The UAE Minister of Industry and Advanced Technology, who is also the president-designate of the next UN climate conference COP28, announced Wednesday a $4.5bn initiative to help unlock Africa’s clean energy potential.
Sultan Al Jaber made the announcement during a keynote address at the inaugural African Climate Summit in Nairobi, Kenya.
He said the initiative would bring together public, private and development capital from UAE institutions, including the Abu Dhabi Fund for Development, Etihad Credit Insurance, Masdar and AMEA Power.
Africa50, an investment platform established by African governments and the Africa Development Bank, has also joined the initiative.
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.
Al Jaber said the initiative would help to identify initial projects and connect them to local implementing entities. He also called on African leaders to improve policy and regulatory frameworks to attract long-term investments in clean energy.
“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,” Al Jaber said. “This multi-stakeholder partnership approach is designed to accelerate sustainable economic progress, address the challenge of climate change and stimulate low carbon growth.”
The UAE has set a goal of achieving net-zero emissions by 2050. The country is already a major player in the renewable energy sector, with solar and wind projects in operation or under development.
The Africa Climate Summit was held to discuss ways to accelerate the transition to clean energy in Africa. The continent is heavily reliant on fossil fuels, but it has the potential to be a major producer of renewable energy.
The summit was attended by representatives from African governments, businesses and civil society organizations. They are expected to discuss a range of issues, including financing for clean energy projects, the development of renewable energy markets and the role of technology in the transition to a low-carbon future.
COP28 President Designate added: “The initiative will prioritize 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 million 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 $6bn a year the continent needs by 2030.
The initiative seeks to correct this imbalance by bringing key stakeholders together to accelerate the 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 million 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 catalyze private sector action.
ADFD is supporting $1bn of financial assistance to address basic infrastructure needs, offer innovative finance solutions and increase mobilization of private investments. The ECI is providing $500m 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 $2bn of equity as part of the new initiative. Masdar will mobilize an additional $8bn in project finance through its Infinity Power platform.
Masdar will target the delivery of 10 gigawatts (GW) of clean energy capacity in Africa by 2030.
AMEA Power is targeting 5GW of renewable energy capacity in the continent by 2030, mobilizing $5bn, of which $1bn will come from equity commitment, and $4bn from project finance.
Additionally, the COP28 Presidency initiative seeks to create pathways for other multilateral development banks, governments, and philanthropies to catalyze additional private sector investment.
COP28 Presidency calls on IFIs to join efforts
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 recognizes 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 operationalize 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.