In an announcement today, the COP28 Presidency with investment giants BlackRock and Brookfield announced to establish a $30 billion fund dedicated to renewable energy in Emerging and Developing Economies. While scaling up investment in renewables is much needed, 350.org raises concerns regarding the accuracy of fund claims and the absence of critical safeguards against potentially harmful investments.
“In the pursuit of a greener tomorrow, we must scrutinize the COP28 fund’s bold claims. While in principle a step in the right direction, we would need to check that the claims by the presidency are not overblown. It seems that safeguards against dangerous distractions and projects that harm communities are missing” says Andreas Sieber, Associate Director of Policy and Campaigns of 350.org
The majority of the $30 billion fund is expected to operate at market rates rather than through concessional finance or grants – a financial approach deemed essential for the substantial upscaling of renewable deployment in the Global South.
Presently, the fund stands at a mere $6.5 billion, not $30bn and is only “expected” to attract additional funds, leaving the timeline for achieving the full “commitment” of $30 billion unclear. Of the total sum, $5 billion is planned to be designated for “risk mitigation capital,” in principle a positive step. Yet, this can be expected to come in the form of concessional loans which can help in particular to unlock private capital. However, 350.org expresses apprehension about the lack of safeguards to prevent the accumulation of unsustainable debt, for both market rate and concessional finance instruments.
“What we can take at face value right now is a fund of $6.5bn which will lend at market rates ‘for global investments, including the Global South’ – this isn’t wrong per se, but as such not a game changer and certainly not an adequate response to the financing needs of countries in the Global South” says Andreas Sieber, Associate Director of Policy and Campaigns of 350.org
While acknowledging the potential of concessional loans to attract additional private investment, 350.org questions the bold claim of unlocking $250 billion by 2030, deeming it potentially exaggerated and urging a closer examination of the fund’s feasibility.
The composition of the fund’s leadership raises further concerns, with three out of four members having a documented history of involvement in fossil fuel investments or having led fossil fuel companies. This has prompted 350.org to highlight concerns about the potential exclusion of essential renewable investments, such as Carbon Capture and Storage, and the need for a strategic shift away from fossil fuel-related endeavors.
350.org calls for a transparent and comprehensive assessment of the fund’s governance, ensuring it aligns with principles of responsible and ethical investment to effectively drive the transition towards a sustainable, green energy future.
Zaki Mamdoo, 350.org Campaign Coordinator, StopEACOP said:
“History shows that when rich countries extract fossil fuels in poorer countries there are usually consequences, like worsening social and economic inequalities on top of deepening the climate crisis. 30 billion USD of climate funds managed by the likes of these companies risk replicating the same systems that worsen inequalities. We must support affordable and energy-saving solutions.
We also need to put decision-making power in the hands of the many, instead of bankers. People should be actively involved in making decisions. Community-centered, community-led, and community-owned wind and solar energy projects are the models that will bring us to an energy transition rooted in justice.”
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