Norway allocates $ 1.2 billion for renewable energy projects in developing countries

Strong points :

  • Norway will invest $ 1.16 billion over 5 years in renewable energy projects in developing countries.
  • The new climate fund will be administered by Norfund, the Norwegian Investment Fund, and will be financed by Norfund as well as from the national budget.

The Norwegian government has announced the allocation of $ 1.16 billion over five years for a new fund that will invest in renewable energy in developing countries with the aim of reducing greenhouse gas emissions.

Speaking about the new fund, Minister of International Development Dag-Inge Ulstein said: “It is part of the solution to some of the major challenges we face that have a particularly severe impact on the world’s poor. We know that even if all countries devote 1% of their GNI to aid, it still will not be enough to solve global challenges such as climate change.

The climate fund, administered by the Norwegian Investment Fund for Developing Countries, Norfund, will support projects to reduce dependence on fossil fuels, including coal, from next year. NOK 1 billion from Norfund and NOK 1 billion from the national budget will be allocated to the fund each year for the next five years.

The government of the Scandinavian country estimates that over time, the fund could mobilize around 100 billion crowns of investments through partnerships with private capital and constitutes an essential element of the contribution of Norway to the realization of the agreement of Nations. United Nations on Climate Change and Sustainable Development Goals.

m Ulstein described the fund as the start of a new partnership between public and private capital that can generate returns on investments, reduce greenhouse gas emissions and increase climate finance.

“To succeed in reducing greenhouse gas emissions, especially in Asia, we must mobilize more business capital,” Prime Minister Erna Solberg said in a statement. “I urge investors to work with the climate investment fund when it becomes operational. This support would be in addition to the SEK 6.3 billion that Norway spends each year on climate finance as part of its development aid budget.

The modern discourse on climate equity is based on the fact that industrialized countries, like the United States and Norway, have contributed significantly to historic greenhouse gas emissions to accumulate their current wealth and are therefore responsible for the major funding. the costs of the necessary clean energy transition. It is also argued that the poorest countries face damage from climate change, as well as transition finance, given that they lack access to technology, intellectual property and multilateral institutions. governing climate action.

At the Paris climate summit in 2015, the rich countries of the Organization for Economic Co-operation and Development (OECD) agreed to raise at least $ 100 billion a year by 2020. Only around $ 80 billion have been raised so far, and much of this climate finance is tied to specific investments. According to an Oxfam report from October 2020, developing countries ended up receiving only $ 25 billion of the $ 60 billion paid to them in climate finance between 2017 and 2018, after deductions for climate finance. loan repayments and interest.

80% of climate finance is provided as a loan (for example, for a solar power project), rather than a grant, and is dependent on achieving specific environmental outcomes, from rainforest conservation to industrial decarbonization. Rich countries need to contribute more money and give up some control over how it is spent by developing countries, environmental analysts say.

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