Spotlight Kampala: Illuminating Energy Inequities in Informal Urban Communities

Spot­light Kam­pala is a mul­ti-insti­tu­tion­al research col­lab­o­ra­tion of uni­ver­si­ties and com­mu­ni­ty advo­cates that aims to shed light on the inequities faced by infor­mal urban com­mu­ni­ties in access­ing and uti­liz­ing elec­tric­i­ty. Our data pro­vides impor­tant base­line sta­tis­tics on met­rics of access like access rates, afford­abil­i­ty, sup­ply reli­a­bil­i­ty and qual­i­ty as well as an under­stand­ing of how com­mu­ni­ty mem­bers per­ceive and nav­i­gate bar­ri­ers to access. We aim not only to pro­vide sum­ma­ry sta­tis­tics, but to ground these learn­ings in the dai­ly lived expe­ri­ence of Kampala’s infor­mal res­i­dents. Com­mu­ni­ty par­tic­i­pa­tion is a core objec­tive of the work, with com­mu­ni­ty mem­bers involved in each step of research design, exe­cu­tion, and dis­sem­i­na­tion. The project also focus­es heav­i­ly on work­ing close­ly with local stake­hold­ers like the Gov­ern­ment of Ugan­da’s Min­istry of Ener­gy and Min­er­al Devel­op­ment, the util­i­ty Umeme Lim­it­ed, and com­mu­ni­ty-based orga­ni­za­tion like ACTo­geth­er Ugan­da and the Nation­al Slum Dwellers Fed­er­a­tion of Uganda.

For more infor­ma­tion and con­tact with the project team, vis­it the Spot­light Kam­pala web­site.

Leveraging IRA Leadership

Lever­age the IRA for Glob­al Clean Ener­gy Leadership

David Williams & Daniel M Kammen

The Infla­tion Reduc­tion Act (IRA) is a pro­found step in advanc­ing cli­mate lead­er­ship par­tic­u­lar­ly from a deeply divid­ed nation. Now is the time to show how this step leads to progress, prof­its and jobs where we are not divid­ed: advanc­ing US over­seas engage­ment and cli­mate lead­er­ship. To do, Con­gress could extend the IRA tax cred­its for US firms work­ing internationally.

The US has much work at home to do to ush­er in the clean ener­gy rev­o­lu­tion.  We need to act glob­al­ly, how­ev­er, or domes­tic progress will mean very lit­tle. We can achieve this by extend­ing proven tax incen­tive tools to unlock the nec­es­sary invest­ment across Africa, Asia and Latin Amer­i­ca.  This will build mar­kets and cre­ate jobs for the clean ener­gy sec­tor in the US. Devel­op­ers will have an entire­ly new pool of sophis­ti­cat­ed investors and the cap­i­tal nec­es­sary to match the scale of the cli­mate challenges.

While many bemoan the dom­i­nant role Chi­na plays in invest­ing in emerg­ing economies, extend­ing US tax cred­its for clean ener­gy projects pro­vides US com­pa­nies a means to build mar­kets and accel­er­ate glob­al decar­boniza­tion.  Take a look at the oppor­tu­ni­ties in Africa.

The num­ber of unelec­tri­fied Africans has remained near­ly unchanged at over 600 mil­lion for over a decade, despite efforts aimed at achiev­ing the UN Sus­tain­able Devel­op­ment Goal (SDG7) to pro­vide glob­al ener­gy access by 2030.  At COP26 in Glas­gow last Novem­ber, the inter­na­tion­al com­mu­ni­ty made a com­mit­ment of $100 bil­lion to indus­tri­al­iz­ing nations. This is an order of mag­ni­tude small­er than what is need­ed on an annu­al, ongo­ing, basis to build decar­bonized, afford­able, and resilient ener­gy future. Clean ener­gy is now cheap­er to build and sim­ply oper­ate than exist­ing fos­sil fuel projects.  Africa needs mas­sive and sus­tained financ­ing for new, bank­able projects.

The Africa elec­tri­fi­ca­tion sto­ry is com­plex because ‘bank­able’ projects are depen­dent not only on design­ing good projects but also on the twin con­straints of sus­tain­ing cap­i­tal from investors and then also able to nav­i­gate com­plex local reg­u­la­to­ry issues. Sub-Saha­ran African projects are often held up because of a lack of ‘First loss cap­i­tal’ (high risk) fund­ing that lever­ages bank and cen­tral gov­ern­ment investments.

Pro­vid­ing risk-tol­er­ant ‘first-loss’ cap­i­tal at scale lever­ages hun­dreds of bil­lions in a glob­al renew­ables indus­try. Oper­a­tional­ly this could be done by extend­ing the IRA to spe­cif­ic projects in Africa. This would strength­en invest­ment by US firms and sup­port the geopo­lit­i­cal goals of the US. This tax cred­it would afford the same incen­tives across to the bor­der that already include invest­ments in solar, wind, geot­her­mal, sus­tain­able hydropow­er, ener­gy effi­cien­cy upgrades, and trans­mis­sion and dis­tri­b­u­tion projects.

Tax incen­tive invest­ing works. The US Invest­ment Tax Cred­it is respon­si­ble for the dra­mat­ic suc­cess­es of solar across the US since its launch in the Ener­gy Pol­i­cy act of 2005. The pro­gram has been high­ly pop­u­lar and an eco­nom­ic engine cre­at­ing over 230,000 jobs in every state with an annu­al pri­vate invest­ment of over $30 bil­lion all while mak­ing renew­able ener­gy more afford­able than con­ven­tion­al ener­gy sources.  The pro­gram has chal­lenges but is resound­ing­ly suc­cess­ful by rely­ing on pri­vate com­pa­nies to make good investments.

The eco­nom­ic needs for African ener­gy are tremen­dous and aid is sim­ply not enough. At COP26 the US and Euro­pean Part­ners com­mit­ted $7.5 bil­lion in aid for the ail­ing South African ener­gy sec­tor.  Nige­ria has pub­licly stat­ed a request for a com­pa­ra­ble amount.  These invest­ments are crit­i­cal­ly need­ed to upgrade or build grid trans­mis­sion assets, invest in new clean ener­gy projects, reduce methane (CH₄) fugi­tive emis­sions, invest in ener­gy access, and launch elec­tric vehi­cle mar­kets.  $400 bil­lion are need­ed beyond busi­ness as usu­al for each coun­try to achieve a clean ener­gy tran­si­tion. That is almost a tril­lion dol­lars of invest­ment oppor­tu­ni­ty for US com­pa­nies to sup­port Just Ener­gy Tran­si­tions in just two nations. Reward­ing US com­pa­nies for invest­ing in com­mer­cial clean ener­gy projects in Africa will enable a tran­si­tion that can­not be achieved with pub­lic sec­tor funds alone.

This can be launched quick­ly and can be in place soon after the Novem­ber COP27 meet­ing in Egypt. The Insti­tute on Tax­a­tion and Eco­nom­ic Poli­ty found that at least 55 of the largest cor­po­ra­tions in the US paid no fed­er­al cor­po­rate income tax­es on their 2020 prof­its. Over $8 bil­lion in avoid­ed tax a year is in com­plex off­shore struc­tures. The tax incen­tive we pro­pose cor­rect this by pro­vid­ing the pri­vate sec­tor a clear means to back up their pub­lic state­ments of com­mit­ment to a Just Ener­gy Tran­si­tion via direct invest­ments in the need­i­est and fastest grow­ing markets.

This ‘sim­ple’ solu­tion requires only a mod­est change to the US invest­ment Tax Cred­it pro­gram to extend eli­gi­bil­i­ty to cer­tain inter­na­tion­al projects. The US direct aid and web of sup­port­ing wrap-around ser­vices cer­tain­ly make a dif­fer­ence but are not enough. Extend­ing proven US pol­i­cy would be a sig­nif­i­cant cat­a­lyst for cap­i­tal direct­ed to indus­tri­al­iz­ing ener­gy mar­kets. In the past year we have seen mul­ti-bil­lion-dol­lar invest­ments in solar, stor­age, and elec­tric vehi­cles in Ango­la, plans in Kenya to move from a 4 GW nation­al grid to 100 GW by mid-cen­tu­ry, and both Nige­ria and South Africa com­mit to going car­bon-free if invest­ment flows to solar, wind, ener­gy stor­age, elec­tri­fied trans­porta­tion, and green hydro­gen.  The mar­kets are there, the time is now, and what is most need­ed is a means to move capital.

The world’s cli­mate-vul­ner­a­ble are sus­cep­ti­ble to the impacts of cli­mate change, and are the most affect­ed by weaponiz­ing ener­gy. This is a unique moment where polit­i­cal will can bring incre­men­tal tax code changes that democ­ra­tize, de-car­bonizes, and decreas­es the con­flict costs of ener­gy around the world. This just might be the match that lights renew­able solu­tions for the rest of the world.