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The International Finance
Corporation (IFC) has signed a partnership agreement with the International
Renewable Energy Agency (IRENA) and pledged $1 billion to accelerate the
transition to clean energy in emerging markets.
With this partnership, IFC joined
the Energy Transition Accelerator Financing Platform (ETAF), a climate finance
mechanism managed by IRENA that advances the global energy transition in IRENA
member countries. IFC will bring its expertise to ETAF, increasing the flow of
private capital towards ETAF projects, while IRENA will leverage its membership
to attract project proposals through the platform.
"We are excited to
collaborate with IRENA and other development partners as we bring IFC's
expertise in project financing, blended finance and energy transition to ETAF.
As a leading financier of low-cost renewable energy with a strong track record
in supporting the energy transition globally, we are confident that today's $1billion
pledge will play a critical role in improving access to sustainable and
affordable energy across emerging markets," IFC's Vice President of Industries,
Mohamed Gouled, said.
Over the past decade, IFC
invested and mobilized more than $32 billion in the energy sector, helping to
accelerate the clean energy transition and increasing access to electricity for
millions of people around the globe through on- and off-grid solutions. IFC has
financed more than 8GW of hydropower, 8GW of solar, and 6GW of wind projects to
date. IFC also finances battery and other energy storage solutions, as well as
transmission and distribution infrastructure, to support network resilience and
further renewable energy integration.
"As governments rally behind
a renewables-based energy transition to address climate change and foster
socio-economic development, we must ensure that the developing world is not
left behind. "With IFC's strategic alliance and their substantial $1
billion pledge to the ETAF platform, IRENA is now better equipped than ever to
drive climate action and contribute to narrowing the energy access gap between
its member countries," IRENA Director-General Francesco La Camera said.
A recent IFC-IEA report, Scaling
Up Private Finance for Clean Energy in Emerging and Developing Economies,
stressed that public investments alone are insufficient to deliver universal
energy access and tackle climate change. To fulfill the climate objectives
outlined in the Paris Agreement and meet the increasing energy demands of emerging
and developing economies, investments in clean energy in these countries must
surpass the $770 billion channeled in 2022 to reach nearly $2.8 trillion by the
early 2030s. The report further notes that increased public funding, together
with policies and technical assistance, can be used effectively in partnership
with private sector capital to reduce project risks and unlock the potential
for clean energy in these countries.
ETAF will source projects on an
ongoing basis and act as facilitator, coordinator, and knowledge hub, providing
technical support, mobilizing resources, and fostering collaboration. It will
support feasible projects and mitigate investment risks through innovative
financing solutions, matchmaking of project partners, technical assistance, and
project facilitation. ETAF has a current pipeline of projects in Latin America,
small island developing states (SIDS), Africa, and Asia.
In a tandem signing, IFC's sister
agency, the Multilateral Investment Guarantee Agency (MIGA), signed its own
partnership agreement with IRENA. Under this agreement, MIGA will contribute
its guarantee and insurance instruments to help de-risk energy transition
projects in emerging markets.
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