News and Announcements / News and Announcements

As Delivered Lecture by Rajiv J. Shah, President of The Rockefeller Foundation: “How Can a Divided World Combat Climate Change?”

Imperial College London, Thursday, April 7, 2022

Thank you. Hello, everyone.

Thank you, Provost Wolmsley, I appreciate that kind introduction and those comments about the values of the school and the process you are undergoing.*

I’m quite honored to be here. I’m aware of who has spoken at this particular event in the past and certainly admit I’m a bit intimidated by that list of prior speakers, including one good friend and mentor who’s not with us today, Sir Gordon Conway, who is an extraordinary leader that Imperial is proud to call one of its own.

Now, my discussion today will focus on climate change and some ideas on how we can bridge some of the divides that seem to keep us from solving big global problems in the world today — challenges like Covid-19, the conflicts we see, obviously, between Russia and Ukraine, the food and fuel crises that that is now spawning around the world. And I will focus my remarks on the growing and devastating divergence that’s taking place between advanced economies and developing ones.

I believe, fundamentally, that the climate project that I suspect many of you are deeply engaged in is, in fact, failing to take account of the needs, the aspirations, and the human potential of much of the developing world. And if that continues, the climate project itself will be unsuccessful, at great consequence to all of us — concepts you understand better than anyone here at Imperial College of London.

This is in fact the right place to have tough conversations about a divided world. This is an institution with an extraordinary history of scholarship and service. We found this old photo from the autumn of 1945, just a few months after World War II was won. King George VI visited Imperial to celebrate its centenary. It was a new era that you were all celebrating together in that moment. The war and its terror had ended. But the peace was still new, a new Cold War was emerging, and the new world was uncertain. Imperial College — its scholars and its students — engaged in that task, from the perspectives of science and diplomacy and politics, and helped shape the future.

They were not alone. This is a photo that was taken a few years prior, with Prime Minister Winston Churchill, who met with U.S. President Franklin Roosevelt aboard the USS Augusta. After this picture was taken, they signed something that we rely on deeply today — and we’ve seen in action the last several months: the Atlantic Charter.

The Atlantic Charter was, in fact, a set of principles they hoped would shape the post-war era in order to prevent the next world war. Central to that thinking was their worry about the effects of persistent fear and want. Those were the words they used — the “fear and want” that could lead to the kind of anger that generates the conditions for conflict. [Churchill and Roosevelt’s] concern was, of course, focused on a post-war Europe that had been decimated, but also took hold in a much larger, much more global context.

After the Charter and the war, the world created together the Bretton Woods institutions, the [International Monetary Fund] and the World Bank, to shape a more stable globalization that would lift up those who otherwise lived without. The United States invested in a Marshall Plan here in Europe that, at its peak, spent almost 2% of American GDP — at the time, around $13 billion — to enact a recovery that, of course, transformed the shape of the post-war era. And after that, still, we created institutions like USAID, which I was proud to run, and DFID and so many others that carried the mantle of global development. This work was shaped by the basic idea that if human beings everywhere could achieve a basic level of dignity, a basic living standard that gave them hope, and opportunity, that we would all be safer and more secure.

The results of this international architecture have actually been extraordinary. From 1961 to 1970, developing countries grew faster than developed ones. And in fact, that basic theory of convergence was the underlying concept that those institutions were created to promote.

Convergence, for those of you that remember your college-level macroeconomics courses, is absolutely a simple idea. It’s that capital and labor come together to define a production possibilities frontier. And it’s technology, knowledge, and innovation that define how productive that capital and labor can be together. Wealthier nations are presumed to have more advanced levels of technology. And that technology is presumed — a central assumption in economics — to diffuse broadly, so that countries that don’t have that more advanced level of technology will in fact catch up.

And we’ve seen that convergence theory that accelerated growth in developing countries relative to advanced economies take hold for much of the last 80 years. And in fact, that growth, coupled with specific initiatives and investments — despite all the noise, despite all the conflict, despite all the poor governance you’ve heard about, read about, and studied — lifted billions of people out of poverty.

The success was so significant that just seven years ago, we sat together and negotiated an arrangement around the Sustainable Development Goals, based on the basic idea that extreme poverty could be eliminated from the face of this planet. The progress that we had witnessed over that time period took the incidence of extreme poverty from roughly 40%, then to 20%, down to well under 10%, to 6 to 8% depending on how you count it. And we set a goal to get under 3%, which was effectively zero when we negotiated the SDGs.

Unfortunately, we know that convergence was incomplete. Inequality across countries shrank dramatically, but inequality within countries continues to expand at pace. And the theory of convergence — driven by technology and innovation and know-how freely diffusing and being taken up across the world — worked in some cases, but in many cases took years or decades to be realized.

In 2019, none of the UN’s Sustainable Development Goals — established around poverty, hunger, health, education, access to energy, efforts to promote environmental sustainability — none of them were on path to be met by 2030, which was the due date that we set in 2015.

And then, of course, Covid hit. Covid has been extraordinarily disruptive to this 80-year convergence. In fact, Covid has ushered in — both because of the disease itself, but, more importantly, the way we’ve responded — an era that the IMF and others call an era of great divergence.

More than a year ago, the world developed an incredible set of vaccines. And I hope you all remember getting your first shot. I certainly remember mine. It was liberating. Yet 35% of the world’s population has not even had their first dose. That’s true for vaccines — and this chart shows you the inequity in access in terms of vaccinated adults across wealthy and less wealthy nations. But it’s also true in testing, treatment, and all the other tools we rely on to return to a more normal economic life and standard levels of social and societal activity.

We also saw a fiscal response to Covid that was incredibly inequitable. In fact, in the United States, we spent 27% of our GDP responding to Covid. Most of it was responding to the economic consequences of Covid. Across all OECD countries, they spent more than a quarter of their GDP doing that in 2020.  Meanwhile, in developing countries, they spent 3% of GDP and in middle-income economies, they spent 5%.

The result has been as expected: a rapid bounce back — and, in some cases, an increase of inflation — in much of the industrial world, and a stagnation in developing nations. The result is a great divergence that can be felt on the ground: 240 million people have been pushed back into poverty. 811 million people — about 50 million higher than the baseline — are hungry today. 100 million people have lost access to electricity as a result of that systemic crisis. And 54 million women have been pushed out of the workforce.

So, you can see that the economic divergence, which can now last for a decade or more, is actually going to get worse before it gets better. We are looking at a fuel crisis, a food crisis, and a debt crisis. In fact, developing countries today will expend $310 billion on debt repayment in 2022, which could be better used at home.

And so, here’s the bad news — and I’m sorry to be bringing you so much bad news at one point in time. Climate change is going to accelerate that divergence. We see in study after study and report after report that the people who are most vulnerable both had the least to contribute in terms of carbon emissions and have the lowest standard of living on the planet. The latest estimates indicate that 3.5 billion people live in highly vulnerable places, and almost all of them are in developing economies. 550 million agricultural workers and small-scale fishermen and fisherwomen face significant losses as the earth warms. And 32 million more people will fall into extreme poverty. These types of impacts are much more concentrated, as you can imagine, in the developing world. In fact, the World Health Organization estimates that there’ll be an additional 250,000 deaths from malaria, malnutrition, diarrhea — diseases that primarily cause mortality in very resource-poor settings.

In that context, the global climate fight, I would argue, is actually missing the opportunity to include everybody. The conventional wisdom on how to respond to climate change has truly been both inequitable, from a country-participation perspective, and insufficient when there have been efforts to reach out and invest in developing and emerging economies.

In fact, the conventional approach to climate action we’ve seen in the Paris Agreement and other initiatives is based on a notion and math that is fundamentally tied to that diffusion story. It puts the onus on wealthy nations, who are the biggest emitters, to cut their emissions quickly and get to net zero by 2050, and it assumes that the actions they take will result in the development of low carbon technologies, which in turn will diffuse across the globe. And that ultimately allows us to envision 1.5 degrees or 2 degrees of warming overall. And since those economies are much lower emitters today, it’s not considered as much of a problem in terms of if they actually tackle the climate crisis. We’ve called that analysis static math.

This chart is a more dynamic assumption that developing economies will grow, that their people will be lifted up in terms of their living standards — in this scenario we simply assume that this growth continues to be fueled by fossil fuels, just like it is today, because we know technology will not simply diffuse on its own. What you see is yes, in OECD economies, emissions come way down according to the Paris plan. And yes, in China and very large middle-income economies, emissions go up and then start to come down. But what you see is a huge growth in emissions from the 81 energy poor countries in the gray part of this graph. That growth will singlehandedly wipe out any chance to be under 1.5 degrees or under 2 degrees. In fact, in this scenario, the world exceeds the 1.5-degree target by 800 billion tons of GHGs.

I’ve asked our internal climate scientists. This is a task for Imperial College to figure out: What will the temperature be under different scenarios, if we continue to just ignore future emissions assumptions from developing economies that are growing and that absolutely will and must lift the living standards of their people through the consumption of energy? And I don’t know the answer. My colleague told me not to pretend I know the number. But it’s got to be over 2 or 2.5 degrees. It might be higher than that. What’s the difference between 1.5 degrees and 2.5 degrees in terms of what the world actually looks like? And which parts of the world are habitable and productive in 2050? Those are the types of questions I hope you can address and answer.

But one thing I do know: if we stay on our current energy path, and if all the Paris agreements are met, in 2050, 77% of those total emissions will come from 81 countries that we ignore today, because we think of them as energy poor, and therefore as low emitters. I believe this is the central challenge for creating a global climate fight that fundamentally includes everybody and that recognizes the need to lift up the billions of people who live in environments where they’re not getting enough energy today.

And so, who are these folks? Energy access and power, which ultimately drives the preponderance of the chart you just saw previously, is, in fact, inequitable and unsustainable in today’s global economy.

Electricity use per person is in fact — according to the Oxford Multidimensional Poverty Index, which tracks 10 different elements of well-being and access to core and basic resources — energy access is the most cross-cutting element of those 10 indicators for whether someone is able to lift themselves out of poverty or whether they remain trapped in a state of poverty.

This, of course, makes sense. Imagine what your life would be like if you consumed no electricity. You can’t do it. Because we get out of bed, the first thing we do is check our phone, turn the light on — hopefully, it’s in the opposite order. But we consume energy continually in wealthier economies.

Despite the fact that electricity was discovered 142 years ago, the basic macroeconomic concept of diffusion of access has simply not happened at scale. In 2021, 768 million people still lived completely in the dark, basically consuming far less than 150 kilowatt hours per year per capita of energy. That’s maybe one light bulb, one small appliance for the course of a year. That’s not even real productive energy.

[The Energy for Growth hub] has estimated that a proper modern energy minimum, below which people are considered to be living in energy poverty, would be 1000 kilowatt hours of consumption per capita, per year. And that means 3.6 billion people in 81 energy poor countries are living well below that modern energy minimum. You see a chart where in Sierra Leone, you have 30 kilowatt hours per capita of energy consumption. And in the United States, you have 12,000 kilowatt hours per capita of energy consumption.

So, what does this actually mean in practice? Well, if you are part of the family that is consuming so little energy in Sierra Leone, you’re probably in a family of six living in a village that’s hours from the capital, Freetown. And on a 30 kilowatt per hour per capita consumption pattern, which is about 3% of the modern energy minimum, that means your kids don’t get to study using light, they’re using kerosene. It means you don’t have any real productive electricity that turns your labor into something that’s more productive for which you can get paid. It means you live in an economy where job creation is informal and not structured. And you’re literally trapped in poverty.

In Nigeria, where average consumption is just 13% of the minimum threshold, a small family living in Lagos can have a couple of lights and a couple of fans, but they don’t have sustainable access to electricity that allows their community to produce the kinds of jobs and economic mobility that we all take for granted.

In Colombia, a pair of grandparents can move closer to their grandchildren to have them over for dinner and improve their quality of life. If they were above the minimum, at about 1200 kilowatt hours, you can cook using reliable natural gas, your children can have a flat screen. You can power a hairdryer and iron — the kinds of appliances that are time saving and labor saving, particularly for women. And it dramatically changes your quality of life and your living standard.

And then of course, there’s the United States. I’m not even sure how we consume 12,000 kilowatt hours a year of energy, but it’s obviously the highest in the world.

So, to change course, and to create a climate fight that is truly going to work and truly going to be inclusive, I think we have to remember two things.

First, people everywhere want the opportunity to lift themselves up. And if you’ve been in the places I just described, then you know instinctively, there’s no amount of climate modeling that will take from people that basic human urge to lift up yourself and your family.

Second, technology is not simply going to diffuse sufficiently on its own. And continuing to make those assumptions, whether it’s for Covid vaccines or renewable energy technology, leads us down a path of failure on a global basis.

What we should really have is a global green energy revolution that lifts everybody across the 1000-kilowatt hour per person per year threshold. And secondarily ensures that a very high percentage — perhaps 90% — of that total energy mix ultimately is coming from renewable sources. That’s the assumption that drives the Paris modeling for wealthier countries, and that should ultimately be true everywhere.

So, can we get there? Well, in some places, we’re well on our way. Germany, for example, has among the largest share of renewable electricity in the world: 42% of their total energy mix is purely from renewable sources. In general, across the word, renewables accounted for 76% of total new power capacity additions in 2020, which is fantastic.

But it still isn’t taking hold in developing countries. So, if you look at the first graph, you just get a sense of the world versus the 81 energy poor countries in terms of their adoption of renewable energy. And it frankly looks like every technology adoption curve I’ve seen in 20 years of doing global development work, whether vaccines, or agricultural technology, or now renewable energy. It’s simply not going to happen without a big global push, and a serious new effort to make it real. Almost all new wind power is concentrated in China and OECD countries. Even when it comes to solar, some developing nations like India and Vietnam have become destinations for mega solar projects, but by and large, statistically, on a global basis, it’s little to no real progress.

Bringing the energy revolution to these 81 energy poor countries will require a 50-time increase in generation from wind and solar by 2040 [to eliminate energy poverty with 90% renewable energy]. 50 times. And we have to get that level of aspiration baked into our thinking if we’re going to succeed. Our research suggests that this is possible. But it will require tremendous growth and tremendous investment.

If we succeed, what a green energy revolution can achieve, is in fact, extraordinary. This is an evolution of the graph you saw before. You’ll notice this takes world carbon emissions, by 2050, down from between 30 and 40 down to well under 10. And most of that difference by the time you’re in 2050, is driven by the 81 energy poor countries today.

So, then you have to ask yourself, is it possible to achieve change at that scale? And I just wanted to call out two examples in the global development landscape that I think should give us great hope.

The first is an example from an agricultural scientist. That’s Dr. Norman Borlaug, who invented dwarf wheat varieties that increased wheat production 300 to 400% on farms. He was a Rockefeller Foundation employee — actually our second longest serving employee in the history of this institution. I think he was with us for 44 years. I know because another agricultural scientist stayed with us for 45 years because he wanted to beat Dr. Borlaug. And he did. Congratulations, Gary Tennyson.

But Norman Borlaug won the Nobel Peace Prize for his efforts to bring his wheat varieties and many other improved agricultural technologies all across the planet. And I remember sitting with him years ago, and he told me, “The whole world believes you can just invent things, and they reach the people who need them most. But that’s never going to happen.” And he would share story after story of sneaking seeds in his pockets and suitcases into Pakistan, planting them, and then taking the Pakistani finance minister to see the difference between what they were planting before and what he was able to achieve.

We gave Bourlaug’s revolution a name; we called it the Green Revolution. Gordon Conway is perhaps the world’s best scholar with whom to study the Green Revolution. So, if any of you have a chance to be in his courses or seminars, I hope you will avail yourself of that. But the Green Revolution ultimately moved anywhere from 800 million to a billion people off the brink of hunger and starvation in the late 1960s and 70s, through widespread adoption of agricultural productivity enhancing technologies.

The second example is on the right, these are refugees from Somalia entering Eritrea. I love this photograph — I noticed it because it won the National Geographic Society photography competition one year. But the minute these refugees got into a place where they could get connectivity, these refugees who were on foot in the middle of night pulled out their phones and connected with their families in their communities, wherever they were.

This photo is a reminder that if you look at the data around technology adoption globally, the mobile phone industry is perhaps the biggest success story of equitable adoption of core new technology. It wasn’t quite as fast as in OECD economies, but ultimately became even more complete in its access with new innovations and business models. So, it is possible, but it requires fundamentally rethinking the level of political will and investment we’re going to make to get there.

I want to just make the case that the technology now exists to be successful. I want to tell you one little story. This is a visit we made to a village in Bihar, India, named Derni. We’re standing in this photo with a micro grid installation that the Rockefeller team had, for many years, experimented with and constructed. When they started building these 8 to 10 years ago, the cost of delivering power, from one of these explorations, was probably north of $1. By the time we started measuring it, it was like 80 plus cents a kilowatt hour. And even then, poor customers in Derni were willing to buy the power at that price, because frankly, it was reliable, and it was accessible and government power was only on for maybe a couple hours a day.

Ultimately, through innovation, through collaboration, and through new technology, the cost came down to 23 cents a kilowatt hour when I visited. And today, in partnership with Tata Power, we’re building 10,000 of these rural mini grids across the country to reach 10 million people at a target cost of 15 cents a kilowatt hour.

What drives that cost reduction and what makes this possible is technology. It’s improved battery storage that reduces the cost structure of this kind of installation. It’s smart metering that can allow you to connect very low-income households and very carefully charge them only for the power that they consume. It’s mobile bill pay that allows customers to pay through mobile phones. It’s artificial intelligence — the systems I visited were being managed from Pune, India, hundreds of miles away in a different state, using AI battery management and AI energy management systems.

But let me just give you a sense of Derni. This video shows where the mini grid plant is installed. That was a school we visited that started to get power and ran night school programs for girls because they had light. The flour mill, the market, and the health clinic all receive power from this installation.

The carpenter shop was a place we visited and spoke to the proprietor, who said, “Look, I get a few hours of government power, and I always have. But the reality is I can’t go buy power tools and I can’t employ people if I don’t know that I’m going to have reliable, always-on electricity.” When he became a customer of our commercial partner that is providing that electricity, he said, “Now I can hire people. I’ve bought power tools; I’ve tripled the size of my business.”

The data we’ve collected surveying customers of the more than 500 of these grids now installed across low-income, rural parts of India reveal that incomes go up 50 to 100%, jobs get created, and customers, importantly, pay their electricity bills on time, because they want to be a reliable customer.

So, these are transformational technologies. And it’s not just solar mini grids, we’re now exploring metro grids that can provide power to entire towns in the Democratic Republic of Congo. We’re looking at new types of hydro technologies that can protect environmental resources but be efficiently deployed in rivers and riverbeds that had not previously been thought of as places that could generate electricity for these types of communities.

Based on this experience in Derni and based on the understanding that if we’re going to succeed, we need to bring all of us together, we launched, at COP26 last year in Glasgow, the Global Energy Alliance for People and Planet. This Alliance is led by a Chief Executive Officer who is here today, Simon Harford.

It is a partnership between three philanthropies: The Rockefeller Foundation, the IKEA Foundation, and the Bezos Earth fund, each of which have committed $500 million of grant resources to this platform. But most importantly, it’s a partnership of all the various multilateral development banks, development finance institutions, and the types of institutions we have grown out of the Bretton Woods architecture we talked about at the beginning.  All of us together committed more than $10 billion to this platform with the goals of reaching a billion people with reliable, renewable electricity, creating or supporting 150 million green jobs along the way, and reducing at least 4 billion metric tons of carbon.

Those are the goals. I would point out a couple of things. The first is, in order to be successful — and Simon really is better to talk about this piece of it — our mindset is, we need to absolutely support countries and have them be in the lead developing plans, constructing programs, implementing those programs. We do need to bring significant outside capital to the domestic resources that exist on major projects and major activities. Ultimately, we need to make sure that projects get done and get done quickly.

When you look at what the Global Energy Alliance could mean, in places that are currently part of the 81-country group that I’ve called energy poor countries, it’s extraordinary. In India, 300 million people still live in relative energy poverty. In Nigeria, 45% of their population, 90 million people, have effectively lives that are fully unelectrified. In the Democratic Republic of Congo, 85% of a country of 90 million people lives without electricity. In South Africa, a country with a 48% unemployment rate, there’s an opportunity to transition from coal to clean energy in a way that creates jobs. And Indonesia’s coal fleet alone could contribute up to 10 billion tons of carbon, just from one country’s planned and existing coal fleet.

That’s part of a larger problem. Due to Chinese financing and due to other reasons, there are 112 gigawatts of new coal being designed, financed, and implemented even as we speak today. So, despite the math I showed you earlier, next year there’s going to be more coal than this year, the year after that there’s going to be more coal than then next year. It’s just going to keep getting worse unless we intervene. And this Alliance is designed to come together and create a different path for our planet.

So, what will this cost? And Simon, I’m very careful, this is not the budget for the Global Energy Alliance. But what does the green energy revolution cost and is it feasible? McKinsey and Company have estimated that to achieve energy transitions that would keep our planet on 1.5-degree Celsius pathway will cost $9.2 trillion per year. Now, that sounds overwhelming.

But if you look deeper at the numbers, about $6 trillion of that is already being invested in renewables or needs to be switched from existing investments in fossil fuels. Today, we subsidize fossil fuels in developing countries and rich countries alike. As you know, during the Ukraine crisis and the Russia crisis, most nations are working overtime to figure out how they can get access to more, and newer, sources of fossil fuels, not less. About $3.4 trillion of that is new capital, over and above what’s currently being invested.  And there are a range of estimates — somewhere between $300 billion and $1 trillion is needed on an annual basis in new capital in the 81 energy poor countries every year between now and 2050.

To put that in perspective, at COP in Copenhagen 12 years ago, wealthy countries agreed to commit $100 billion every year to help support the transition. And at the COP in Glasgow, they were still debating on whether they were even able to hit that $100 billion number, 12 years later. So, we have a long way to go to generate this kind of capital to achieve that outcome. But I would argue it is something that can be done.

I’ll conclude with this, especially in the wake of Russia’s invasion of Ukraine. These types of challenges are big. They require all of us working together. And they require an exceptional amount of political will. But in the past, we have shown that we understood the threats that we were looking at. We understood the realities of the choices we face. And we made those tough decisions together.

I believe very much so that we can do that again. Because if we don’t, we’ll end up with a climate crisis and a poverty crisis that continues to be pervasive. Thank you.

# # #

* Earlier, Dr. Shah commented about the concerns over the naming of the Schrödinger Lecture: “Over the last several weeks, we’ve all become aware of disturbing new revelations and facts. Since then, we’ve encouraged Imperial to take them seriously and begin a process to identify an appropriate course for this lecture. I understand that process is underway and trust it will result in a just and equitable outcome.”