Latest update on climate finance for mitigation

The SDG Knowledge Hub of the International Institute for Sustainable Development (IISD) provides a recent update on global developments in climate finance for mitigation.

 

Climate Mitigation Finance Update: Initiatives in Africa, South America and Europe Signal Transition Towards a Low-Carbon Future

Multilateral development banks (MDBs) operating in Africa, South America and Europe have funded several new projects that contribute to the transition to a low-carbon future. These initiatives include the first fleet of electric buses in the Caucasus, renewable energy projects in Cameroon, Greece, Tanzania and Uruguay, and a £246 million initiative in battery technology in the UK.

EBRD Signs First Project under Greek Renewable Energy Framework

The European Bank for Reconstruction and Development (EBRD) has invested €28.3 million in bonds issued by Hellenic Petroleum to support several solar and wind power projects that will contribute to the company’s energy diversification, amounting to 190 MW increased renewable energy capacity.

The investment marks the first activity under EBRD’s €300 million Greek Renewable Energy Framework, launched in March 2017, which aims to enable Greece to realize its “huge potential” in solar, wind, biomass and geothermal energy sources. The Framework builds on a market-based, renewable-energy support scheme established in Greece that replaces fixed-price feed-in tariffs with competitive auctions.

Framework projects must fulfil a set of standards established by the EBRD Green Economy Transition (GET), which is part of the EBRD’s strategy to increase its annual business investment in green energy to 40% by 2020. Alongside competitiveness, inclusion, good governance, resilience and integration, “greenness” is one of six “transition qualities” the EBRD defines as characterizing a successful economy.

CIF Supports Geothermal Energy in Tanzania

The Climate Investment Funds (CIF) has approved US$21.7 million in financing for the United Republic of Tanzania’s Geothermal Energy Development Project. The project is described as a “significant step” towards transforming the country’s economy through sustainable energy. Funded through the CIF’s Scaling-up Renewable Energy Program (SREP), it will include a US$5 million loan, and US$16.73 million of grant resources to be implemented by the African Development Bank (AfDB). In addition, the project is expected to create an enabling environment that will further mobilize both public and private investments, with the total contribution from the private sector expected to be around US$300 million.

The 100 megawatt (MW) project will focus on developing southwestern Tanzania’s Ngozi geothermal steam field and aims to highlight the potential role of geothermal technology in Tanzania’s energy transformation. According to the AfDB, Tanzania has the potential to generate 650 MW of energy from its 15 geothermal sites and has committed to diversifying its energy sector, half of which currently is generated using fossil fuel sources. Such projects will also reduce the country’s electricity dependence on Uganda, Zambia and Kenya, and help to increase Tanzania’s resilience to future shocks impacting its power sector.

Hydropower Plant Gets Underway in Cameroon

Akinwumi Adesina, President of the AfDB, set down a ceremonial foundation stone for a new 30 MW hydroelectric plant at the Lom Pangar Dam in eastern Cameroon. The power plant aims to increase energy access for several local regions in Cameroon and respond to the growing national electricity demand. According to Adesina, the project will provide electricity to 10,000 further households and begins the “implementation phase” of work to enable energy access for schools, hospitals, and businesses, contributing to enabling access for the ten million Cameroonians that are currently lacking electricity access.

The project is part of the current total US$135 million of financing from the AfDB for energy projects in Cameroon, and is co-financed by the French Agency for Development (CFAF 39.353 billion), AfDB (CFAF 34.792 billion), the World Bank (CFAF 64.820 billion), the Development Bank of the Central African States (CFAF 20 billion) and the European Investment Bank (EIB) (CFAF 19.679 billion).

Renewable Energy Projects Get Connected in Uruguay

The Inter-American Investment Corporation (IIC) is financing a transmission line to connect renewable energy projects in two Uruguayan cities, Melo and Tacuarembó. IIC signed a US$56 million senior A-loan and a US$25 million B-loan to finance the project, which will be operated by special purpose vehicle Difebal S.A, owned by Terna. The financial agreement includes a tenor of 17 years. According to IIC, it underscores the Corporation’s commitment to mitigating climate change while ensuring the reliability of the national electricity system in Uruguay.

Batumi Receives First Electric Buses

The EBRD has launched a project to modernize and improve public transport in Batumi, Georgia, through a fleet of new buses with improved environmental and operational performances. The project, a first for the EBRD, is providing a sovereign loan of €5.5 million that will enable Batumi’s municipal bus company, Batumi Autotransport LLC, to buy ten electric buses and 20 buses that meet the Euro V emissions standard. The ten electric buses will be the first of their kind in the Caucasus. In addition to the environmental benefits, the funding also aims to improve the reliability, safety and efficiency of public transport in Batumi. The project is supported by the EBRD-managed multi-donor Eastern Europe Energy Efficiency and Environment Partnership (E5P) Fund, of which the European Union (EU) is the largest contributor. According to the EBRD, the new, lower emissions buses will also have low floors that will enable easier access for passengers with reduced mobility.

UK to Invest in Battery Technology

As part of its Industrial Strategy, the UK has launched a £246 million initiative, known as the Faraday Challenge, which aims to make the UK a world leader in the design, development and manufacture of electric batteries. Phase one of the initiative sees the launch of a £45 million competition, led by the Engineering and Physical Sciences Research Council (EPSRC), to create a virtual Battery Institute that will address key industrial challenges in the field of battery technology. Leading voices within the Strategy have said they hope the Faraday Challenge will enable the UK to play a key role in the “energy and automotive revolution” and contribute to the UK’s transition towards a low carbon economy.

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