Between €100 million and €1 billion would be raised by the World Economic Forum (WEF) and KPMG as a contribution to global efforts on the transition to low-carbon economies, a proposal on this from the parties has shown.
Obtained in Abuja by OGN, the proposal noted that WEF and KPMG proposed to establish a Sustainable Energy Innovation Fund (SEIF) to support and accelerate breakthrough energy innovations with the potential to significantly reduce carbon (CO2) emissions from the surface of the earth.
The proposal, it was learnt builds on multiple consultations in this regards and is part of WEF’s ‘Partnering to Accelerate Sustainable Energy Innovation’ project, which is supported by KPMG.
Both parties explained in the proposal that energy consumption and production represented around two-thirds of global greenhouse gas (GHG) emissions and there was an urgency to act as recommended by the Intergovernmental Panel on Climate Change (IPCC).
They stated that maturing and bringing to market a broader set of energy technologies and solutions much faster is critical in tackling climate change, adding that to achieve this, more capital must flow to sustainable energy innovation, and available funding from public and private sources must be aligned and used as effectively as possible.
“The development of sustainable energy innovations faces systemic financial and regulatory hurdles, making the road to market long and challenging. While many sustainable energy innovation challenges and potential markets for deployment are global, energy innovation funding is often taking place nationally,” said the proposal which hinted that the SEIF would be a unique proposition, differentiated from other funding models.
SEIF’s unique propositions
According to the proposal, the SEIF will be the first global sustainable energy innovation fund of scale designed to address the innovation deficit identified in the 2015 Paris climate agreement.
It explained that critically, mechanisms will be built into the fund structure to enable cross-border sharing of ideas and knowledge to help avoid duplication of effort and to facilitate knowledge and risk sharing on a global basis.
The fund, it added will support leading-edge energy innovation throughout the world provided the innovation in question has specific application to middle-and low-income countries.
This however does not exclude supports for innovations to be deployed also in high-income countries.
“Unlike other funds, the SEIF will support energy innovators in the early, mid and late stages where the impact on the climate change agenda can be substantial. Besides funding technologies, the fund also intends to support adaptive and innovative business models and integrated solutions,” it stated.
Additionally, the proposal said the fund is specifically designed to reduce risk through investment diversification, and that innovation in areas comprising hydrogen; energy storage; biomass, bioenergy and advanced biofuels; and energy efficiency have been suggested for investments.
“A blended finance funding structure will be used to meet the different objectives of public and private investors to create synergies between public and private capital. Public investments will help reduce risks to private investors and thereby help catalyse investments from the private sector.
“While this type of funding model has been used extensively to finance infrastructure projects (particularly renewables) in the middle and low-income world, it has not for the most part been used to fund energy innovation initiatives,” it explained further.