In a policy brief on the financing of the Global Energy Efficiency and Renewable Energy Fund (GEEREF), Behrens stresses the critical importance of energy services, asserting that "energy poverty impedes development".
The fund was started in late 2008 "to address the financing gap for clean energy projects in developing countries," his paper recalls. Commenting on its raison d'être, Behrens emphasises that achieving the Millennium Development Goals will entail "providing access to sustainable energy services to some 2.5 billion people".
The GEEREF is "aimed at leveraging private investments with public funds" and providing financing for small and medium-sized energy projects in developing countries, the paper explains. Currently, the fund seeks to "reduce investment risks for private capital of projects below €10 million in size," it adds, as these find it hardest to attract investors.
The GEEREF was set up as part of the European Initiative on Clean, Renewable Energy, Energy Efficiency and Climate Change related to Development, Behrens reports. In 2006, the European Commission estimated that with full investment and leveraging, the fund could bring "almost one gigawatt of clean energy capacity to developing countries, serving some 1-3 million people with sustainable energy services," he recalls.
This would have the double benefit of "saving some 1-2 million tonnes of CO2 equivalent per year," the paper states. Funding for the GEEREF currently stands at €113 million over the period 2007-2011 and comes from the Commission, Germany and Norway.
Behrens argues that it is important for developed countries to provide developing nations with such support because "OECD countries cannot fight climate change alone" and "some €75 billion of additional investment and financial flows will be needed in 2030 for climate change mitigation in developing countries". But new investments in clean energy in developing countries currently stand at just €19 billion.
The report also paints a gloomy picture regarding the current financial crisis, which it says will lower the fund's "leverage factor".
On a brighter note, the GEEREF has decided upon its first two investments, "worth €22 million," regarding projects in Africa and Asia, the research fellow recalls, with two more which "may be announced in 2009".
The success of these first programmes is vital to gaining additional funding from member states and international organisations, he stresses, adding that "funding from the auctioning of Emissions Trading Scheme allowances should further be considered".
Behrens concludes that "the strength of GEEREF is not its current financial volume but the innovative nature of the instrument". He believes that it has the potential "to attract financial support from other donors" and "to serve as a role model for the creation of similar public private partnerships".
