How The Renewable Boom Can Counter Energy Poverty In Rural Areas

As the world undergoes a green transition, governments around the globe have the potential to develop new energy hubs and diversify beyond traditional fossil fuel-rich regions to create a new energy landscape. While coal, oil, and gas operations were confined to a few resource-rich areas, renewable energy can be produced in a more diverse and widespread manner, which could help to develop the economies of much-overlooked rural regions of the world. In fact, vast areas of undeveloped land present the perfect location for generating solar and wind power. So, could renewable energy be the key to global rural development? 

The OECD has long been discussing the potential for linking renewable energy to rural development, having launched an Executive Summary Brief for Policy Makers in 2012. This has shaped the way some (but not all) political leaders have approached the development of their renewable energy sectors. Some of the benefits for rural areas identified by the OECD included new revenue sources, job creation, business opportunities, technological innovation, community skills development, and a decrease in energy prices. 

Since this report, the OECD has seen a significant deepening of the ties between renewable energy and rural development. The organization now expects rural regions to be the primary beneficiaries of accelerated investments in renewable energy, particularly thanks to the acceleration of the green transition in several countries. As rural territories provide open spaces, agriculture, and a low population density, they are ideal for the development of renewable energy projects, including wind, solar, water, and biomass. At present, rural regions produce around 63% of renewable energy, with 36% of this figure coming from the most remote places.  Related: Warren Buffett Buys Up Even More Occidental Petroleum

The United Nations Development Programme (UNDP) has also identified the rollout of renewable energy operations in rural areas as a means of tackling the barriers to rural energy access, as well as rural poverty. The development of green energy projects in non-traditional energy production areas, many of which may not have access to mains electricity, could help encourage the electrification of these regions. This is particularly important for developing countries that experience high levels of energy inequality. And some states are already developing their rural areas as renewable energy hubs, to spur economic development in disadvantaged communities, attract foreign investment, boost the country's economy, and support the green transition. 

In rural sub-Saharan Africa, most of the population continues to rely heavily on agricultural activities as their main source of income. Many do not have access to irrigation or electricity, making the modernization of farming impossible, and revenues therefore limited. There is also a huge problem with food insecurity and the growing threat of climate change. The development of renewable energy projects could go hand in hand with rural development, with green energy operations supplying vital clean power to the country, as well as a new source of revenue and affordable power to disadvantaged communities. 

The International Energy Agency (IEA) believes the global clean energy transition holds new promise for Africa's economic and social development. By May 2022, the countries that account for over 70% of the world's CO2 emissions committed to net-zero emissions by 2050. This includes 12 African countries, that produce more than 40% of Africa's carbon dioxide emissions. The IEA's Sustainable Africa Scenario sees the African continent having universal access to modern energy services by 2030, as well as the full implementation of all African climate pledges. This would require 90 million people a year to be connected to an electricity grid, tripling the connectivity rate of recent years. In 2022, 600 million people, around 43% of Africa's population, had no access to electricity. While the cost of achieving this goal is huge - around $25 billion per year - the benefits are far-reaching.

This is true of all areas of the world, not Africa alone. And in China, there has been significant development seen in rural areas thanks to the rollout of renewable energy projects. In March this year, China announced it would be launching a pilot scheme to further promote the development of renewable energy in rural areas. This will require provincial-level government departments to identify rural 'pilot counties' for the construction of renewable energy operations and submit these plans to the National Energy Administration (NEA) for assessment and approval by the end of May. 

Meanwhile, this month, in the U.S., the Biden Administration announced almost $11 billion in grants and loans to deliver affordable clean energy to rural communities across the country. The Department of Agriculture Secretary, Tom Vilsack, suggested that this funding will provide rural areas with more dependable power and help lower energy costs. This is the single largest federal investment in rural electrification since 1936. Vilsack stated: "These investments will also combat climate change and significantly reduce air and water pollution that put children's health at risk." The programme is expected to contribute to the development of large-scale solar, wind, geothermal, biomass, hydropower projects, and energy storage projects across the country, attracting greater investment from the private sector. 

Governments worldwide are discovering the expansion of renewable energy operations and rural development can go hand in hand, helping to improve the economies of much-neglected regions of the world as well as supporting the global green transition. Rural areas offer the ideal landscape for renewable energy development, while also providing energy security for areas that may not have had easy access to electricity previously. Further, the creation of energy projects brings new revenue, jobs, and more investment to these regions. In return, rural regions can develop their economies and contribute to the country's overall economy, as well as help accelerate the green transition. 

By Felicity Bradstock for Oilprice.com

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