Global Energy Efficiency and Renewable Energy Fund

The European Commission today proposed the creation of a Global Energy Efficiency and Renewable Energy Fund (GEEREF), which will accelerate the transfer, development and deployment of environmentally sound technologies. This innovative mechanism underlines the Commission’s commitment to help developing countries invest in renewable energy and energy efficiency. It will contribute to bringing clean, secure and affordable energy supplies to the 1.6 billion people around the world who have no access to electricity.

Despite improving prospects, energy efficiency and renewable energy projects face significant difficulties in raising commercial funding. The problems are complex but mainly concern a lack of risk capital, which provides important collateral for lenders. The need for risk capital in developing countries and transition economies is estimated at over €9 billion, far above current levels. Mobilising private sector finance is therefore essential.

GEEREF aims to help overcome these barriers by providing new risk-sharing and co-financing options to mobilise international and domestic commercial investments. It will invest in a broad mix of energy efficiency and renewable energy technologies. Priority will be given to deploying environmentally sound technologies with a proven technical track record.

GEEREF will stimulate the creation of regional sub-funds tailored to regional needs and conditions, rather than investing in projects directly. Sub-funds are envisaged for the African, Caribbean and Pacific (ACP) region, North Africa, non-EU Eastern Europe, Latin America and Asia. The focus will be on investments below €10 million as these are mostly ignored by commercial investors and international finance institutions. Corporate finance will be offered to support small and medium-sized enterprises as well as project finance

These projects will also combat climate change and air pollution. The Commission intends to kick-start the fund with a contribution of up to €80 million over the next four years, and expects that financing from other public and private sources will take funding to at least €100 million. This means that it will contribute to the financing of investment projects of a value up to 1 billion euro.