"Parliament's support for the global fund to promote green energy is an important signal to developing countries, which will face very significant challenges relating to energy and climate change over the coming decades," MEP and Green Party Vice-President Claude Turmes said in a press statement following the plenary's endorsement of GEEREF.
Conceived as a public-private partnership, the fund's objective is to mobilise the large-scale public and private financing needed for pilot projects in renewable energy and clean technology projects, particularly in developing states.
The Commission, which proposed the fund in October 2006, hopes it will act as an incentive for private capital financing by offering "suitable risk sharing and co-funding options for various commercial and non-commercial investors with a global investment mandate".
The Commission estimates that initial capital costs are three to seven times higher for investment in renewables that they are for conventional energies such as coal and gas. Financing problems also plague the development of renewable energies within the EU, which has set itself the target of producing 20% of its energy from renewable sources by 2020 (see EurActiv LinksDossier).
The EU will contribute €80 million to the fund by 2010, with a €15 million 'kick-start' contribution scheduled for 2008. Lending institutions like the World Bank and the European Investment Bank (EIB) will also contribute to the fund, with €100 million in total initial funding from commercial and public sources expected.
"This is expected to mobilise additional risk capital of at least €300 million and possibly up to €1 billion in the longer term," according to the Commission.
Emphasis is to be placed on the promotion of renewable and energy efficiency projects in areas so far neglected by mainstream investments, signalling a link with EU-funded efforts in local development projects.
