The European Bank for Reconstruction and Development announced on August 17 that the EBRD and the Green Climate Fund (GCF) are teaming up to make a major contribution to a $1 billion renewable energy project in Egypt.
According to the Bank, the funding supports the Egyptian government’s Sustainable Energy Strategy, which aims to source 20% of Egypt’s energy from low-emission renewable sources by 2022. The financing will allow independent power producers to invest in the first wave of private renewable energy production in Egypt.
Funding for this initiative, the largest contribution by GCF since it began full-scale operations, is expected to start flowing in September. This follows the signing of a funded activity agreement (FAA) between GCF and the EBRD on August 17.
FAAs mark the last phase of legal arrangements to implement projects between GCF and its Accredited Entities, such as the EBRD. GCF currently has 54 Accredited Entities, which propose climate finance projects and implement those that are approved by the GCF Board.
The EBRD is providing $352.3 million while GCF is making a contribution of $154.7 million. Additional financing from sponsors and other co-financiers will bring the total investment in new private renewable energy generation in Egypt to $1 billion.
GCF Executive Director Howard Bamsey said the FAA signing marks a benchmark in the way the Fund can work with its partners to pool financial resources to boost countries’ mitigation and adaptation capacities. “This FAA is just the beginning of the potential GCF and the EBRD have in combining their financial forces to drive climate action across various parts of the planet,” Bamsey said.
The GCF Executive Director added the GCF Board has already approved three diverse projects proposed by the EBRD in addition to the Egypt initiative. These include a hydropower project in Tajikistan; a water conservation project in Morocco; and a sustainable energy project covering 10 countries.
EBRD President Suma Chakrabarti said this initiative, the nearest to implementation among the GCF-approved EBRD projects, underscores the very productive cooperation between the two organisations. “Climate finance is crucial to the EBRD’s strategy. We are aiming to dedicate 40 percent of our annual investments to the green economy by 2020,” he said, referring to the EBRD’s Green Economy Transition policy, launched in 2015.
Suma heralded the rising prominence of the private sector as a major driving force in the current creation of a global green economy, including climate finance.