Renewable energies and energy efficiency

AFD Group is today one of the most committed donors on the “climate” issue. Proparco earmarks 30% of its operations for projects that contribute to the fight against climate change – mainly via the development of renewable energies and energy efficiency.
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Introduction

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Proparco, an institution committed to the fight against climate change

Climate change is a tangible reality. To deal with this threat, Proparco and its parent organisation, AFD, have been pursuing an ambitious programme for the past decade. Together we have mobilised nearly €18 billion for projects that will have a positive impact on climate change. This has made us one of the most active financial backers in this field. And our commitment is ongoing our goal is to pledge 30% of our annual financing to combating climate change. To this end we support private actors who are turning climate challenge into an opportunity. Our aim is to encourage sustainable development in sectors such as infrastructure, manufacturing, financial institutions and agriculture.

Our “Clim’action” plan has several strands. For example, following the pledges made at the Climate Change Conference in Paris (COP21), the AFD Group is actively helping to boost synergies between lenders and to standardise practices and climate-related financing Tools.

ICCF

Installation des panneaux solaires

Interact Climate Change Facility

Working with its European partners, Proparco has also helped create a facility dedicated to cofinancing renewable energy and energy efficiency projects led by the private sector in developing and emerging economies. This stands as one of the most successful lender collaboration accomplishments to date.

In total, 23 projects for an added value of 377 billion euros have been approved via ICCF in the second trimester of 2017.

Our five priority areas

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Renewable energy: Solar, wind and hydro power: key resources for a global energy transition

Developing renewable energy – wind, solar, hydro, geothermal and biomass – is a viable, sustainable way to meet the world’s growing demand for energy while helping to combat climate change. These technologies diversify national energy mixes, reduce dependence on fossil fuels (oil, coal and gas) and lower GHG emissions.

The development, production and use of renewable energies also has a ripple effect on economies. For example it offers numerous opportunities for job and wealth creation, and research and development. But this involves massive investment, aggressive incentive policies and the opening up of the market to independent power producers. The challenge is to achieve cost parity with traditional energy production methods in the short and medium term.

Energy efficiency in manufacturing: Opportunities to save energy and reduce industry’s carbon footprint

Businesses, specifically those in the manufacturing sector, consume a huge amount of energy. Not only is this level of consumption reflected in a dependence on fossil fuels (gas, oil and coal) and heavy financial expenditure, but it also raises the question of environmental responsibility. For example, the cement sector alone accounts for 5% of CO2 emissions – a percentage that could exceed 10% by 2050.

Energy efficiency is part of the solution. Recovering the heat produced during a manufacturing process would provide businesses with their own power supply.

Power access: Off-grid offers innovative, clean and affordable solutions

Sustainable access to energy is a key driver of economic and social development. Energy services have multiple, profound impacts on companies’ productivity, people’s health, teaching and learning conditions, food security, and so on.

Today the United Nations estimates that 1.4 billion people have no access to modern energy services, while 3 billion people depend on “traditional biomass” and coal as their primary fuel source. Africa remains the continent with the least access to power, averaging less than one household in two. A lack of infrastructure and technical skills are the two main reasons for the sector’s underperformance in the region.

Off-grid projects, which are now accessible to the poorest populations, are an innovative solution to this problem.

Sustainable transport: For efficient, eco-friendly transport networks

By 2050, more than 70% of the world’s population will live in towns or cities. As major energy consumers, urban areas are simultaneously one of the main causes of climate change and one of the principal vectors for reducing greenhouse gas emissions.

Rail transport is preferred over road transport with regard to transport capacity, cost per kilometre, infrastructure longevity, safety and climate. Rail is also crucial for transporting certain raw materials or opening up landlocked countries.

To respond to these challenges, PROPARCO is investing in clean urban and interurban public transport and developing rail services for passenger and freight transportation.

Water supply and sanitation; Private operators – partners for cost-efficient water services

Climate change will have an extremely serious impact on the availability of water resources in a large part of the world. Added to this are the consequences of pollution of rivers and water tables.

Consequently, the sustainable management of this resource, the protection of its quality, and the management of demand, are crucial issues. PROPARCO supports projects for integrated water resources management, to improve the yields of water networks, and increase capacities for storing water resources and wastewater treatment in countries subject to high water stress.

European Partnership for Climate

Panneaux solaires de Providencia Solar

A European partnership to mobilise businesses and investors against climate change

Climate change is one of the major challenges of the 21st century. International Energy Agency (IEA) has calculated investment needs, to avoid global temperature increase of more than 2°C, at USD 590 billion annually for OECD countries and USD 769 billion for non-OECD countries by 2035.

Private actors will be key players in the transition to more eco-friendly economies, by developing projects that have a "climate benefit" such as renewable energy projects, e.g. wind farms or solar power plants, or other projects that contribute to the reduction of greenhouse gas (GHGs) emission.
To enable them to play their part as fully as possible, Proparco has stepped up for years its cooperation with its European counterparts (EDFI). Thanks to the partnerships, Proparco can take on larger-scale projects and mobilize greater financial resources.

Since 2009, their investments dedicated to climate change mitigation were quadrupled: from €517 million to €2,167 million for a cumulative total of 6,174 million.

27
countries of operation
25%
of our client base
802
Gigawatts/hour produced in renewable energy
680,500
tCO2/year will be avoided thanks to 17 climat projects
€2 bn
committed to climate change

But our goal is to go even further, supporting innovation and creativity so that technical and financial solutions can be brought to the fore. For instance new mobile phone technology now makes it possible to deploy off-grid power systems across the African continent. Then there is our collaboration with our peers and traditional and new investors, which will enable us to develop new products for the sector, including green bonds, repayable grants and credit enhancement.

We firmly believe that the private sector will be a key player in the transition to more eco-friendly economies that benefit the greatest number of people. As a financial development institution, our goal is to enable the private sector to play its part as fully as possible.

In the energy sector our finances have two main goals:

  • supporting renewable energy projects (solar energy, wind energy, hydraulic, biomass) on all continents, to respond to the growing energy needs in developing countries, whilst promoting means of production less polluting than fossil fuels;
  • secure the energy supply on the African continent by valuing the local, conventional, and renewable natural resources (gaz, hydraulic, ...), which offer a quick solution to the deficit of installed capacity.
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