Climate Policy's Hidden Trade-Offs: Foreign Aid and the Challenge of Affordable Energy

Abstract

The world faces two energy crises: dependence on carbon-emitting fuel sources exacerbating climate change and energy poverty. At the same time that global temperatures rise, over one billion people around the world subsist energy-poor. National and international government bodies focus alleviation efforts on green energy transitions for the sake of the environment but at an unnoticed cost. Climate-oriented policies shift foreign aid allocations, removing aid from fossil fuels and promoting renewable energy. In developing countries, these foreign aid flows play a role in helping move towards cleaner energy sources; however, this comes with unintended consequences. This thesis aims to establish a connection between foreign aid and rises in energy poverty in developing countries. Through original data analysis, this study shows that increases in official development aid, when coupled with increases in green energy aid, drive an increase in energy poverty as a function of the cost of electricity and household affordability. To explore how foreign aid flows have country-specific impacts on energy poverty, the thesis relies on the examples of India and Bangladesh. The findings presented in this thesis contribute to the broader discussion of foreign aid and climate policy in political science and have valuable insights for policymakers as they work to create a sustainable and affordable future.