Ken Silverstein | Oct 10, 2010

The path to prosperity begins with electrification. To that end, the United Nations has established a goal of bringing power generation to the under-developed regions so that they can improve their quality of life.

The foundation of any economy is the ability to access reliable energy so that goods and services can be produced and then transported. While many developing countries have made great strides in the effort to electrify their economies, billions of people go without power -- or by using solid fuels such as wood to stay warm in the winter. Such substandard lifestyles not only erode upward mobility but they are also damaging to human health.

"Based on analysis carried out jointly with the World Health Organization, there are more people dying from smoke from biomass for cooking than from malaria or tuberculosis today," says Nobuo Tanaka, executive director of the International Energy Agency in Paris. "By 2030 over 4,000 people will die prematurely every day from the effects of indoor smoke."

To meet the UN goal of wiping out "extreme poverty" by 2015, 395 million more people will need to gain access to electricity, Tanaka says. For the more ambitious target of universal access by 2030, he says that $36 billion per year is needed. Because most places that lack electricity are located in rural regions, the demand could be met through on site generation powered by green energy.

Today, the UN says that 1.4 billion people do not have any electricity. Most of those are in Asia and Sub-Saharan Africa. Other areas without power include swaths of Latin America and the Philippines. Based on current population trends, 1.2 billion - or 15 percent of the world's population - will still lack such access in 2030.

The World Bank says that the problems in Sub-Saharan Africa are particularly acute. It notes that on a per capita basis, power generation in the poorest areas there is about one-tenth of other hard-pressed places. About 30 African countries experience frequent outages and load shedding.

Altogether, the financial institution says that an additional annual investment of $30 billion, or 6.4 percent, of Africa's gross domestic product is needed. While the numbers nearly exceed those that the UN says is necessary when it comes to bringing power to those around the globe, it is apparent that Africa is a big part of the overall effort.

So is Southern Asia. The government of India, for example, set a goal of bringing electricity to the roughly 500,000 million people there by 2012. But the World Bank says that the target won't be met because of delays in adding new capacity. Similarly, the institution helped serve 10 million Indonesians with power in the 1990s but 70 million there are still without it.

Greenhouse Gas Dilemma

Perhaps the goal of bringing electricity to the masses and the cause of reducing the level of heat trapping emissions are inconsistent with one another? With the world economy projected to grow four-fold over the next four decades, the potential to increase carbon releases is real.

Ironically, the Organization for Economic Cooperation and Development says that poorer countries will have twice the level of carbon emissions as those of their more prosperous brethren. That's because the richer countries will have access to the most modern pollution control equipment while those in the developing nations will rely on cheaper coal-fired power. Already, China and India use coal to meet most of their power needs, albeit they are implementing at a rapid rate greener fuels and nuclear energy.

"Coal is the only sustainable fuel with the scale to meet the primary energy needs of the world's rising populations and economies," says Greg Boyce, CEO of Peabody Coal.

The dilemma is now forcing the World Bank to study how it allocates its loans. After all, coal is the quickest way to bring electricity to those without. But it is responsible for most of the carbon emissions that some say contribute to global warming. The institution says that "trade-offs" are a must.

To put the matter in perspective, in 2009 loans from the World Bank to renewable energy and energy efficient projects made up 40 percent of the institution's $8.2 billion portfolio, says the Center for American Progress. Fossil fuel deals accounted for 24 percent of that $8.2 billion figure. That represents a change from previous business practices.

The matter reached a boiling point earlier this year when the institution approved a $3.75 billion loan to build a highly efficient coal plant in South Africa. Some said such largess should go to clean energy development while others say that the facility was necessary to bring electric power to the under-served - a position from which the United States formally abstained. This country did say that in the future it would oppose such lending unless the focus was on carbon reduction.

The same debate is brewing in Southeast Asia. Take Indonesia: A study there produced by Jakarta-based Institute for Essential Services Reform looked at how the World Bank has loaned money there over the last 40 years. It found that the institution had concentrated its efforts on energy forms that were "carbon intensive" and "environmentally risky."

"Apparently, the Bank only pays lip service as an institution concerned with climate change and delivering affordable and reliable energy to off grid, rural communities," says Fabby Tumiwa, executive director of non-profit reform group.

The UN is praiseworthy for elevating the issue of electrification to the forefront of the global agenda. But the expense and controversy surrounding the types of generation that will be used to spread such prosperity will prevent a quick resolution.

So what do you think? Please share your thoughts by posting a quick comment below, or by sending me a longer reply to energybizinsider@energycentral.com.

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