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REM: Norway to invest $1.1bn in green energy in world’s poorest countries

The Norwegian government has earmarked NOK10bn ($1.15bn) over the next five years for a new fund that will invest in renewable energy in developing and emerging economies to try to reduce greenhouse gas (GHG) emissions in the world’s poorest countries.

“The climate investment fund is an essential part of Norway’s contribution to achieve the goals set out in the Paris Agreement and the SDGs,’ said Prime Minister Erna Solberg in a statement on June 7.

The news comes as there is growing acknowledgement among wealthy countries that growth in investment must increase quickly in developing economies if the world is to reach net zero by 2050.

When the Paris Agreement was signed, global leaders pledged to provide $100bn in climate finance annually to developing countries by 2020.

Building on this, the International Energy Agency (IEA) said in June that $1 trillion of annual investment in clean energy in developing economies was needed by 2030. Otherwise, developing economies, including China, could be emitting the majority of the world’s GHG emissions in future.

The IEA forecast that emissions from emerging economies were projected to grow by 5bn tonnes per year (tpy) by 2040, compared with a projected 2bn tpy fall in advanced economies and a levelling off in China.

“The establishment of the new climate investment fund is a milestone in Norwegian development aid. It is part of the solution to some of the major challenges we are facing and that are having a particularly severe impact on the world’s poor. We know that even if all countries spend 1% of their GNI on aid, it will still not be enough to solve global challenges such as climate change,” said Norwegian Minister of International Development Dag-Inge Ulstein.

NOK2bn ($231mn) will be provided to the climate investment fund annually over a period of five years.

Half if this annual amount will come from the national budget and from Norfund, the Norwegian Investment Fund for developing countries. Norfund will be given responsibility for administering the fund.

“To succeed in reducing greenhouse gas emissions, particularly in Asia, we need to mobilise more commercial capital. I urge investors to work with the climate investment fund when it is up and running,” Ms Solberg said.

Some 30% of global GHG emissions come from coal-fired power plants, and a net increase is anticipated in coal power generation in developing countries over the next few years.

“Providing more climate finance to developing countries is important for reaching the global climate targets and for ensuring that all countries can benefit from the transition to a low-emission society. This fund will provide Norway with a new tool that it can use to help bring about reductions in greenhouse gas emissions in developing countries,” said Minister of Climate and Environment Sveinung Rotevatn.

The Norwegian government said it was aiming to mobilise investment in renewable energy far more quickly than would otherwise have been the case.