A UNDP and WRI report, titled ‘Long-Term Low Greenhouse Gas Emission Development Strategies,’ highlights the energy sector as important entry point to address energy-related emissions of G20 countries.
EIB backs over €6 billion of clean energy, energy efficiency, sustainable transport, urban development, water, and private sector investments across Europe and Africa.
A progress report on finance from Multilateral Development Banks finds insufficient focus on energy access for the poor.
October 2018: During the month of October, we saw reports on long-term development and mitigation strategies, and more finance was made available for several energy and other investment projects, including from the European Investment Bank. A report by Oil Change International identified the need for Multilateral Development Banks’ to increase finance for energy access, in particular for off-grid and mini-grid clean energy projects. UNDP and the World Resources Institute (WRI) issued a paper on long-term low greenhouse gas (GHG) emission development strategies to provide input for the 2018 G20 Summit in Buenos Aires, Argentina at the end of November, which will be immediately followed by the UNFCCC COP 24 in Katowice, Poland.
Long-Term Strategies to Transition to Low–GHG Development
The Paris Agreement invites Parties to communicate mid-century long-term low GHG emissions development strategies by 2020. These strategies provide direction for near- and medium-term action and planning, and guide the implementation of countries’ nationally determined contributions (NDCs) under the Agreement. Ten countries have submitted their voluntary long-term strategies to the UNFCCC Secretariat so far, with only six G20 members among them. Yet, according to a joint report by WRI and UNDP, G20 countries, with nearly US$70 trillion in expected infrastructure spending through 2040, have an imperative to ensure investments that will facilitate the transitions to low–GHG development and mitigate climate risk through long-term planning.
Based on examples of national long-term planning efforts and implementation approaches in G20 and other countries, the report outlines steps and elements countries can consider in developing their own strategies, and choices they may face. It provides timely input for the G20 Climate Sustainability Group. The G20 Summit in Buenos Aires, Argentina commences at the end of the November, followed immediately by the UNFCCC COP 24 in Katowice, Poland. These events offer opportunities for leaders to take responsibility and give direction. The report notes energy sectoral strategies as particularly important for the G20, which collectively accounts for 80% of global energy-related emissions.
Specifically, the authors suggest inputs for the design of long-term strategies, such as data and scenarios. They also recommend factoring in: existing plans and policies; international cooperation; governance issues; monitoring plans and revision processes; and transparent communication. On the scope and elements of long-term strategies, the report presents entry points for various goals, including meeting sustainable development, mitigation and adaptation objectives. Sectoral pathways presented in existing long-term strategies are also reviewed, with emphasis given to the energy sector. This sector not only carries substantial mitigation potential argues the report. It also offers opportunities, through energy assets and energy planning, to employ technological solutions in areas of: increasing energy efficiency and conservation; decarbonizing electric power and electrifying other energy demand; and optimizing the use of fossil fuels within the remaining carbon budget.
Scaling Up Energy Access
Long-term planning and energy investments that increase energy access also matter in countries with the largest energy access gaps. A report titled ‘Shortchanging Energy Access: A Progress Report on Multilateral Development Bank Finance’ by Oil Change International, a US-based think tank, analyses energy finance provided by Multilateral Development Banks (MDBs) from 2014-2017. The authors stress the need for MDBs to increase energy finance to improve access for the poor, including for off-grid and mini-grid clean energy projects. The analysis observes MDB finance for energy access is trending upwards, but finance for off-grid, distributed renewable energy, and cooking and heating solutions for the poor remain marginal and erratic from year to year.
Specifically, the report finds:
- MDB finance for off-grid and distributed renewable energy solutions for the poor contributed just 2% (an average of US$378 million per year) to the estimated US$36 billion per year of global investment needed in decentralized energy solutions;
- Just 1.6% of MDB energy finance went to clean cooking solutions, with an annual average of only US$312 million, compared to the US$4.4 billion in yearly investment needed; and
- Only 12% of MDB support targeting the “enabling environment” had components to advance energy access for the poor.
The report provides a comparative summary of MDB performance on energy access with individual assessments of African Development Bank, Asian Development Bank, Inter-American Development Bank and the World Bank Group.
District Energy Systems Reduce GHG Emission With Energy Efficient Networks
During the Partnering for Green Growth and the Global Goals 2030 Summit in Copenhagen, Denmark, UN Environment’s District Energy in Cities Initiative was named best State-of-the-Art partnership in the energy sector. Working with 36 cities worldwide, the initiative unlocks private sector finance to cut GHG emissions from heating and cooling through modernization of district energy systems. A district energy system is a network of pipes that heat and cool buildings across a neighborhood or entire city, by using otherwise lost energy sources and connecting renewables, waste heat, thermal storage, power grids, thermal grids and heat pumps. [UN Environment Press Release]
Other News in Energy Finance
The European Investment Bank (EIB) approved finance for a number of energy projects in the areas of: energy efficiency in homes and industries; renewable energy; and energy distribution. These EIB loans include:
- €210 million to support Northwester wind farm off the Belgian coast, a project estimated at €642 million;
- €100 million to the Republic of Uzbekistan to implement energy-efficiency investments of small and medium-sized enterprises, mid-cap companies and private sector entities;
- €77 million to two energy companies in Slovakia, with €60 million to the gas distribution company SPP-distribúcia to upgrade its distribution network, and €17 million to GreenWay, to expand charging stations for electric cars in Central and Eastern Europe;
- €60 million to Portuguese company Windplus to install a floating wind farm off the coast of Portugal, and €40 million to Portuguese The Navigator Company, a producer of uncoated woodfree paper, for modernization of a pulp mill to increase energy and resource efficiency and reduce pollutant emission; and
- €20 million to German-based tado GmbH, a “smart” home climate management company, to step up its research and development activities.
In Australia, Jemena received support from the Australian Renewable Energy Agency for a two-year trial project to produce renewable hydrogen from wind and solar power by electrolysis, the process where electricity is used to split water into hydrogen and oxygen. The government is funding Jemena’s project with 7.5 million Australian dollars to build a demonstration electrolyzer at its facility in Sydney and connect to the existing gas network in New South Wales.
In the UK, Scottish Power has become the first integrated energy company to make the shift from coal and gas generation to wind power. The organization is also investing £5.2 billion in renewable energy, enhanced grid networks and smart technology for customers. [Climate Action News on Jemena Renewable Hydrogen Project][Climate Action News on Scottish Power switch to 100% wind power]
EIB Supports Multiple Investments with Over €6 Billion
The European Investment Bank (EIB) approved backing for €6.67 billion of investments, across Europe and Africa, in sustainable transport, clean energy, energy efficiency, urban development, water, private sector innovation, and education and internet access.
In the area of innovation and energy efficiency, the bank supports private sector investments with €2 billion of new direct financing for investment through local partners. This includes support for automation, robot and digitalization technology, as well as development of electric and alternative fuel tractors, combines and crop spraying agricultural equipment, as well as agricultural infrastructure in Ukraine, and microfinance across Africa.
In the renewable energy and energy infrastructure sector, EIB is providing financing for €1 billion in new energy investments. This includes backing a 42 MW solar project in Poland, two 500 MW solar schemes in Morocco and a 420 MW hydropower scheme in Cameroon, as well as a cross-border inter-connector between Mali and Guinea and renovation of electricity distribution across Greece.
In the transportation sector, the Bank agreed to new financing of €1.2 billion for urban rail, maritime and airport investments. These include: upgrading urban rail in five Spanish cities; the construction of a new metro line in Sofia, Bulgaria; and expanding the airport and improving tram services in Krakow, Poland. Maritime investment in Serbia will enhance safe navigation and improve capacity. Investment to allow larger vessels to use two local ports, expanding cargo and passenger traffic, will improve maritime access to Rome, Italy.
Sharing a similar objective to finance sustainable and integrated transport systems that promote economic growth, the Asian Infrastructure Investment Bank (AIIB) released its Transport Sector Strategy. AIIB will support projects that leverage innovative and greener technologies and promote universal access, safety standards, and equity of opportunity. [EIB Press Release] [AIIB Press Release]
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.