Energy Transition in LMICs
Last updated in October 2024.
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Executive summary
Why did we decide to focus on Low- and Middle-Income Countries? Emissions are increasing quickly in emerging economies, and we think it is important to understand the challenges and opportunities for low-carbon and cost-effective pathways to meet growing energy demand of Low- and Middle-Income Countries (LMICs). We try to take a nuanced approach that also considers the moral imperative of High-Income Countries (HICs) leading on emissions reduction and embedding LMICs’ energy transition into a broader context of energy access, energy security, and economic growth.
Why did we select India and Indonesia as our focus countries? We selected India and Indonesia primarily due to their high level of current and projected CO2 emissions. Both countries present opportunities for nonprofits to influence policy and could drive significant reductions in the global carbon budget.
Why did we narrow down on the electricity sector? Electricity and heating are responsible for over 40% of total CO2 emissions in Indonesia and over 50% of total CO2 emissions in India. The electricity sector plays a central role in the clean energy transition due to its high emissions and its prioritization on the political agenda. While this document focuses primarily on the electricity sector, we have also considered strategies that include reducing emissions from LMICs across other sectors, such as industry, in our sector-specific deep dives.
Nonprofits' strategies in a clean energy transition: Nonprofits in India and Indonesia advance the clean energy transition via research, government and policy engagement, mobilizing finance, community-level capacity building, implementation, and grassroots initiatives. Based on our analysis, we think research and knowledge creation, government and policy engagement, and mobilizing finance could be especially promising for high cost-effectiveness. We believe reputable think tanks have a large scope to influence national and sub-national energy transition policies by conducting reliable research, cultivating government partnerships, and acting as advisory bodies.
Theory of change: Government and policy engagement as well as research and knowledge creation, can increase political support and capacity to implement ambitious electricity policies. Mobilized finance can also help make clean energy projects bankable. Combined, these can result in increased implementation of clean energy projects, leading to efficiencies that can reduce costs. Subsequently, higher adoption of renewable and energy-efficient technologies would reduce greenhouse gas emissions.
Key uncertainties and open questions: We are unsure to what extent nonprofits working in the energy transition space in India and Indonesia can influence policy and how resistant this is to changes in government. Although we relied heavily on local experts and funders in our research, we recognize that our understanding of the nonprofit landscape is most likely incomplete.
Bottom line / next steps: We believe supporting research and government and policy engagement, as well as mobilizing finance, is promising in India and Indonesia. We think that organizations promoting these strategies could advance more ambitious electricity policies in India and Indonesia. We are considering funding organizations working on these strategies.