I recently participated in a panel discussion on the question of why sustainable land use is important for a low-carbon energy future. While pondering this question in preparation for the panel, my first thought was that it should be turned around: how can renewable energy contribute to making land use more sustainable?
Arable land is where most of our food and fibres come from. In the past 40 years, we lost almost a third of that land to soil degradation; new land that can be cultivated is often created by destroying carbon sinks such as forests and peatlands. We must therefore protect the arable land that is left and use it in the most efficient and effective way possible. But where does renewable energy come into this challenge?
The answer is building resilience to the impacts of climate change.
A longan farm in Cambodia, where REEEP and Nexus' Clean Energy Revolving Fund is active (see below). Photo: Jeremy Meek for REEEP
The damage done to our soils by erosion and pollution is exacerbated by climate change, as long droughts in parts of southern Africa and the mistiming of the monsoon in South and Southeast Asia demonstrate. Though these effects are not yet visible everywhere, we need to help farmers prepare for these changes.
Energy enters the sustainability equation as a critical service and a precondition for enhanced resilience. Let me draw together five observations:
Resilience is closely linked to prosperity – only when people do not have to worry about day-to-day survival can they plan for the future, and only when they have a financial buffer can they withstand unexpected shocks;
Prosperity is closely linked to energy access – and an estimated 3 billion people have no reliable access to modern energy services;
Hundreds of millions of small-holder and family farms need better access to energy services for productive uses such as cooling and irrigation;
Climate change impacts will increase the pace of change that these farmers have to adapt to – they need to be able to afford better equipment to survive and prosper;
Many SMEs and start-ups are starting to develop services for these customers – but they are in desperate need of investment, R&D, and technical support.
We therefore need to link the energy access agenda to the climate resilience agenda. Smallholder farmers produce a huge share of the global food supply, directly where it is needed. They all need to adapt to climatic changes – and they need to have access to the technical and financial means to do so.
One example of a measure that has started tackling this issue is a project in Cambodia, where REEEP and Nexus for Development, supported by the Government of Austria and the Blue Moon Fund, have established a pilot revolving loan fund that provides concessional loans to small farmers. These loans help them buy renewable energy technology, to replace expensive grid electricity or polluting diesel-powered generators. So far, most farmers who have taken out loans from the fund have invested in solar irrigation. This Clean Energy Revolving Fund (CERF) fills a gap in the market for small unsecuritised loans starting at 8,000 USD, for which conventional financial institutions would be hesitant to carry out the required due diligence. Despite the lack of collateral required from lenders, repayment rates are at nearly 100% and the fund has started to revolve.
Mr. Seng Sokhom, one of the beneficiaries of the CERF, inspects his longan farm, which is now equipped with a solar-powered water pump. Photo: Jeremy Meek for REEEP
Demand for loans from the CERF is rising and we have started to look for a Cambodian partner to help us meet this demand and grow the fund from 1 million to 5-10 million USD - ideally an agricultural bank. We are already talking to a bilateral development bank to help guarantee the loans and reduce the risk for any future partner.
Work in progress!
Find out more about the Clean Energy Revolving Fund here.