ABSTRACT
Investment in LCRD is intended to enable citizens, households and economies to achieve development gains as well as to mitigate and adapt to the effects of climate change. The lower-income groups that form the ‘base of the pyramid’ will bear the brunt of the worsening impacts of climate change, and LCRD policies need to include these groups in order to improve their resilience to climate-related shocks, their access to services such as health and education, and their opportunities for building sustainable livelihoods. LCRD investment may be in anything from improved crop varieties to
water management technologies, from solar energy to climate resilient infrastructure and business development. As countries move to implement their low carbon action plans, it is important to understand how these plans are being delivered on the ground and to ask how we can ensure that climate-related interventions benefit those who need them most. In this chapter we use a political economy framework to analyse actors
and incentives that catalyse decentralised energy projects in LDCs. The analysis is based on IIED research into projects in Bangladesh, Ethiopia, Nepal and Rwanda involving technologies such as Solar Home Systems, Solar Irrigation Pumps, biogas, and mini-and micro-grids in rural areas (Steinbach et al. 2015a; Rai et al. 2015a; Rwirahira and Fisher 2015; Kaur et al. 2016). We use this analysis to explore how communities and markets can invest in and benefit from local low carbon initiatives. We provide an overview of the modalities used – the financial instruments, intermediaries and systems – and consider their effectiveness. We look at what incentivises intermediaries to invest in renewable energy technologies in low-income communities and what incentivises members of those communities to purchase those technologies. Finally, we draw on this evidence to suggest ways of structuring delivery mechanisms to encourage pro-poor LCRD. Our analysis leads us to make three arguments:
First, decentralised energy can deliver co-benefits to households at the bottom of the pyramid, but for this to happen these households need
access to finance, and their specific financial needs remain unfulfilled by mainstream markets.
