The European Commission has launched the Global Energy Efficiency and Renewable Energy Fund (GEEREF) with an initial €80 million, and hopes to mobilise up to €1 billion in the longer term.
Total initial funding from public and commercial sources of €150 to 200 million is anticipated, and this is expected to mobilise additional risk capital of at least €300 million.
Promoters of energy efficiency and renewable energy projects face significant difficulties in raising commercial funding, the growing concern lying in the lack of risk capital.
It is hoped that this fund will mobilise private sector finance especially in small-scale projects to accelerate the transfer, development and deployment of environmentally sound technologies, and thereby help to bring secure and clean energy supplies to people in poorer regions of the world.
Explaining their motivation to launch this fund, European Commissioner for development and humanitarian aid, Louis Michel and Commissioner for Environment Stavros Dimas, both emphasized that "Developing countries must have access to affordable and clean energy supplies: this is a prerequisite for sustainable development. This fund can foster private investments and become a real source of sustainable development, especially in Africa”.
The GEEREF aims to help overcome these barriers to investments by providing new risk-sharing and co-financing options to mobilise international and domestic investments.
It is an innovative global risk capital fund that will use limited public money to mobilise private investment in small scale energy efficiency and renewable energy projects in developing countries and economies in transition.
This fund is the first concrete initiative deriving from the "European Initiative on Clean, Renewable Energy, Energy Efficiency and Climate Change related to Development".
Through this fund, the Commission follows up on its commitments to fight climate change and transfer clean technologies to developing countries.
The European Union works in accordance with the agreement reached in Bali on the launch of negotiations towards a comprehensive climate change framework to be completed by the end of 2009.
The GEEREF will invest in regional sub-funds in the African, Caribbean and Pacific (ACP) region, North Africa, non-EU Eastern Europe, Latin America and Asia.
The focus will be on investments below €10 million as these are mostly ignored by commercial investors and international finance institutions.
The initiative is being implemented with the assistance of the European Investment Fund.