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EU makes financial guarantee on green energy investments

By JT - Jan 23,2020 - Last updated at Jan 23,2020

AMMAN — The European Bank for Reconstruction and Development (EBRD) and the European Union (EU) have agreed upon a new 50-million-euro programme of financial guarantees aimed at scaling up investment in renewable energy in Ukraine and in the EU’s Southern Neighbourhood, with a particular focus on Jordan, Lebanon and Tunisia.

This is the first EBRD guarantee programme to receive funding through the EU External Investment Plan (EIP), an EU initiative launched in 2017 with the goal of attracting more investments, especially from businesses and private investors, into countries neighbouring the EU and into Africa, according to the EBRD website.

Under the new programme, the EBRD will provide guarantees to lenders, such as local commercial banks, which will allow them to provide financing to projects alongside EBRD loans. The guarantees are expected to help generate total investments of up to 500 million euros.

To date, the EU has allocated 4.5 billion euros in public funds through the EIP to leverage 44 billion euros in public and private investments for development in countries neighbouring the EU and in Africa, the website said.

The EBRD will implement the largest volume and number of guarantees under the EIP in the EU Neighbourhood.

The projects under this programme will help unlock countries’ substantial renewable energy potential, promote the development of renewable energy more widely and demonstrate how the private sector can help meet the growing demand for energy. 

The guarantee is also expected to provide 340 MW of additional installed renewable energy capacity, which translates into an extra 970 gigawatt hours per year of electricity production from renewable sources and a cut in annual greenhouse gas emissions equivalent to 530 kilotonnes of CO2, according to the website.

Pierre Heilbronn, EBRD vice president of policy and partnerships, said: “We’re delighted to partner with the EU for such an urgent cause as climate action. Our lending, combined with the EU’s financial instruments, encourages more participation of the private sector in investments which are very much needed to face the global challenges of the future, including a more sustainable development model.” 

He added that this agreement is “only the beginning” of the EBRD's cooperation with the EU through the EIP in the EU neighbourhood regions, according to the website.

Olivér Várhelyi, European commissioner for European Neighbourhood policy and enlargement negotiations, added that the guarantee, besides helping finance many more renewable energy projects with private sector financing, will also cut down greenhouse gas emissions. 

"We’re convinced that the guarantee provides sufficient risk cover to attract major private sector investment in countries where not enough such financing is available, therefore we are preparing to support even greater volume of private investment in sustainable development post 2020 through the European Fund for Sustainable Development Plus, which will also cover enlargement countries,” he was quoted on the website as saying.

The programme will also have an "important demonstration effect", introducing a number of new developers and commercial financiers to these markets, the website said.

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