Brussels, 28 March 2008
New €80 million fund to boost energy efficiency and renewables in the fight against climate change in developing countries.
The Global Energy Efficiency and Renewable Energy Fund (GEEREF)
As part of its initiatives to fight against climate change, the European Commission has launched a fund, the GEEREF, to mobilise private investments in energy efficiency and renewable energy projects in developing countries and economies in transition. Targeted at small scale projects, the Commission will kick-start the fund with a contribution of up to €80million over the next four years.
Today, some 1.6 billion people in the world's poorer countries still have no regular access to reliable energy services. At the same time, promoters of energy efficiency and renewable energy projects face significant difficulties in raising commercial funding, the growing concern lying in the lack of risk capital. It is hoped that this fund will mobilise private sector finance especially in small scale projects to accelerate the transfer, development and deployment of environmentally sound technologies, and thereby help to bring secure and clean energy supplies to people in poorer regions of the world.
Explaining their motivation to launch this fund, European Commissioner for development and humanitarian aid, Louis Michel and Commissioner for Environment Stavros Dimas, both emphasized that "Developing countries must have access to affordable and clean energy supplies: this is a prerequisite for sustainable development. This fund can foster private investments and become a real source of sustainable development, especially in Africa”.
The GEEREF aims to help overcome these barriers to investments by providing new risk-sharing and co-financing options to mobilise international and domestic investments. It is an innovative global risk capital fund that will use limited public money to mobilise private investment in small scale energy efficiency and renewable energy projects in developing countries and economies in transition. Priority will be given to deploying environmentally sound technologies with a proven technical track record.
This fund is the first concrete initiative deriving from the "European Initiative on Clean, Renewable Energy, Energy Efficiency and Climate Change related to Development". Through this fund, the Commission follows up on its commitments to fight climate change and transfer clean technologies to developing countries. The European Union works in accordance with the agreement reached in Bali on the launch of negotiations towards a comprehensive climate change framework to be completed by the end of 2009.
How will the GEEREF work?
The GEEREF will invest in regional sub-funds in the African, Caribbean and Pacific (ACP) region, North Africa, non-EU Eastern Europe, Latin America and Asia. The focus will be on investments below €10 million as these are mostly ignored by commercial investors and international finance institutions.
The Commission intends to put €80 million into GEEREF in 2007-2010 to kick-start the initiative. Total initial funding from public and commercial sources of €150 to 200 million is anticipated, and this is expected to mobilise additional risk capital of at least €300 million and possibly up to €1 billion in the longer term. Today, several Member States of the European Union and of the European Economic Area have already showed interest in participating to the fund.
This initiative supported by the European Parliament is being implemented with the assistance of the European Investment Fund.