CDC Group, the UK’s development finance institution and impact investor, plans to invest more than £3 billion to help rising economies in Africa and Asia battle climate change.
CDC will become one of the world’s largest climate finance investors in Africa and certain South Asian economies as a result of the pledge made today at COP26 in Glasgow. The announcement is part of the Prime Minister’s ‘Clean Green Initiative,’ which aims to assist developing nations to take advantage of green technologies and expand their economies in a sustainable way.
Over the next five years, the £3 billion in climate funding from CDC will be invested in a variety of industries, including renewable energy, infrastructure, and agriculture, including forestry. It will be used to help emerging economies reach the targets set out in the Paris Agreement, as well as to adapt to and become more robust to the effects of the climate emergency.
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Over the next five years, CDC anticipates power generated from its fast-increasing portfolio of renewable power investments to double in size. As additional investments come online, the proportion of power generated by renewables throughout CDC’s overall energy portfolio will expand from 32 percent to almost 70 percent during the same time period.
In addition, the CDC will increase venture capital investment in early-stage, technology-based businesses with the potential to play critical roles in the fight against climate change.
This will be aided by the UK government’s pledge of a £200 million Climate Innovation Facility at COP26. The new fund was established to give funding for developing countries most innovative climate solutions. CDC will try to seed new markets for investment by testing – and then growing – the most effective solutions.
Pula, a Kenyan agritech company, is the first recipient of the new fund. The funding will be used to test a novel “Pay-at-Harvest” insurance product, which has yet to be tried in Africa but has the potential to greatly boost smallholder insurance use, resulting in both development and climate benefits.
Nick O’Donohoe, Chief Executive of CDC, said: “The financial commitment announced today will mean that CDC will become a global leader in climate finance in Africa and South Asia. COP is about making specific commitments to act, and this is demonstrated by a doubling of our financial support to those countries most vulnerable to the ravages of the climate emergency.”
CDC also unveiled a number of new climate-related investments.
- $70 million investment in the Green Growth Equity Fund, India’s first dedicated climate finance fund, to make investments in a further six to eight innovative companies.
- $28 million investment in Atlas Solar, the Pakistan solar power company, for a project that will generate 100MW of renewable energy.
- $37 million investment in Africa Renewable Energy Fund II, a fund that invests in small hydro, wind, geothermal and solar projects across sub-Saharan Africa.
- $10 million of follow up investment in M-Kopa, the Kenyan off-grid solar company that provides vital power for homes and communities in rural locations.
- $14 million invested in Leap India Food and Logistics, an agri-warehousing and logistics company based in India.
CDC funded over $1 billion in climate finance across Africa and South Asia from 2017 to 2020. By 2050, the organization’s portfolio of over 1000 investments will be net-zero.