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ELECTR-5744; No of Pages 26UNFCCC (2007). We complementthe existing literature by: Increasing the granularity interms of geographical coverageand providing data at the nationallevel for energy investments; Refining existing estimateswith additional informationfrom various complementarysources; and Providing an update on theexisting figures by using the mostrecent available datasets.A. Flows consideredOur estimates are based on datafor a number of complementaryflows: Gross Fixed CapitalFormation 9 (GFCF), ForeignDirect Investments 10 (FDI), andOfficial Development Finance 11(ODF). (Appendix A providesdetailed national energy-relatedGFCF accounts. Appendix Bprovides supplementaryinformation with regard to energyinvestments in the CleanDevelopment Mechanism (CDM),merely as a point of comparison.)Table 1 presents a generaloverview of the financial flowsconsidered in this analysis. GFCFrepresents the total investmentflow. We include FDI and ODF toadd richness to the analysis. 12N ational and internationalstatistics offices do notgenerally record the yearlyamount of domestic andinternational finance directed atthe energy sector; available datathus present severe limitations. Weapply basic statistical tools toestimate missing values, andemploy several techniques to treatTable 1: Overview of Investment Flow Data. aType of flow Data source RemarkTotalGFCF UNSTAT b and WDI c Data include waterInternationalFDI UNCTAD Data include waterODFAidData da NFCCC (2007) also includes international debt as a source of financing for the energy, gas and water sector and anestimation of the source of the investment (households, corporations, government) for the total of all sectors (tables IV-8 and III-2, respectively). These data are the results of an economic model built for the year 2000. We estimate GFCF asa time series to obtain insights on trends.b UNSD (n.d.).c WB (n.d.).d Findley et al. (2010).the available data. The sectionbelow provides a detailedoverview of the data treatment foreach flow. All data are convertedinto USD 2000 using GDP deflatorsand exchange rates. 13 We focus onthe timeframe 2000–2009, andutilize data from project leveldatabases (ODF and PrivateParticipation in Infrastructuredatabase 14 (PPI)) and data fromNational Accounts (GFCF andFDI). We recognize thatinvestment decisions in the projectlevel database may not reflectimmediately in the nationalaccounts, or may generate multiyearflows.1. GFCFGFCF data are aggregated forspecific sectors and/or for theentire economy. Here we areinterested in electricity, gasdistribution, and water supply, forwhich data are available only forselected countries. 15 For thecountries with incomplete timeseries for this sector, we use theaverage national share from theyears for which data is availableand compute the missing onesbased on the total GFCF for yearswhere it is not. Where sectorspecificdata are missingaltogether, we use a weightedaverage share of GFCF forelectricity, gas distribution, andwater supply over the total (3.8percent and 8.1 percent for OECDand non-OECD, respectively) andcompute it as a best approximationfor the missing national data. 16 It isimportant to note that that GFCFdata are based on nationalaccounts’ definitions of sectors,and therefore electricity, gasdistribution, and water are includedin the same sector. Comprehensivedatasets distinguishing the watercomponent from electricity, and gasdistribution do not exist. Weexclude the water component bysubtracting it from the total basedon the ratios 17 available inUNFCCC (2007), which are basedon OECD data.V arious investments in coal,oil, and gas production,processing, and transportationfacilities are spread across othersectors in the national accounts –mining and quarrying, industry,and transportation etc. – whichalso include other facilities.Therefore, compiling data on4 1040-6190/$–see front matter # 2011 Elsevier Inc. All rights reserved., doi:/10.1016/j.tej.2011.07.006 The Electricity JournalPlease cite this article in press as: Bazilian M, have surnames. Informing the Financing of Universal Energy Access: An Assessment of Current Financial FlowsElectr. J. (2011), doi:10.1016/j.tej.2011.07.006
ELECTR-5744; No of Pages 26investment in coal, oil, and gassupply from national accounts ischallenging. Also, the extractivesectors are often export-oriented,and the link with national energyaccess is therefore weaker.Nonetheless, cumulativeinvestment in coal, oil, and gas isroughly equivalent to powersector investment (see, e.g., IEA,2010). Finally, we have excluded anumber of countries or subnationalentities 18 from theanalysis for various reasons (e.g.,statistical anomalies, lack of data).2. FDIFDI data are available inaggregate and by sector, includingfor electricity, gas distribution, andwater. We only consider FDIinflows, as our interest lies in theinvestments in particularcountries. 19 In general, the datasetsare relatively ‘‘patchy.’’ Ratherthan trying to extrapolate thefigures based on bold assumptionsto cover for the missing data, wefocus our analysis on a subset ofcountries for which the data isavailable. 20 Thus we do not presentan aggregated time-series, as wedo for GFCF and ODF.W e use a complementarydatabase, the PrivateParticipation in InfrastructureDatabase, 21 which collects dataseparately for projects in the energyand water sectors, to evaluate theproportion of investment in each ofenergy and water, which we thenapply to isolate the watercomponent. We find that at theglobal level, between 2000 and2008, the investment in the watersector was approximately 10percent of the total, althoughnational shares can differsignificantly. Unfortunately,UNCTAD does not differentiatebetween ‘‘greenfield’’ and mergersand acquisitions flows; in otherwords, there is no means todistinguish between investmentsin new projects and financialtransactions not leading toadditional assets.3. ODFOfficial Development Financedata is available for the energysector and its sub-components,including energy policy,renewable sources, nonrenewablesources, and others.The source used, AidData(Findley et al., 2010), contains allthe data included in the CreditorReporting System (CRS) databaseof the OECD and adds greatercoverage of multilateralorganizations and of non-OECDdonors. 22 We include onlyprojects related to the energysector, following themethodology applied in OECD(2010b), 23 and exclude refinancingloans. It must be noted that ODF(or ODA) are commitmentsproclaimed by the donors, notactual flows. 24IV. Financing Energy:Past TrendsFinancing for the energy sectoris obviously contingent on trendsin overall capital flows. The recentfinancial crisis affecteddeveloping countries in a numberof ways. Notably, it hurt exportrevenues, caused remittances todecline, and ODA is likely tofurther suffer from theretrenchment of donor countries(UN, 2011). While we focus onGFCF, Foreign Direct Investment,and Official DevelopmentFinance, other capital flows, inparticular portfolio investments(debt and equity) and short- andlong-term private bank lendingwill provide additional finance tothe energy sector.A. Gross Fixed CapitalFormationTo provide a sense of scale, it isuseful to consider energy-relatedinvestment in relation to globalinvestment. The share of GFCF forenergy represented 2.8 percent ofthe total in 2000, with the largestshares being wholesale retailtrade (34 percent), manufacturing(17 percent), and construction (11percent). 25Global GFCF for electricity andgas distribution (detailed data fordeveloping countries in TableA1.1 of Appendix A) has beenrising steadily throughout thepast decade, with the notableAug./Sep. 2011, Vol. 24, Issue 7 1040-6190/$–see front matter # 2011 Elsevier Inc. All rights reserved., doi:/10.1016/j.tej.2011.07.006 5Please cite this article in press as: Bazilian M, have surnames. Informing the Financing of Universal Energy Access: An Assessment of Current Financial FlowsElectr. J. (2011), doi:10.1016/j.tej.2011.07.006
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