By Will Dickson
Established in 2011, the Interact Climate Change Facility (ICCF) has to date contributed to about €500 million worth of projects related to improving energy infrastructure in developing and emerging countries. Energy demand in these nations is often higher than the available supply and the goal of the ICCF is to expand access to affordable electricity that is either produced through renewable methods or at least through high-efficiency conventional power plants.
The French Development Agency (AFD), the European Investment Bank (EIB), and 11 European Development Finance Institutions (EDFI) that founded the organization provide funding capacity for the co-financing facility. On April 21st, 2021, DFIs from the Netherlands, Austria, and Sweden committed to replenish the facility with €50 million.
The ICCF has financed over 30 projects in 18 developing countries.
Approximately half of those projects support wind power, an example being the Lake Turkana wind farm in Kenya, the largest wind farm in Africa. Another 25% of the projects relate to solar power generation. The MERCER solar power plant, for example, has helped Honduras become the first non-island nation to generate 10% of the country’s electricity demand through solar power. The remainder of the projects promotes an expanding sustainable energy landscape either through supporting geothermal or hydroelectric energy production or by increasing the efficiency of conventional power stations.
According to the Association of bilateral European Development Finance Institutions (edfi.eu) website:
“ICCF has contributed to reducing carbon emissions by almost two million [tons] per year and installing 1,147MW of additional renewable energy capacity.”
OeEB, the Austrian development bank that contributed €15 million of the €50 million investment in ICCF in April, states:
“The lack of sufficient long-term credit funds is one of the greatest barriers for renewable energy and energy efficiency projects in developing countries. [By] demonstrating the economic viability of projects, ICCF also aims to act as a catalyst and attract additional private financing and follow-up investments.”
With low overheads and an efficient fast-track process, ICCF aims to syndicate large amounts of funding for projects while at the same time mitigating risk by sharing the operation among DFIs. Linda Broekhuizen, the CEO of FMO, the Dutch development bank that committed €20 million to ICCF in April, has said of the co-financing facility:
“We are proud to be a part of this joint action to fight climate change in emerging markets. The fund has proven to be efficient and well-functioning, and an important vehicle for climate financing. As an important bonus, it strengthens cooperation and knowledge sharing among the European DFIs.”
Last year, the agencies and banks that make up the facility agreed to extend the ICCF mandate until 2022.
