s finest solar reserves, but only 1% of these resources is being utilized.
But regions with enormous clean electricity potential like Africa also have low access to power due to limited investment in energy development. For instance, nearly half of the population in Africa lacks access to electricity. However, WTO and WMO state that international electricity trade could resolve these mismatches by encouraging the development of renewable electricity in areas with huge potential and facilitating the transfer of surplus energy to countries with inadequate renewable power capacity. This would eventually help countries to decarbonize their electricity systems and cut the cost of transition from dirty to clean energy.
To achieve this, the report explains there is a need for increased access to funding, including climate-specific finance, for developing regions such as Africa to enable countries there to harness their plentiful renewable sources of electricity. To facilitate trade in renewable electricity, the report added that countries need to build cross-border electricity transmission infrastructure – similar to the internet system.
The good news is that some countries are already involved in power trade, with certain transboundary power projects up and running and others under development. In East Africa, Rwanda, Burundi and Tanzania share electricity from a renewable power project they jointly established. More similar projects are at different stages of development as countries in this region seek to increase access to electricity and reduce the cost of its supply.
Several countries in Southern Africa are also sharing electricity, with more renewable cross-border projects in the offing. Similarly, the African Union is seeking to bring the continent into a single energy trade market to provide electricity to 1.3 billion people in the region. There is a similar initiative seeking to integrate the energy systems in the Asia-Pacific region.
Singapore, a country in Southeast Asia with insufficient renewable electricity potential, is already integrating its energy infrastructure with the renewable power systems of its neighbours to reach its net zero carbon emissions target by 2050. Other countries such as the United Kingdom are also importing renewable electricity to meet its climate targets.
Worldwide electricity demand is anticipated to increase over the coming years, mainly due to growth in economic activities, the expansion of data facilities and the electrification of households and transport systems. Yet the potential of cross-border electricity trade is still untapped as statistics show only around 3% of the energy generated globally is sold across borders.
To achieve net zero carbon emissions by 2050, there is a need for substantial investment in renewable electricity production and transmission – with the bulk of clean energy generation required in developing countries. Without large investments in clean electricity production and transmission, according to WTO and WMO, the transition to low-carbon energy systems will be hard to achieve.
