DFID is committed to increasing access to reliable and affordable energy to reduce poverty and increase economic growth in developing countries. Renewable energy has an increasingly important role to play in helping developing countries make progress towards the Millennium Development Goals.
In terms of future aid allocations, we expect deployment of clean energy investment to happen not through DFID’s bilateral aid allocations, but through a big change in the way the multilateral agencies engage in the energy sector. We are encouraging the World Bank and regional development banks to give renewable energy greater attention.
For example, the World Bank has scaled up its financial support for renewable energy and energy efficiency projects. In August 2006, it announced a rise to $680 million in commitments in the year to June 2006, an increase of 48 per cent. compared to the previous year. This figure excludes large hydropower projects and covers solar, wind, geothermal, biomass and small (less than 10 MW) hydropower technologies.
We very much welcome this increased investment by the World Bank on clean energy. We now think that the bank needs to set out a high level of ambition for funds flowing through the Clean Energy Investment Framework over the coming years. At the recent spring meetings of the World Bank the UK called on the bank to set a range of new investment and outcome targets, including a higher target for renewable energy.
As announced in the 2007 Budget Statement, a new £800 million Environmental Transformation Fund will finance environmental projects, including clean energy.
DFID has supported the creation of a new €220 million EU African, Caribbean and Pacific Energy Facility, which will start funding projects this year from the European Development Fund. This facility aims to improve access to energy, especially in rural areas of Africa, and has encouraged viable renewable energy proposals.
Finally, DFID is increasing research funding for the energy sector to reflect the growing interest in clean energy for development. This year DFID launched a new five year, £3.75 million energy research programme on renewable energy and is currently scoping areas for further work.