The COP28 president-designate, Sultan Al Jaber, announced a UAE finance initiative that will provide US$4.5bn to help unlock Africa's clean energy potential
The announcement was made during a keynote address at the inaugural African Climate Summit in Nairobi, Kenya.
The landmark initiative brings together vital public, private, and development capital from UAE institutions, notably from Abu Dhabi Fund for Development (ADFD), Etihad Credit Insurance (ECI), Masdar, and AMEA Power. Africa50, which is an investment platform established by African governments and the Africa Development Bank (AfDB), has also joined the UAE finance initiative. Africa50 was founded to help solve the continent's critical infrastructure challenges and will help identify initial projects and connect to local implementing entities.
The COP28 president designate has repeatedly called for the global tripling of renewable energy by 2030 and has pushed to make finance more available, accessible and affordable.
The announcement came with a clear call to action for African leaders to improve policy and regulatory frameworks to attract the long-term investments necessary to accelerate the deployment of clean and renewable energy.
In order to reduce barriers to investment, the president-designate highlighted multiple action points that require the coordinated efforts of African leaders and the international community. These include restoring the financial sustainability of local utilities and modernising basic energy infrastructures, clarifying development processes and eliminating the red-tape delaying market lead-time, in addition to eliminating restrictions to capital flows and accessing adequate and affordable risk mitigation measures. During his remarks, Al Jaber said, "This initiative builds on the UAE's track record of commercially driven, innovative blended finance solutions that can be deployed to promote the adoption of clean energy in emerging and developing nations. This multi-stakeholder partnership approach is designed to accelerate sustainable economic progress, address the challenge of climate change and stimulate low carbon growth."
He added, "The initiative will prioritise investments in countries across Africa with clear transition strategies, enhanced regulatory frameworks and a master plan for developing grid infrastructure that integrates supply and demand. In short, this initiative is designed to work with Africa, for Africa. It aims to clearly demonstrate the commercial case for clean investment across this continent. And it will act as a scalable model that can be replicated to help put Africa on a superhighway to low carbon growth."
Fast-tracking the energy transition, fixing climate finance, focusing on people, lives and livelihoods, and underscoring these efforts with full inclusivity are the key pillars of the COP28 Presidency's Action Agenda.
In sub-Saharan Africa alone, 600 mn people live without access to electricity. Delivering greater access to clean energy will drive social and economic development but currently investment in African renewables represents only 2% of the global total, and less than a quarter of the US$60bn a year the continent needs by 2030.
The initiative announced seeks to correct this imbalance by bringing key stakeholders together to accelerate development and delivery of infrastructure, generation and distribution solutions to close the gap in universal clean energy access.
The initiative will sit under the umbrella of Etihad 7, a development platform launched by the UAE at Abu Dhabi Sustainability Week in 2022, and championed by the Ministry of Foreign Affairs (MoFA). Announced in 2022, Etihad 7 aims to provide 100 mn people across the African continent with clean electricity by 2035.
The Abu Dhabi Fund for Development (ADFD) and the Etihad Credit Insurance (ECI) are kickstarting this initiative through funding the initial investment intended to catalyse private sector action. ADFD is supporting with US$1bn of financial assistance to address basic infrastructure needs, offer innovative finance solutions and increase mobilisation of private investments. The ECI is providing US$500mn of credit insurance to de-risk and unlock private capital – further demonstrating ECI's commitment towards global sustainable development.
Masdar, one of the world's largest clean energy companies, active in 22 countries in Africa, is committing an additional US$2bn of equity as part of the new initiative. Masdar will mobilise an additional US$8bn in project finance and through its Infinity Power platform. Masdar will target the delivery of 10 GW of clean energy capacity in Africa by 2030.
AMEA Power is targeting 5 GW of renewable energy capacity in the continent by 2030, mobilizing US$5bn, of which US$1bn will come from equity commitment, and US$4 billion from project finance.
Additionally, the initiative seeks to create pathways for other multilateral development banks, governments, and philanthropies to catalyse additional private sector investment. The COP28 Presidency has called for others including international financial institutions (IFIs) and foundations to join the effort to convert words into actions.
The COP28 UAE Presidency also recognises that the Global South needs to be in the driver's seat to ensure a fully inclusive approach.
The COP28 UAE Presidency continues to call for the doubling of adaptation finance and to operationalise funding arrangements for Loss and Damage to ensure that those most vulnerable to the effects of climate change are protected. The COP28 Presidency is working to achieve broader reform of IFIs to unlock necessary mitigation as well as adaption financing to support the Global South.
The announcement comes days before the United Nations Framework Convention on Climate Change (UNFCCC) is due to release the technical data around the first Global Stocktake of climate progress since the 2015 Paris Agreement. It is widely anticipated that the Stocktake will find that the world is off-track from meeting its objectives as outlined In 2015.
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