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IKEA and the Rockefeller Foundation are making the largest investment in history to establish a fund. They hope to fund more than $10 billion in small renewable energy projects to help more than 1 billion people escape energy poverty.
Each foundation will provide 500 million U.S. dollars in venture capital. They hope to attract 10 billion U.S. dollars in additional funding from international development agencies this year, and then open it to institutional investors to expand renewable energy to countries such as India, Nigeria, and Ethiopia. investment.
“This is commercially viable. Taking a billion dollars upfront in risk can free up tens of billions of dollars. We are not gambling here. We have seen it work in India. We know what it takes to succeed,” Rajiv ShahThe chairman of the Rockefeller Foundation told the Financial Times.
Per Heggenes, CEO of the IKEA Foundation, said that it provides a “very important” opportunity to deal with two major threats in developing countries: poverty and climate change.
Investment in renewable energy has become a big business in Europe and the United States, but the IKEA-Rockefeller platform aims to do similar things for small-scale projects in emerging markets. Its goal is to develop “distributed” renewable energy projects-not centralized power plants-mainly in the form of small solar projects, but there are also some micro hydropower.
These foundations stated that they have signed agreements with the International Finance Corporation and the US International Development Finance Corporation, which are affiliated with the World Bank, and hope that IKEA’s participation will be supported by similar institutions in Europe.
Their goal is to obtain $10 billion in funding from development agencies by the end of this year to supplement the initial $1 billion, and then invite commercial investors to support individual projects.
Shah said that he believes that the platform may eventually use its “charity capital as a lever to obtain commercial capital” to grow to US$100 billion or even US$1 trillion.
He said that from the time he was handling the Copenhagen and Paris climate change conferences as an Obama administration official, he has seen “a lot of promises and a lot of goodwill, but not a lot of implementation.”
“This has the opportunity to become the most important and most funded investment with the dual goal of lifting people out of poverty in a climate-friendly way.”
Heggenes said the IKEA Foundation-established by a retailer of flat furniture Protect it from being acquired and invest in projects that address inequality -View energy poverty as the biggest obstacle to growth in poorer countries.
The two foundations have set a goal of reducing 1 billion tons of carbon dioxide emissions by the end of this decade and lifting 1 billion people out of energy poverty.
Shah said that the pandemic has set back the development of poorer countries for as long as 20 years, so there is a great need to encourage these countries to grow in an environmentally friendly way. “Now is the time to take action,” he said.
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