Beyond coal: Scaling up clean energy to fight global poverty

Eradicating global poverty is within reach, but under threat from a changing climate. Left unchecked, climate change will put at risk our ability to lift people out of extreme poverty permanently by 2030, the first target of the Sustainable Development Goals (SDGs).

Key messages

1. More coal will not end energy poverty

Some electricity-poor households sit physically close to the grid, but sector mismanagement and connection costs thwart access. These households are left unconnected while power plants – coal or otherwise – sit idle. New coal will not solve this. Even more electricity-poor households live far from the grid: 84% are in rural areas.

If scaled up appropriately, distributed renewable solutions will be the cheapest and quickest way of reaching over two thirds of those without electricity. Clean and safe cooking is mostly achieved through access to cleaner fuels and stoves, not by more coal power.

2. Coal is given too much credit for the reduction of extreme poverty

Many countries look to China as a model when addressing their own extreme poverty: China dramatically reduced its own extreme poverty, and powered its rapid industrialisation primarily with coal. Yet two thirds of China’s reduction of extreme poverty were due to agricultural and macroeconomic policy changes before its coal-fired expansion in the 1990s. Industrialisation, while important to China’s overall economic success, accounts for less than a quarter of the decline in extreme poverty between 1981 and 2004. Runaway coal consumption began only in the 2000s, at five times the rate of the 1990s.

3. Better energy options exist to lift people out of income poverty

Energy is needed not only for universal access, but also to lift people’s incomes by powering growth and employment. Low-carbon, renewable options are competitive with coal. In the US, the price of electricity from photovoltaics has fallen by over 80%, and wind power by over 60%, since 2009.

There are also options to effectively manage the intermittency of some renewables. Coal is not one of them. Renewables are also a more promising source of employment: the sector employed 9.4 million people in 2015, compared to the million employed by the coal industry according to the World Coal Association’s own 2012 estimate.

4. More coal will entrench poverty

Coal’s environmental and climate impacts present a clear threat to people living in poverty. Air pollution from coal causes some 670,000 premature deaths a year in China and 100,000 in India. A one gigawatt plant in Indonesia could cause 26,000 premature deaths over its lifespan. Building just a third of the planned coal-fired power plants, mostly in developing Asia, would take the world past 2°C of warming, pushing hundreds of millions into extreme poverty before the middle of the century.

To quote the World Bank President Jim Kim: ‘if the entire region implements the coal-based plans right now, I think we are finished ... That would spell disaster for our planet.’

It is difficult to account for all the factors – political interests, the advantages of incumbent technology – that will determine how many planned coal-fired power plants get built. However, a new fleet of coal-fired power plants is not needed to combat extreme poverty or energy poverty. To achieve the ambitions of the Paris Climate Agreement, SDG1 on eradicating global poverty by 2030 and SDG7 on universal access to affordable, reliable, sustainable and modern energy by 2030, an urgent shift to renewable and efficient energy systems is required.

Key recommendations

G20 governments must stop all forms of subsidy for fossil fuels.
All forms of public support for coal capacity expansion should be phased out, including those channelled through Development Finance Institutions.
All support for energy through bilateral and multilateral channels must prioritise the delivery of SDG7 on ensuring access to affordable, reliable, sustainable and modern energy.
Development institutions must apply monitoring and reporting frameworks that track the poverty reduction and development impact of their energy support.
Developing and emerging economies should develop plans for a sustainable and socially just energy shift, in line with implementing the SDGs and their Nationally Determined Contributions under the Paris Agreement, identifying support needed from development partners.
Public and private finance must be more transparent about exposure to carbon risk.