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More growth and jobs: €500 million in EU funding available for clean energy infrastructure

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The European Commission is releasing today €500 million of funding for cross-border energy infrastructure. The projects will strengthen the EU’s internal energy market, enhance security of energy supply, and help provide clean, sustainable energy for Europe.  The 2018-2 CEF Energy call for proposals (CEF-Energy-2018-2) under the Connecting Europe Facility (CEF-Energy) will be open until 11 October 2018.

Proposed projects, which can be either studies or construction works, will be evaluated against several criteria. These include their state of maturity, their cross-border dimension, and to what extent they will remove bottlenecks to energy flow and end energy isolation of EU countries. To be eligible to apply for CEF funding, projects must be designated Projects of Common Interest (PCIs). PCIs are considered essential for completing the EU’s internal energy market, and are required to have a significant impact on at least two EU countries. The third PCI list, which entered into force in April 2018, has an increased focus on electricity projects, with 110 projects out of 173 financing electricity transmission and smart grids. 53 projects support gas and six are in oil transportation. For the first time there are also four projects in the area of cross-border carbon dioxide transportation.

The CEF-Energy provides EU funding for energy infrastructure projects that increase competitiveness, enhance the EU’s security of energy supply, contribute to sustainable development and protection of the environment, as well as promotion of safe, secure (including cybersecurity) and efficient network operation. It is making available a total of €5.35 billion for energy projects in the period 2014-2020.

Recent crucial examples of CEF-Energy grants are: the construction of the Biscay Gulf France-Spain interconnection (at €578 million, the largest CEF-Energy grant ever awarded); the support for the Balticconnector project, which will establish a physical interconnection between the Finnish and Estonian gas transmission systems; and the grant for the SINCRO GRID project, which will help the Slovenian and Croatian transmission and distribution grid.

Projects submitted in response to this call will be evaluated in November and December 2018, and the results will be communicated in early 2019.

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New ADB Platform to Help Boost Financing for Climate Action

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The Asian Development Bank (ADB) has launched a new platform aimed at helping its developing member countries in Asia and the Pacific mobilize funding to meet their goals under the Paris Agreement.

The NDC Advance platform will help countries mobilize finance to implement Nationally Determined Contributions (NDCs) regarding greenhouse gas emissions that each country has voluntarily committed to under the Paris Agreement. NDCs also describe priority actions for countries to adapt to climate change.

The announcement was made at the 24th Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP24) in Katowice, Poland, which is aiming to finalize a rulebook for the Paris Agreement when it goes into effect on 1 January 2020.

The agreement aims to limit the increase in the global average temperature to below 2°C, while aiming for 1.5°C.

“Through their NDCs, our developing member countries have made ambitious commitments to respond to climate change,” said ADB Vice-President for Knowledge Management and Sustainable Development Mr. Bambang Susantono. “We need to ensure that countries are able to mobilize the needed financing to deliver on their commitments. NDC Advance will help countries devise investment plans to tap financing from a variety of sources and to implement priority projects effectively.”

NDC Advance is funded through a $4.55 million grant from ADB and will have three aims: providing technical assistance that helps countries better engage with potential sources of climate finance and to make use of innovative finance mechanisms; identifying and prioritizing climate projects; and supporting countries in tracking how projects deliver against their NDC goals.

The new initiative will help propel the climate actions ADB has committed to under its Strategy 2030 program.

ADB earlier this year committed to ensuring that 75% of its operations will support climate change mitigation and adaptation by 2030, while providing cumulative climate financing of $80 billion from its own sources between 2019 and 2030.

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Egypt: Shifting Public Funds from Infrastructure to Investing in People

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Egypt has an opportunity to capitalize on current reforms by enabling more private investment in infrastructure and freeing up public funds for investments in people’s education, health and social protection. This is according to a new World Bank report launched today in Cairo,‘’Egypt: Enabling Private Investment and Commercial Financing in Infrastructure’’, which calls for increasing the public funds available for building human capital by expanding successful energy reforms to other key sectors, such as transport, logistics, water and agriculture.

Egypt can learn from global experience and gain by increasing the use of private sector finance, management expertise and innovation in commercial infrastructure and agriculture, conserving public sector resources for where they are needed most”, said Clive Harris, Head for Maximizing Finance for Development for the World Bank.

Egypt is now beginning to reap the benefits of its transformative economic reform program. Macroeconomic stability and market confidence have been largely restored, growth has resumed, fiscal accounts are improving, and the public debt ratio is projected to fall for the first time in a decade.

Egypt has demonstrated that by having a package aimed at reducing economic risks, pursuing sector level reforms and well-prepared bankable projects, large scale foreign and domestic investment can be achieved, This is visible through the  US$ 2 billion invested in the largest solar park in the world, Benban, as well as US$ 13 billion in the Zohr field and other natural gas projects” said Ashish Khanna, Program Leader for Sustainable Development at the World Bank.

The report indicates that the action plan to further enabling private investment requires clear policy actions to resolve four cross cutting barriers to private investment – namely better management of land, transparency in Government procurement, efficiency in state owned enterprise and encouraging long term domestic financing. This needs to be complemented with developing projects for private investments with maximum economic impact, like the regional energy hub, logistics corridors, freight transport and agricultural transformation hubs.

The gains from reforms would also free up scarce public resources and allow for them to be re-allocated to investments in the education and health of Egyptians, the country’s human capital. Reforms in the energy sector provide an example of what is possible. The reform of energy subsidies freed up US$14 billon, reduced the pressure on the national budget and allowed the quadrupling of the investments in social safety net programs.

According to the report, for Egypt to maintain its reform momentum and focus on investing in its citizens, it will need to broaden and deepen its reform agenda to other sectors. This would be part of a fundamental shift away from the state as a provider of employment and output to an enabler of private investment; with the economy driven by a dynamic private sector generating jobs for the youth.

The report identifies four sectors which have huge potential for private investments and illustrates how successfully attracting those investments would generate growth, create jobs and ultimately contribute to developing Egypt’s human capital. The four sectors analyzed in the report are: transport, energy, water and sanitation, and agriculture.

The World Bank provides technical, analytical and financial support to help Egypt reduce poverty and boost shared prosperity. The focus of Bank support includes social safety nets, energy, transport, rural water and sanitation, irrigation, social housing, health care, job creation, and financing for micro and small enterprises. The World Bank currently has a portfolio of 16 projects with a total commitment of US$6.69 billion.

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New Initiative to Mitigate Risk for Global Solar Scale-up

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The World Bank and Agence Française de Développement (AFD) are developing a joint Global Solar Risk Mitigation Initiative (SRMI), an integrated approach to tackle policy, technical and financial issues associated with scaling up solar energy deployment, especially in some of the world’s poorest countries.

Initiated in Delhi at the first International Solar Alliance (ISA) summit in March 2018, the initiative will support the ISA’s goal to reduce costs and mobilize $1,000 billion in public and private investments to finance 1,000 GW of global solar capacity by 2030.

“The World Bank, in partnership with AFD, remains committed to the International Solar Alliance’s goals and to global efforts to fight climate change. Through this new, integrated approach, we hope to further scale up solar energy use by reducing the cost of financing for solar projects and de-risking them, especially in low-income countries,” said Riccardo Puliti, Senior Director of Energy and Extractives at the World Bank.

As the costs for solar power have fallen steadily, solar power is increasingly viewed as a key component in the fight against climate change. However, solar deployment has been slow in some emerging markets, particularly Africa, due to layers of risks perceived by the private sector in financing solar projects. The SRMI aims to change that.

“This partnership with ISA and the World Bank is another step towards achieving the objective of the Paris Agreement of redirecting financial flows in favor of low carbon and resilient development pathways.  AFD is glad to join forces with these partners to deliver on the commitments made at COP21, to bring solutions to de-risk potential solar investments and mobilize the private sector to invest in sustainable development” said Rémy RIOUX, CEO of AFD.

The SRMI’s integrated approach will include:

  • Support for the development of an enabling policy environment in targeted countries
  • A new digital procurement (e-tendering) platform to facilitate and streamline solar auctions
  • Targeting relatively small (under 20 MW) solar projects, offering a more comprehensive risk mitigation package of support to a wider range of investors and financiers to promote scale up at later stages. The financial risk mitigation package offered by SRMI will be supported by technical assistance and concerted engagement on planning, resource mapping and power sector reforms to ensure the creditworthiness of utilities in these countries
  • Mitigating the residual project’s risks through adequate risk mitigation financial instruments for both on and off-grid projects

The governments of India and France launched the ISA, an international organization as part of the Paris Climate Agreement in 2015 to scale up solar energy resources, reduce the cost of financing for solar projects around the world and ultimately help reach the Sustainable Development Goal on energy (SDG7) of providing access to affordable, reliable, sustainable and modern energy to all. To date, 71 countries have signed the constituting treaty of the ISA, and 48 have ratified it.

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