Press release | Date: 05/11/2021 | Ministry of Foreign Affairs
Norway is launching cooperation for the provision of guarantees to promote investment in renewable energy in developing countries. ‘This new initiative represents a significant boost to Norway’s global efforts to address climate change and increase access to green electricity,’ said Minister of International Development Anne Beathe Tvinnereim.
Norway will provide NOK 1.5 billion over a period of five years to provide guarantees that reduce non-commercial risk related to foreign direct investments in renewable energy in developing countries. The first agreement is with the World Bank’s Multilateral Investment Agency and amounts to 500 million NOK.
One of the key issues discussed at the UN Climate Change Conference (COP26) in Glasgow is how wealthy countries are delivering on their commitment to support the green transition in developing countries.
‘Emissions need to be cut worldwide, at a time when close to one billion people still have no access to electricity. It will not be possible to motivate developing countries to reduce their emissions and at the same time enable them to further develop their capacity to deliver basic services such as healthcare and electricity, if we do not provide more climate finance. As wealthy countries, we also have an obligation to do this,’ said Ms Anne Beathe Tvinnereim.
The Norwegian Government has announced that it will double its climate finance by 2026 to NOK 14 billion. Norway’s climate finance includes funding via the aid budget for climate-related actions and investments; mobilisation of private capital through Norfund, the Norwegian Investment Fund for developing countries; and the new climate investment fund which is being established to increase investments in renewable energy.
‘If we are to prevent the rise in global temperature from going beyond a safe level and promote development in the countries that need it most, we must both increase public funding and become even better at mobilising private finance. This new guarantee initiative is crucial because it will help reduce risks for commercial investors,’ Ms Tvinnereim said.
Norway’s guarantee initiative will make it possible to trigger major investments in renewable energy in developing countries using relatively small amounts of aid funding. The initiative is being launched by the Norwegian Agency for Development Cooperation (Norad) to make existing guarantees more accessible and affordable. This will remove one of the obstacles to increasing investments in renewable energy in developing countries.
Ms Tvinnereim and Director General of Norad Bård Vegar Solhjell were both present for the signing of Norway’s first cooperation agreement with the World Bank’s Multilateral Investment Guarantee Agency.
'Norad has been negotiating for one and a half years to develop this agreement, and we are proud of this launch. We know that guarantees are among the most effective ways of mobilizing commercial investors to renewable energy projects', said Norad's Director General Bård Vegar Solhjell.