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Electrifying the ‘eighth continent’: exploring the role of climate finance and its impact on energy justice and equality in Madagascar’s planned energy transition

Abstract

Developing country case studies have thus far been under-represented in conceptual models attempting to theorize energy transitions. This paper explores the role of climate finance in the process of Madagascar’s planned transition to renewable energy sources as envisioned in the country’s New Energy Policy in order to demonstrate the different experience in developing countries when compared to hegemonic transition narratives. Drawing upon qualitative interviews with energy finance providers and focus groups in recently electrified rural communities, this paper reveals that Madagascar’s transition is dependent on the financial resources mobilized by the government’s technical and financial partners. Climate finance emerges as a critical lever to implement environmental legislation. The interview findings were correlated with census data to evaluate how current financing strategies are directly connected to energy justice issues, namely the equality in access to affordable and clean energy. Through an analysis of projected energy finance flows and key financiers’ financing strategies, this paper exposes a shift from grant-based climate finance to financial instruments with clear return profiles, such as concessional loans and private capital, and finds that the choice of financial instrument impacts the provision of complementary social services in rural electrification schemes. Grants are linked to higher investments into complementary social services, while private financiers focus on innovation and scale. Purely private financed electrification projects were found to negatively impact social cohesion by increasing the inequality in access to energy. This study concludes that if only commercially viable energy projects were to be financed going forward, up to 19 million Madagascans might be excluded from future electrification efforts. Consequently, this paper urges researchers to consider social justice implications when evaluating climate finance strategies.

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Notes

  1. ‘Les partenaires techniques et financiers’ (PTF) is a French expression used to describe the technical and financial partners that support the Madagascan government in achieving its development goals.

  2. Average estimate of staff of Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ)

  3. Madagascar is sometimes referred to as the ‘Eighth Continent’ due to its unique levels of biodiversity and endemism. It is estimated that 83% of plants, 86% of macroinvertebrates, and 84% of land vertebrates are endemic (Goodman and Benstead 2005).

  4. This calculation does not consider the potential increases in disposable incomes within the rural population that a successful electrification might entail and which might lower the minimum threshold of connections significantly.

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Acknowledgements

I would like to express my gratitude to my supervisor Prof Dr. Nick Eyre from the University of Oxford who provided stimulating ideas and guidance throughout the research process. Furthermore, I would like to thank the Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH who have generously supported my field research in Madagascar, particularly the staff of the ‘Rural Electrification Through Renewable Energies’ project in Madagascar.

Funding

The financial support received for this project by the German National Academic Foundation, the University of Oxford’s Environmental Change Institute, and Green Templeton College is gratefully acknowledged.

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This article is part of a Special Issue, “Climate Finance Justice: International Perspectives on Climate Policy, Social Justice, and Capital,” edited by Lauren Gifford and Chris Knudson.

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Cholibois, T. Electrifying the ‘eighth continent’: exploring the role of climate finance and its impact on energy justice and equality in Madagascar’s planned energy transition. Climatic Change 161, 345–364 (2020). https://doi.org/10.1007/s10584-019-02644-x

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Keywords

  • Climate finance
  • Energy finance
  • Development finance
  • Rural electrification
  • Energy transition
  • Madagascar