EC Launches €80M Fund to Boost Energy Efficiency, Renewables

March 31, 2008 // Published as a news service by IHS

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As part of its initiative to fight against climate change, on March 28 the European Commission (EC) launched the Global Energy Efficiency and Renewable Energy Fund (GEEREF).

The aim of this fund is to mobilise private investments in energy efficiency and renewable energy projects in developing countries and economies in transition.

Targeted at small-scale projects, the EC will kick-start the fund with a contribution of up to €80 million over the next four years.

Some 1.6 billion people in the world's poorer countries currently 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, often due to the lack of risk capital.

The EC intends that this fund will spur 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.

The EC plans to put €80 million into GEEREF for the period 2007-2010 to kick-start the initiative. Total initial funding from public and commercial sources of €150 to €200 million is anticipated. This is expected to mobilise additional risk capital of at least €300 million and possibly up to €1 billion in the longer term.

Louis Michel, EC commissioner for development and humanitarian aid, and Stavros Dimas, EC environment commissioner, 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 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 increase 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 EC is following through on its commitment to fight climate change and transfer clean technologies to developing countries.

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 less than €10 million, as these are mostly ignored by commercial investors and international finance institutions.

This initiative, which is supported by the European Parliament, is being implemented with the assistance of the European Investment Fund. Several member states of the European Union and the European Economic Area have already showed interest in participating in the fund.

Source: European Commission.