Clean Energy Development: Viable means for driving economic growth

Energy is an indispensable commodity in the daily routines of people. People can add daily individual needs such as food, communications, transportation, education, social conditions as well as heating. Social needs cover such broad areas as safety, clean water delivery, outdoor lighting, waste management, education, and health care. In simple terms, energy is a requirement at every stage, every situation from the production of all the needs people have demanded to fulfill life requirements.

Cognizant of the fact that energy development plays a vital role in fostering comprehensive life situations, The Ethiopian Herald held talks with Ephrem Biyadglign, who graduated from Haramaya University in Agro-economics. He said energy is a driver of every development and progress wheel. Hence, much attention needs to be given to it and environmentally friendly renewable energy sources have to be well developed. Yes, he said, the growing energy demand, which is one of the essential factors affecting Ethiopia’s economic growth, remains highly relevant. It is also important to comprehend that economic growth reflects an increase in the level of national income and per capita income.

Ephrem said, “Since ensuring economic growth is one of the main goals of the country, Ethiopia wants to ensure its own energy independence or sustainable energy reserves. In providing economic growth, not only the amount of energy used is of great importance, but also the efficient use of energy to increase production matters. It should be carefully emphasized that not only an increase in energy consumption does lead to economic growth but as a result of economic growth more energy is also consumed.”

He further stated that more energy consumption is needed to achieve the economic growth that Ethiopia aims for, and the energy infrastructures and resources required for economic growth must be ready. It is also necessary to expand investigation on alternative energy sources and close the gaps in country’s energy needs through its consumption.

“Energy demand in Ethiopia will rise enormously as per capita income and population grows. Technologies are now available for addressing the most serious forms of local and regional pollution from fossil fuel use, at costs that are small relative to the costs of energy supplies. In fact, developing countries like Ethiopia are in a position to address their local and regional pollution problems at a far earlier phase of development than were the industrialized countries before them. Furthermore, there are highly promising options for addressing global warming in the long term—renewable energy, hydrogen-related technologies and fuel cells, for example, which could be developed through enlightened exploration, development, and demonstration policies. Much therefore will depend on energy and environmental policies. In reviewing the ground rules for such policies, Ethiopia has to work on achieving economic prosperity and simultaneously meeting rising world energy demand and realizing a low-pollution future across the nation and beyond.”

According to Ephrem, Ethiopia often experiences a strong link between energy consumption and economic growth, with increased energy use typically accompanying expansion.”

True, in Ethiopia energy use is strongly correlated with how much money we have. As people get richer they tend to use more energy. They install lighting in their homes; get a washing machine; air conditioning or heating; maybe even a car.

It is important to provide policy implications for the sustainable development of both energy and the economy at the national and regional levels.In fact, modern energy forms are an economic good, capable of improving the living standards of millions of people in the nation, most of all the billions of people in developing countries who lack access to service or whose consumption levels are far below those of people in industrialized countries.

Melkamu Afeta, a chemical engineer , says technologies are available, emerging, or capable of being developed to solve the pollution problem at a small fraction of the overall costs of energy supplies. The more policies recognize the distinction, the more likely will people be able to meet rising energy demands with greatly reduced pollution. Furthermore, once the benefits of pollution abatement are taken into account, economic output and well-being are likely to be higher not lower.

In Ethiopia and other developing countries the net effects on growth should be even greater, since their environmental priorities in the energy sector include the elimination of smoke, emissions of particulate matter, lead in fuels, and the indoor air pollution and damage to soils and forests arising from the use of traditional fuels.

Thus, he added there is no reason from an economic perspective why developing countries like ours cannot adopt ambitious policies for reducing local and regional pollution from energy production and use. The technologies and practices are now available that should, if the right policies are put in place, enable developing countries to reduce such sources of environmental damage at a much earlier phase of development than was the case for industrialized countries.

True, he added substantially reducing local and regional pollution levels, particularly in developing regions, and increasing new technologies and practices for reducing carbon emissions and other greenhouse gases in the long term helps the nation make a difference. Income growth is the main determinant of citizens ability to afford and use modern energy forms. If development policies fail to promote economic growth on a broad basis, attempts by the energy industry to widen access will have limited success. If development policies are progressive, the industry can be confident that markets will emerge in Ethiopia as well as higher income communities to meet emerging demand and so will improve the social and economic situation of millions of billions of people.

“Needless to state, energy is a key source of economic growth. For industrialization and economic development, economic growth and energy consumption have a positive and linear correlation. Energy use in developing nations like Ethiopia has quadrupled over a few years and is further likely to increase exponentially in the future. Energy advancement in the services offered by energy is desirable and essential, so energy services are important for economic growth as well as for improvement of standards of living of people.”

He further elucidated that various manufacturing and consumption activities use renewable energy as the primary input, so it becomes the main source of economic development and growth. If energy is not sufficient to meet demand, it will lead to a fall in Gross Domestic Product (GDP), the most important input for economic growth.

He added that energy development offers several benefits to developed nations and contributes to economic growth in progressive nations and/or developing nations, which leads to improvement in every respect such as poverty and hunger reduction, raising standards of living, and a better environment. Hence, the relationship between the rate of economic growth and energy consumption in developing nations such as Ethiopia is highly tied.

Energy consumption is an essential requirement for human existence and plays an important role in driving economic growth nationally, regionally, continentally and even worldwide.Not only the importance of energy does lie in its ability to fuel productive activities but it also fuels its facilitation of household consumption. Undoubtedly, the efficient utilization of energy is widely acknowledged as a fundamental element in the pursuit of inclusive tool for economic growth and socio-economic advancement.

This relationship between energy consumption and economic growth, however, is influenced by various factors such as consumption patterns, and policy interventions. These complexities make energy a key driver of growth, yet the link remains unpredictable in both developed and developing countries, indeed, Melkamu added.

It is crystal clear that energy consumption in Africa including our country, such as electricity and petroleum, remains significantly lower than international benchmarks, and understanding their impact on economic growth is critical for informing investment decisions and targeted policy measures aimed at increasing regional energy consumption.

“Definitely, energy consumption in terms of availability is critical for supporting key economic activities, particularly in industries such as manufacturing, transportation, culinary and service sectors. However, Ethiopia continues to face challenges such as insufficient energy supply, such as unreliable electricity, and the volatility of petroleum prices, particularly for manufacturing and transportation sectors that heavily depend on these energy sources,” he underscored.

These challenges are also driven by the need to modernize the economy, rapid population growth, urbanization, and industrialization, all of which intensify the need to explore the impact of electricity and petroleum consumption on economic growth. Thus, such challenges need to be abated following the coordinated effort of the government, development partners, and the private sector, among others.

BY MENGESHA AMARE

THE ETHIOPIAN HERALD TUESDAY 24 JUNE 2025

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