19 July 2018: Climate mitigation finance news in July included announcements celebrating Ireland’s fossil fuel divestment bill, the World Bank Group’s record in climate finance and the Forest Carbon Partnership Facility’s 10 year anniversary, as well as a new finance partnership for sustainable infrastructure in Asia and financing for renewable energy in Croatia, Uruguay, Tunisia and Sub-Saharan Africa.

Celebrating fossil-fuel divestment, record climate investment and 10 years of support for REDD+

Ireland’s parliament has passed a bill that will require the country’s €8 billion sovereign fund, the Irish Strategic Investment Fund, to stop investments in fossil fuels and to divest existing investments within the next five years. Michael D’Arcy, State Minister at the Department of Finance, Ireland, commended the achievement of passing the bill, noting that his country was “taking the opportunity to show real global leadership in a move away from fossil-fuel investment dependency,” stressing the potential of such policies when implemented by a number of countries to “drive demand for low-fossil-fuel investments at a global level.” [Ireland Government Press Release] [Fossil Fuel Divestment Bill]

The World Bank Group has announced that it set a new record for its climate finance, reporting that US$20.5 billion was delivered to climate-related projects in 2018, amounting to 32.1% of its total 2018 financing, and exceeding the 28% target set by the Group in its 2016 Climate Change Action Plan. According to the Group, the increased financing has seen results including integrating an additional 18 GW renewable energy capacity into electricity grids, the mobilization of US$10 billion in commercial finance for clean energy, 22 climate-smart agriculture investment plans in 20 countries, and US$784 million invested in improving climate-resilient transport systems. [World Bank Press Release]

The Forest Carbon Partnership Facility (FCPF) has released a publication celebrating its 10 year anniversary. First announced at the UN Climate Change Conference in Bali, 2007, the FCPF is a global partnership of governments, businesses, civil society, and Indigenous Peoples focused on reducing emissions from deforestation and forest degradation and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks (REDD+). The publication outlines the progression of the FCPF over the past 10 years, noting that the Facility now works with 47 developing countries across Africa, Asia-Pacific, and Latin America and the Caribbean.

The Facility guides countries to a stage to implement REDD+, including through designing national REDD+ strategies, developing reference emission levels, and designing measurement, reporting, and verification systems. It also supports countries in setting up national REDD+ management arrangements that include environmental and social safeguards. The anniversary publication is a compilation of short excerpts from articles, publications and interviews produced by the FCPF in its 10-year history, including on establishing global standards for REDD+, leveraging investments and supporting policy changes, developing tools for technical capacity building, engaging with stakeholders and boosting gender integration. [Forest Carbon Partnership Facility 10 Years]

Partnering for sustainable infrastructure in Asia

The Asian Infrastructure Investment Bank (AIIB) and the Islamic Development Bank (IsDB) have signed a Memorandum of Understanding (MOU) titled, ‘Mobilizing Financing for Infrastructure: Innovation & Collaboration.’ The agreement states that the two organizations actively seek to co-finance projects in areas in which they both operate and that feature a “strong focus” on sustainable infrastructure. Such projects include, for example, the development of infrastructure for energy generation, power transmission, transportation and telecommunications, as well as rural infrastructure for water supply and sanitation, environmental protection, urban development and logistics. [AIIB Press Release][IsDB Press Release]

Investing in renewables in Europe, Africa and Latin America

The European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the European Commission (EC) have joined up their efforts to finance electricity and heat generation units in Zagreb, Croatia, to replace older, less efficient units. The €130 million loan will include a €87 million loan from EBRD and a €43 million loan from EIB. The EIB loan is guaranteed by the European Fund for Strategic Investments (EFSI), a pillar of the Investment Plan for Europe, commonly referred to as the “Juncker Plan,”referring to the European Commission’s current President Jean-Claude Juncker. EFSI enables loan conditions to be better aligned to the economic lifetime of the asset to be financed and is intended to act as a catalyst for engaging private sector banks. [EBRD Press Release]

IDB Invest, the private sector institution of the Inter-American Development Bank (IDB) Group, has issued a US$114.4 million financing package for the refinancing of two solar plants in Uruguay. IDB reports that the two plants, ‘El Litoral’ and ‘El Naranjal’ have been in operation since 2017, and generate approximately 135 GWh of renewable energy per year. The power will be sold to the state grid company National Administration of Power Plants and Transmissions for the next 25.5 years. It is expected that 1.9 million tons of emissions will be displaced over the full lifespan of the project. The plants contribute to the exponential growth Uruguay has seen in in its solar and wind energy market since launching the national renewable energy program, from 1.3% of total energy generated in 2013 to 32.2% in 2017. [IDB Press Release]

Removing energy subsidies in Tunisia will enable the reallocation of public finance towards safety nets.

The World Bank has announced a US$500 million operation in Tunisia, which aims, among other things, to support the shift to renewable energy in the country, including contributing towards the goal of generating 30% of all electricity from renewable sources by 2030. A key part of the operation will involve removing energy subsidies. According to the World Bank such subsidies “place huge pressures on the national budget and benefit the rich, who consume more energy than the poor”. The removal of such subsidies will enable the reallocation of public finance towards social safety nets.

The operation will also improve the investment conditions and economic efficiency of the sector, helping to attract green financing. Through creating the enabling conditions for scaling up renewable energy, the project expects to improve energy security through reducing dependence on fossil fuel imports. [World Bank Press Release]

The World Bank has also announced a project in Sub-Saharan Africa to help strengthen technical capacity for the preparation of large-scale solar parks and grid integration of solar electricity. Another project in the Soloman Islands aims to increase access to grid-supplied electricity and renewable energy generation. [World Bank Sub-Saharan Africa Project Announcement][World Bank Soloman Islands Project Announcement]

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The SDG Knowledge Hub publishes monthly climate finance updates, which largely focus on multilateral financing and cover, inter alia, mitigation and adaptation project financing news and lessons, institutional events and news, and latest developments in carbon markets and pricing. Past climate finance updates can be found under the tags: Finance Update: Climate Change; and Finance Update: Sustainable Energy.