The SDG Knowledge Hub of the International Institute for Sustainable Development (IISD) provides the recent update on climate finance for mitigation compiled by Beate Antonich.
Mitigation Finance Update: Every Project Counts to Help Achieve SDGs 7, 13
The past month saw a number of initiatives relating to: economic transitions supported by renewable energy sources, particularly solar; energy storage solutions and developments; and energy efficient housing projects in line with the ‘Zero Carbon Buildings for All Initiative,’ aiming to decarbonize buildings by 2050. This Update informs of the support provided to various mitigation projects in these sectors around the world. Each of the financing agreements highlighted brings the international community closer to reaching the SDGs, in particular SDG 7 (affordable and clean energy) and SDG 13 (climate action).
World Bank Initiatives Attract Pledges to Promote Energy Storage, Renewable Energy Solutions
Some of the world’s largest gaps in electricity access are observed in Sub-Saharan Africa. Achieving SDG 7 thus poses a huge challenge for the region where poverty is widespread, economic growth remains below population growth for the fourth consecutive year and public debt levels and debt risk are rising. Among renewable energy solutions, solar is seen as a suitable opportunity for the region to reach SDG 7 together with SDG 13 by 2030. On this basis, in 2018, the World Bank launched the Solar Risk Mitigation Initiative (SRMI), in partnership with Agence Française de Développement, the International Solar Alliance and the International Renewable Energy Agency (IRENA).
Last month, France and the Netherlands pledged USD 100 Million to the SRMI to support Sub-Saharan African countries in their off-grid and grid-connected solar energy programmes. France’s USD 55 million will provide private investors with guarantees for smaller solar projects in Sub-Saharan Africa through the Africa Trade Insurance Agency. The Dutch government committed USD 44 Million to the Regional Off-Grid Electrification Project in the Sahel, which aims to increase electricity access for households, businesses and public institutions using modern, standalone solar systems.
Among the most promising tools available to expand integration of renewables with the speed, scale and efficiency that the climate crisis demands are energy storage technologies. The UK pledged USD 250 million to the Climate Investment Funds’ (CIF) Global Energy Storage Program, thereby supporting the World Bank Group’s (WBG) goal of mobilizing USD 1 billion in concessional climate funds for the programme, in addition to WBG’s commitments. The programme is expected to help middle-income countries (MICs) and developing countries increase their use of renewable energy, particularly wind and solar power, and improve energy security, increase grid stability and expand access to electricity. It also aims to finance a tripling of battery storage by 2025.
600 Million in Finance for Renewable Energy in Kazakhstan, Russian Federation
In support of Kazakhstan’s transition to renewable energy sources, the European Bank for Reconstruction and Development (EBRD) approved EUR 300 million in funding to extend Kazakhstan’s Renewables Framework. The programme supports solar, wind, hydro and biogas distribution and transmission projects, and is expected to reduce annual carbon dioxide (CO2) emissions by at least 500,000 tons. Receiving also concessional finance from the Green Climate Fund (GCF), the Renewables Framework will help Kazakhstan reach its renewable energy targets of 3% of generation by 2020 and 50% by 2050, as inscribed in its commitments under the Paris Agreement on climate change.
Renewable energy sector development in the Russian Federation received support with the approval by the New Development Bank (NDB) of a USD 300 million loan to the Eurasian Development Bank (EDB). With the funds, the EDB will support projects using wind, solar and small hydropower energy generation technologies, contributing to the country’s power generation mix in line with its Energy Strategy 2030.
World Bank Approves USD 185 Million Credit for Renewable Energy in Bangladesh
Bangladesh signed a USD 185 million financing agreement with the World Bank to support a Scaling-up Renewable Energy Project. The project aims to add 310 megawatt (MW) renewable energy generation capacity, with a focus on utility scale solar photovoltaic (PV) and rooftop PV. The USD 185 million credit includes a USD 26.38 million loan and a USD 2.87 million grant from the CIF Strategic Climate Fund (SCF).
EIB, Partners Support Renewable Energy Projects in Kenya, Brazil and Italy
In recent news, we saw the European Investment Bank (EIB) sign agreements to finance renewable energy projects within and outside the EU.
In Kenya, the EIB supported the government’s national electrification strategy, which aims to expand access to electricity to all citizens by 2022, including by extending electricity networks and use of on- and off-grid solar standalone solar systems. In view of these plans to diversify the county’s electricity supply away from both rain-dependent hydro and fossil fuels, the EIB and the Dutch Entrepreneurial Development Bank (FMO) each agreed to provide USD 53 million for two new solar photovoltaic plants in Kenya towards the total of USD 147 million. The two schemes will also contribute to improving grid stability, and contribute to expected increase in energy demand.
In Brazil, the EIB facilitated a EUR 150 million credit to EDPR Brazil, the local subsidiary of EDP Renovaveis (EDPR), a renewable energy company headquartered in Spain, to support the development of wind and solar power generation plants. These constructions support Brazil’s transition towards a cleaner energy mix, reduce the country’s energy and fuel imports, lower its CO2 emissions, and create employment opportunities.
In Italy, the EIB and Poste Italiane agreed on a EUR 400 million loan to facilitate the implementation of the company’s ‘Deliver 2022’ strategic plan. Among the goals of the 80 sub-projects of the plan supported by EIB financing are the planned installation of highly energy efficient solar panels in 661 post offices and the improvement of energy efficiency standards throughout the network in order to reduce carbon emissions.
Spain, Sweden Receive EIB Support for Clean Urban Transport, Energy Efficient Housing
Under the Investment Plan for Europe and as part of a joint EIB-European Commission financing instrument, the EIB provided almost EUR 200 million since 2017 to cut emissions produced by buses in Spain’s largest cities. The Bank recently approved the provision of more funds to support clean transport projects in other Spanish cities under the Cleaner Transport Facility.
In Sweden, the EIB agreed to a EUR 300 million financing facility with Heimstaden Bostad AB, a Swedish residential company, for the development of eight residential properties in five cities. The projects will result in about 3,300 new affordable housing units with high energy performance standards.
Recommended Reading List
In the context of this Update, two mitigation finance and policy-related publications are suggested:
During the UN Secretary-General’s Climate Action Summit on 23 September, government, business and civil society leaders launched the ‘Zero Carbon Buildings for All Initiative,’ to decarbonize buildings by 2050. A related paper titled, ‘Accelerating Building Decarbonization: Eight Attainable Policy Pathways to Net Zero Carbon Buildings for All,’ by the World Resources Institute (WRI), presents policy pathways that combine up to five components: basic energy efficiency; advanced energy efficiency; on-site carbon-free renewable energy; off-site carbon-free renewable energy; and carbon offsets in cases where efficiency measures and renewables cannot meet 100% of energy demand.
A publication by the International Monetary Fund (IMF) titled, ‘Macroeconomic and Financial Policies for Climate Change Mitigation: A Review of the Literature,’ provides an overview of policy tools for enabling a large-scale transition to a low-carbon economy and climate change mitigation. The findings highlighted in the paper include: climate change mitigation can generate inequality within and between countries; and within countries, energy subsidy reform poses deep social and political acceptability issues. This, the authors conclude, underlines the need for energy subsidy reforms to include spending or redistribution components. They also provide examples of successful energy subsidy reforms that include compensatory measures for energy price hikes.