I. What is the Energy Transition Accelerator Financing Platform?
Energy Transition Accelerator Financing (ETAF) Platform, is an inclusive, multi-stakeholder climate finance platform managed by the International Renewable Energy Agency to advance the energy transition across the Agency’s 166-strong membership. Launched in November 2021, ETAF aims to mobilise approximately US$1 billion to support the energy transition by 2030.
II. When was ETAF launched?
ETAF was launched on November 2, 2021 at the COP26.
III. Who is behind the platform?
ETAF is a joint initiative of the UAE government, and IRENA. IRENA fulfills the secretariat responsibilities for the ETAF platform. As such, the platform serves as the first global climate finance partnership from the Middle East to the world. The UAE, through the Abu Dhabi Fund for Development, is an anchor investor to the Platform and has committed US$400 million of capital of the total expected size of US$1.0 billion. ETAF aims to be an open and inclusive platform that attracts a spectrum of both private and public investors committed to advancing the deployment of renewables.
IV. What does ETAF aim to do?
ETAF has a goal to finance the initial implementation of approximately 1.5 GW of renewable energy technologies and grow to 5 GW by 2030, to help achieve climate and sustainable development goals. In this respect, ETAF will support the implementation of ambitious National Determined Contributions (NDCs) to meet the Paris Agreement targets and the realisation of United Nations Sustainable Development Goals (SDGs), while serving important national objectives such as energy access, energy security, economic diversification and more.
V. What role does public finance play in advancing renewables?
Public financing plays a crucial role in facilitating the energy transition, as markets alone are not likely to move rapidly enough. In 2019, the public sector provided some USD 450 billion in the form of public equity and lending by development finance institutions and based on IRENA’s 1.5°C 2050 scenario, such public investments will grow to some USD 780 billion by the middle of the century. Public debt financing will be an important facilitator for other lenders, especially in developing markets with high real or perceived risks.
VI. How does ETAF relate to the IRENA/ADFD Project Facility?
The former Facility committed US$350 million over seven cycles from 2013 to2020. This Facility via ADFD co-finance renewable projects in developing countries and has positively shaped outcomes for people, communities and countries all over the world. Today, 26 projects in 21 countries have benefited from the partnership. However, the new ETAF platform is fundamentally different. While it builds on the strong foundations of the existing relationship between IRENA and ADFD, ETAF is a multi-stakeholder fund that will attract capital from a range of actors across the public and private spheres.
VII. What sort of projects and what sort of countries will be the focus of the platform?
ETAF will finance energy transition related projects in developing countries all over the world subject to the risk appetite and credit approvals of the financing institutions involved. Such projects include renewable power generation, power storage, grid enhancements, bioenergy, green fuels and electrification, among others. Projects eligible for ETAF financing must be located in one of IRENA’s 166 member countries.
VIII. What are the global investment needs to reach net zero by 2050?
Meeting international climate and development objectives requires a massive re-allocation of capital towards low-carbon technologies, including renewables, as well as the mobilisation of all available capital sources. Total energy transition related investments needed to 2050 are USD131 trillion – USD 33 trillion more than planned energy investments to the middle of the century. However, a significant proportion of planned investments are misaligned with a 1.5 future. Energy investments need to shift to low-carbon energy transition solutions and increase 30% overall, to an average of USD4.4 trillion per year.
IX. How much has been invested in renewables in developing countries in recent years?
Regions dominated by developing and emerging economies remain consistently under-represented in terms of the share global renewable energy investment they attract. Between 2013 and 2018, only 15% of the total global renewables’ investment went to developing and emerging countries. Developing country renewables investment is mostly concentrated in Latin America and the Caribbean (5%), South Asia (4%) and the Middle East and North Africa (2%).
X. What are the broader investment trends in the energy transition?
With falling costs, renewable energy investments have grown steadily over the past 15 years, From around USD 70 billion in 2005 to just over USD 300 billion in 2019. In 2020, despite the dramatic impacts of the COVID-19 pandemic, investments in renewables reached over USD 320 billion led by solar and wind, which account for a combined share of more than 90% of total investment. However, the pace of deployment and level of investment must accelerate considerably for the world to meet internationally agreed climate goals. Annual investment in renewables – including various types of power generation, solar heat and biofuels – would have to almost triple to USD 800 billion by 2050.
XI. How will ETAF source projects?
IRENA will implement and maintain an open call for projects under the ETAF Platform. Details of project registration, project submission, matchmaking and project eligibility documentation will always be accessible via this purpose-built website for ETAF. Projects submitted to the Platform should come from IRENA Member countries and be accounted for as part of their NDC targets. IRENA will channel and recommend a robust pipeline of renewable energy projects from around the world for funding consideration by ETAF partners.
XII. What is the nature of the financing? Are these soft loans?
ETAF offers a broad range of financial products and innovative financing solutions. Financial matchmaking of renewable energy projects will be subject to funding partners’ compliance procedures, due diligence, and in line with their credit financing or investment requirements. IRENA will offer technical assistance and project facilitation support.