The European Bank for Reconstruction and Development (EBRD) and the European Union have agreed a new €50 million programme of financial guarantees aimed at scaling up investment in renewable energy in Ukraine and in the EU’s Southern Neighbourhood with a particular focus on Jordan, Lebanon and Tunisia, which will benefit from wind and solar energy expansion, the EBRD said on 22 January.

“The guarantee agreement will help finance many more renewable energy projects, with private sector financing,” EU European Neighbourhood Policy and Enlargement Negotiations Commissioner Olivér Várhelyi said, adding that the agreement will help cut greenhouse gas emissions, first in Ukraine and then in countries in the EU’s Southern Neighbourhood, with a particular focus on Jordan, Lebanon and Tunisia. “We’re convinced the guarantee provides sufficient risk cover to attract major private sector investment in countries where not enough such financing is available, therefore we are preparing to support even greater volume of private investment in sustainable development post 2020, through the European Fund for Sustainable Development Plus, which will also cover enlargement countries,” Várhelyi said.

For his part, EBRD Vice President, Policy and Partnerships Pierre Heilbronn said the bank is delighted to partner with the EU for such an urgent cause as climate action. “Our lending combined with the EU’s financial instruments encourages more participation of the private sector in investments which are very much needed to face the global challenges of the future, including a more sustainable development model. This first agreement is only the beginning of our cooperation with the EU through the External Investment Plan in the EU neighbourhood regions,” Heilbronn said.

This is the first EBRD guarantee programme to receive funding through the EU External Investment Plan (EIP), an EU initiative launched in 2017 with the aim to attract more investment, especially from businesses and private investors, into countries neighbouring the EU and in Africa.

Under the new programme, the EBRD will provide guarantees to lenders such as local commercial banks, which will allow them to provide financing to projects alongside EBRD loans. The guarantee is expected to help generate total investments of up to €500 million.

Through the EIP, to date the EU has allocated €4.5 billion in public funds to leverage €44 billion in public and private investment for development in countries neighbouring the EU and in Africa.

The EBRD will implement the largest volume and number of guarantees under the EIP in the EU Neighbourhood.

According to the EBRD, the projects under this programme will help unlock countries’ substantial renewable energy potential, promote the development of renewable energy more widely and demonstrate how the private sector can help meet growing demand for energy. The guarantee is expected to provide 340 MW of additional installed renewable energy capacity. This translates into an extra 970 gigawatt hours per year of electricity production from renewable sources, and a cut in annual greenhouse gas emissions equivalent to 530 kilotons of CO2.

According to the EBRD, the programme will have an important demonstration effect, introducing a number of new developers and commercial financiers to these markets.