Development aid for energy in Small Island Developing States

Abstract

Background: Energy is given high priority in the national development agendas of most Small Island Developing States (SIDS) because it is intertwined with social, economic and environmental challenges. Many SIDS experience heavy fiscal burdens associated with imported fuels, some have very low electricity access rates, and islands also have a strong interest in the transition to cleaner energy because they are particularly vulnerable to the impacts of climate change. This paper presents a global mapping of development finance for SIDS' energy sectors. We analyse whether energy aid has increased following international commitments to support developing countries tackle climate change and whether this is supporting renewable energy, whether finance has been targeted to different recipient countries based on either their income status or their electricity access rates and whether electricity access rates have substantially improved during this time, and whether financial commitments are actually being disbursed. Methods: Focusing mainly on the period 2002-2016, we use data reported by bilateral and multilateral sources to the Organisation of Economic Cooperation and Development's Development Assistance Committee on financial support to 37 SIDS. Our analysis includes almost 5700 energy-related transactions between 2002 and 2016. Data on populations and electricity access rates of individual countries come from the World Bank's Open Data platform. Results: We observe an increase in funding since 2009 and a shift towards renewables, and solar particularly, though oil-fired plants and other non-renewables continue to be funded. Energy aid is unevenly spread between SIDS, on a total and a per capita basis. There is little correlation between the allocations made to individual countries and either their income or energy access gaps, and improvements in electricity access have been slow in those countries where the gap is largest. We also identify low disbursement rates, suggesting implementation problems. Conclusions: There is an urgent need to improve the quantity and quality of aid to help SIDS tackle their significant energy challenges. While the trend towards more funding for renewables is positive, low disbursement levels and limited support for strengthening local human and institutional capacities may be limiting its effectiveness.

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