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Towards a climate-neutral Europe: EU invests over €10bn in innovative clean technologies

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The Commission today announces an investment programme worth over €10 billion for low-carbon technologies in several sectors to boost their global competitiveness.

EU innovative climate action, as announced today, has a range of benefits for the health and prosperity of Europeans with an immediate, tangible impact on people’s lives – from the creation of local green jobs and growth, to energy-efficient homes with a reduced energy bill, cleaner air, more efficient public transport systems in cities, and secure supplies of energy and other resources.

Commissioner for Climate Action and Energy Miguel Arias Cañete said: “Less than three months after adopting our strategic vision for a climate neutral Europe by 2050, we are putting the money where the mouth is. Our objective is to keep building a modern, competitive and socially fair Paris-aligned economy for all Europeans. For this to happen, we will need deployment of clean innovative technologies on an industrial scale. This is why we are investing in bringing to the market highly innovative technologies in energy intensive industries, in carbon capture, storage and use, in the renewable energy sector and in energy storage. We are today unleashing technological solutions in all Member States and pressing the fast-forward button in our transition to a modern and climate-neutral society in Europe.”

The Commission wants to ensure that Europe continues to be at the top of the league as regards new high-value patents for clean energy technologies. This leadership provides a global competitive advantage, allowing Europe to harvest first mover benefits by increasing exports of European sustainable products and sustainable technology and business models.

On 28 November 2018, the European Commission adopted a strategic long-term vision for a prosperous, modern, competitive and climate neutral economy by 2050 – A Clean Planet for all. The strategy shows how Europe can lead the way to climate neutrality while preserving the competitiveness of its industries by investing into realistic technological solutions. This transition also requires further scaling-up of technological innovations in energy, buildings, transport, industry and agriculture sectors.

Next steps

The Commission aims to launch the first call for proposals under the Innovation Fund already in 2020, followed by regular calls until 2030.

Background

The Innovation Fund will pool together resources amounting to around €10 billion, depending on the carbon price. At least 450 million allowances from the EU Emissions Trading System (EU ETS) Directive will be sold on the carbon market in the period 2020-2030. The revenues of these sales depend on the carbon price, which is currently around EUR 20.

Any undisbursed revenues from the Innovation Fund’s predecessor, the NER 300 programme, will also be added to the Innovation Fund. Thus, the total endowment of the Fund can be around EUR 10 Billion.

The Innovation Fund aims to create the right financial incentives for companies and public authorities to invest now in the next generation of low-carbon technologies and to give EU companies a first-mover advantage to become global technology leaders.

The Innovation Fund builds on the experience from the NER300 programme, the current EU programme to support the demonstration of carbon capture and storage and renewable energy technologies. It expands its scope to also explicitly cover energy storage and energy intensive industries and is better tailored to promote innovation through an improved and simplified governance. It will offer grants to cover up to 60% of the additional capital and operational costs linked to innovation for the selected projects, disbursing the money in a flexible way based on the needs of individual projects.

In addition, following the Commission’s decision to reinvest the unspent funds from the first NER 300 call amounting to some EUR 487.6 million, the transfer of unspent NER300 funds to InnovFin Energy Demo Projects is now taking effect and the Commission confirmed that three existing projects can now benefit from a loan guarantee backed by funds from the NER300.

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Luxembourg, UN Environment sign deal to accelerate sustainable finance

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Luxembourg today signed an agreement to back a UN Environment-convened network that helps the world’s major financial centres to increase green and sustainable finance.

The International Network of Financial Centres for Sustainability (FC4S) has 22 members from Europe, Asia, Africa, and North America – each of them committed to shifting their investments to support the goals of the 2030 Agenda for Sustainable Development and the Paris Agreement.

Home to Europe’s largest investment fund center with a 62 per cent global market share in cross-border funds, along with136 international banks from 29 countries and over 35,000 listed tradable securities, Luxembourg is today one of the world’s leading financial centers.

“A recognized European leader in green and sustainable finance, Luxembourg is stepping up its commitment to support the efforts of the International Network of Financial Centers for Sustainability,” said Pierre Gramegna, Minister of Finance of Luxembourg, as he signed the agreement to provide USD 500,000 in funding to FC4S. “This commitment is aimed at helping the FC4S to better connect financial centers, to foster exchange of knowledge and thus help shaping the trends and developments that will define sustainable finance in the years to come.”

The levels of green and sustainable finance needed to deliver on the Paris Agreement and the sustainable development goals are still insufficient. For example, the World Resources Institute estimates that USD 5.7 trillion will need to be invested annually in green infrastructure by 2020. However, 2018 research by the United Nations Framework Convention on Climate Change found that climate finance, while growing, had hit only USD 681 billion annually by 2016.

“Much of the resources needed to finance the transition to a low-emission, sustainable world will have to come from private sources,” said Satya S. Tripathi, UN Assistant Secretary-General and head of UN Environment’s New York office. “This is why the work of FC4S, helping financial centres to green their flows, is crucial. UN Environment is very grateful to Luxembourg for increasing its commitment to green and sustainable finance.”

Luxembourg’s commitment to financial innovation and sustainable finance has led to the launch of a wide range of initiatives, including  the first Stock Exchange dedicated to green, socially responsible and sustainable securities: The Luxembourg Green Exchange (LGX) in 2016.

The LGX has the largest market share of listed green bonds worldwide. Luxembourg leads the European market when it comes to responsible investment funds, with a market share of 39 per cent. 69 per cent of worldwide assets in microfinance investment vehicles are Luxembourg domiciled funds.

“Financial centres are key pressure points in the global financial system, and FC4S members like Luxembourg are pressing hard to make the system sustainable,” said Stephen Nolan, head of the FC4S network. “This contribution from Luxembourg is yet another sign that the smart money is getting behind sustainability.”

The signing took place at an event during the Spring Meetings of the World Bank Group and the International Monetary Fund, at which Mr. Gramegna, John Berrigan, Deputy Director-General, Financial Services and Capital Markets Union (FISMA), and Marcos Ayerra, Chair of the Inter-American Regional Committee and others looked at how to increase the role of financial centres in financing sustainability.

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World Bank Supports Climate Resilient Agriculture and Infrastructure Services in Sri Lanka

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Sri Lanka and the World Bank today signed two new agreements worth $150 million to improve climate resilience and agriculture productivity for small farmers and support priority infrastructure through public-private partnerships.

Hartwig Schafer, World Bank Vice President for the South Asia Region and Dr. R.H.S. Samaratunga, Secretary, Ministry of Finance signed the agreements on behalf of the World Bank and the Government of Sri Lanka respectively. The signing took place during the World Bank Group and IMF Spring Meetings 2019 in Washington, D.C., in the presence of Hon. State Minister of Finance, Eran Wickremaratne.

The new projects include:

    A $125 million credit for the Climate Smart Irrigated Agriculture Project, which will improve the resilience and productivity of agriculture for more than 470,000 small farmers in 6 provinces in the dry zone of the country.

    A $25 million loan for the Framework Development and Infrastructure Financing to Support Public-Private Partnerships Project, which will help the Government of Sri Lanka develop a platform to attract and sustain investments required to fulfill its future development priorities.

“Sri Lanka is on a path to becoming an upper middle-income country,” said Hartwig Schafer. “To ensure that this growth is sustainable, affordable, and resilient, the two projects are designed to leverage private sector financing for infrastructure and address climate vulnerability in the agriculture sector.” 

The Climate Smart Irrigated Agriculture Project will be implemented by the Ministry of Agriculture, Rural Economic Affairs, Livestock Development, Irrigation and Fisheries & Aquatic Resources along with the six Provincial Councils participating in the project. The total project cost is $140 million, including a $125 million credit from the International Development Association, with a $10 million contribution from the Government of Sri Lanka and a $5 million contribution from the project beneficiaries.

“The project will support farmers’ access to training and research. Currently, only 10 percent of women benefit, and this project will help bridge this gap and improve productivity of both men and women working in agriculture” said Idah Pswarayi-Riddihough, World Bank Country Director for Maldives, Nepal and Sri Lanka. “Innovation, including the introduction of improved crop varieties, cropping patterns, water resources management, amongst others, can help farmers adapt to changing climate and improve their incomes and livelihoods.”

The key principle of the Framework Development and Infrastructure Financing to Support Public-Private Partnerships Project is to encourage the private sector to invest in priority projects selected through competitive procurement processes to ensure value for money. The project will be implemented by the Ministry of Finance and Mass Media together with the National Agency for Public Private Partnership. The $25 million loan has a 20-year maturity, including a 9-year grace period, and $2 million counterpart funding.

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‘The clock is ticking’ on meeting the Sustainable Development Goals

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Pointing to climate change, inequalities and other serious challenges, United Nations Deputy Secretary-General Amina Mohammed told a forum on Thursday Development that “the clock is ticking” down, to making the 2030 Agenda for Sustainable Development.

“Climate change is ravaging the planet… staggering numbers of children and youth – especially girls and young women – still lack access to basic education and healthcare services, [and] people in many countries are starved of economic opportunities, decent work and social protection measures”, she told the  2019 ECOSOC Partnership Forum, where governments, business representatives and other influencers met to discuss how partnerships can best advance and the 17 (SDGs).

Under the theme, “Partnerships Driving Inclusive Implementation of the SDGs”, the Forum will capture key policy messages to inform the High-level Political Forum (HLPF) in in September.

“Our task is immense, but many of the pathways to change are in plain sight”, she asserted, adding that while “success is still possible”, it requires difficult conversations around “the need to fill partnership skillset gaps, tackle financing shortfalls, and address data deficiencies”.

The economic, social and environmental dimensions of sustainable development call for “a fully integrated approach” that engages everyone.

“Partnerships are critical for achieving progress across the full agenda” stressed Ms. Mohammed, calling SDG 17 on partnerships, “the ‘connective tissue’ which will ensure an integrated and holistic approach to sustainable development”.

The deputy UN chief shared four points for discussion, beginning with a commitment between the UN, governments, private sector and civil society to work together in a more coordinated and integrated way. 

“The transformation we need requires us to acknowledge that everyone is a development actor,” she argued. “Governments alone cannot achieve the SDGs”. 

Secondly, she pointed to the need to prioritize investments in platforms and coalitions that engage a larger ecosystem of partners. 

“Investments in cross-cutting, high-return priorities have strong potential to unlock progress across multiple SDGs”, she stated, flaggin a range of areas, from quality education and health services to zero-carbon energy and environmental conservation.

Ms. Mohammad’s third point focused on leadership, innovation and strategic collaborations “at the local level”. 

“We must draw on the knowledge and experience of local communities and actors on the ground to ensure that we replicate and scale up the most promising models”, she emphasized. 

Ensuring that the process to socialize the SDGs and strengthen ownership is “inclusive, transparent and accountable”, was her final point.

“All stakeholders, big or small should find a place to play their role and make their contribution”, she maintained. 

She urged everyone to “reflect honestly about where we are falling short, because those shortcomings are also where the opportunities lie to make a difference”. 

“Only with this kind of pragmatic approach will we realize our aspiration of leaving no one behind”, said Ms. Mohammed, with the reminder that promoting equitable access and equal participation by all, including the most marginalized, “is a fundamental ethic of the SDG era”. 

Turning to capacity-building for vulnerable groups, she encouraged the forum to apply “a lens of inclusion and empowerment” to ensure that they “are put in the driver’s seat for SDG implementation”. 

Recalling that young people, particularly women and entrepreneurs, are at the forefront of SDG progress, the Deputy Secretary-General concluded: “Let’s make sure we listen carefully to their vision and draw inspiration from their determination and commitment to creating a better world”.

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