Implementation of climate finance

The long road to implementing the Africa Renewable Energy Initiative (AREI)

Renewable-energies-Sudan

AREI wants to support renewable energies in Africa on a large scale. Photo: C.Kropke, Brot für die Welt

The Africa Renewable Energy Initiative (AREI) was established in 2015 with ambitious goals, aiming to give all Africans access to renewable energy. Various donors have pledged financial support for the goals, including Germany with €3 billion. Since then, the initiative has spent a lot of time mainly on clarifying its structure and operation. Now it is high time to start the implementation. The AREI has great potential and continues to enjoy strong support from African decision makers, civil society and donor countries, so administrative questions should no longer stand in the way of a swift implementation.

An inspiring start

The Africa Renewable Energy Initiative (AREI) was established about two years ago by African institutions. Among the many initiatives active in the field of energy and development on the continent, the AREI stands out. It was presented by the African Union and supported by the G7 countries at the G7 summit at Schloss Elmau in 2015 and officially launched at the Paris climate conference (COP 21). The initiative is slated to support the generation of an additional 10 GW of renewable energy in Africa by 2020 and as much as 300 GW by 2030. The latter figure amounts to a doubling of the total existing power generation capacity on the continent. The initiative aims to benefit local people and improve energy access. It has the potential to become a lighthouse project for the implementation of the 2030 Agenda for Sustainable Development and the Paris Agreement in Africa. There are three reasons for this:

Firstly, the initiative’s founding documents take a systemic perspective: its objective is not a series of individual projects, but a transformation of energy systems. Secondly, the initiative was developed by Africans and is being supported and managed by African institutions such as the African Union Commission. Thirdly, the AREI is pursuing ambitious goals that combine development and climate protection and are meant to give all Africans access to clean, modern energy in the medium term. The initiative thus contributes directly toward achieving Sustainable Development Goal 7 (sustainable and modern energy for all) and Goal 13 (urgent action to combat climate change).

The initiative is to be supported by various sources such as a dedicated AREI trust fund, multilateral funds from development banks and the Green Climate Fund, as well as bilateral cooperation. The primary concern of the AREI is not the establishment of a new fund, but rather improved coordination of various financial flows. An important responsibility of the initiative’s decision-making bodies is therefore not the approval of funding for projects and programs, but the recognition of projects that are bilaterally funded, for example, as official AREI projects that comply with the initiative’s objectives and criteria. Such projects can then be counted when reviewing the attainment of AREI goals. Germany, France, the European Commission and other donors pledged at least $10 billion in financial support for the initiative and its objectives in Paris. An AREI Board of Directors was appointed by the African Union and a small team of experts, the Independent Delivery Unit (IDU), was tasked with advancing the initiative. Since then, the IDU – particularly in 2016 – has been active developing a series of concept papers (e.g. the framework document, proposals for criteria for approving projects and programs, as well as a preliminary action plan). International donors have reaffirmed their support at the G20 summit in Hamburg in 2017 and on other occasions. African and international civil society quickly came around to endorse and support the initiative, as the overarching objectives – sustainable development through universal access to energy and the development of a modern energy system based on renewable energies – were perceived as very positive.

Dissonances in Conakry

However, there were also some differences of opinion between the various stakeholders during the second meeting of the AREI Board of Directors in Conakry, Guinea, on March 4, 2017. At the time, the Board of Directors had nine voting members (five African heads of state or government, two African institutions – the African Union Commission and the African Development Bank – and two representatives of non-African donors, namely the European Commission and France). At this meeting, the Board of Directors had a disagreement with Youba Sokona, the then head of the IDU, who had been a driving force behind the initiative and was instrumental in shaping it. In the end, Sokona resigned from his post. The exact causes of this disagreement are difficult to understand from the outside, not least because no provision had been made for civil society observers at AREI meetings at that time. It has been reported, however, that the dispute was mainly sparked by a list of 19 projects that were recognized as AREI projects at the meeting. These 19 projects were proposed by the European Commission. The IDU did not have the opportunity to review the projects on the basis of the envisaged AREI criteria before the decision was made. Criticism had been leveled that France and the European Commission in particular had been pushing for these projects, thereby weakening African ownership. The events were viewed very critically by African civil society and led to negative headlines in the international press.

After the meeting in Conakry, the initiative was faced with two major challenges: firstly, the IDU – and thus the entire initiative – was leaderless and barely capable of acting due to the departure of Sokona. Secondly, the meeting had shown that there was still a considerable need for clarification within the initiative as to the decision-making structures, processes and rules to be laid out in the Governing Instrument. This includes the responsibilities of the various AREI bodies – the Board of Directors, the Technical Committee and the IDU, the division of responsibilities between them and the process of recognizing AREI projects and programs.

New impulses and progress

A lot has happened since then. First of all, the position of head of the IDU had to be filled quickly and in Seyni Nafo, chairman of the African climate negotiators’ group, a temporary head was found.  Probably at least in part due to criticism by civil society, France and the European Commission stated that they will not exercise their voting rights on the Board of Directors and only participate as observing members.

According to a new proposal for the Governing Instrument, only five members of the Board of Directors would still be eligible to vote, i.e. one head of state or government for each of the five African regions. In addition to the donors, African institutions such as the African Union Commission and the African Development Bank (AfDB) would be granted observer status only. The AfDB does not agree with this and is threatening to withdraw from the initiative. The bank is currently performing a variety of functions within the AREI. It literally hosts the IDU. This applies, for example, to the provision of office space for IDU staff and to the management of funds provided by donors for the operation of the IDU. Furthermore, the bank was also tasked with managing an AREI trust fund to which donors can contribute for AREI projects. So far, however, all donors have preferred to use their existing bilateral development cooperation programs with African countries to realize projects and programs and have them recognized as AREI contributions. The trust fund is not currently in use, so the trustee function of the AfDB is of little practical relevance.

A withdrawal of the AfDB would initially be likely to have mainly practical implications, since a new host would have to be found for the initiative. The AfDB’s demand for voting rights on the Board of Directors is being seen critically by civil society, as it is not a common practice for a host or trustee to be granted a vote. On the contrary – this may even give rise to conflicts of interest. It has also been questioned whether the AfDB is indeed the most suitable host for the initiative, as the bank has repeatedly supported fossil fuel-based power generation and controversial projects such as large-scale dams. Many civil society observers doubt whether the AfDB truly supports the AREI’s vision – all the more so since the bank finalized a new agreement with Japan a few months ago under which it will continue to finance conventional, fossil-fueled power plants in Africa.

The last meeting of the Board of Directors, which took place on September 22, 2017 in New York during the United Nations General Assembly, saw important progress being made in restoring the initiative to working order. A key civil society demand has been implemented: civil society observers may now be present during meetings. The Governing Instrument has been tentatively adopted by the Board of Directors. However, as some members of the Board of Directors expressed concerns or were absent, it is still provisional and will probably continue to be reviewed and finalized at the next meeting. The document only mentions the AfDB in a footnote. The language pertaining to the future trustee and/or host of the initiative was formulated in such a way that it remains to be seen which institution(s) will be considered. It was only stated that the Board of Directors shall appoint a trustee and establish an IDU host to ensure that the IDU can work independently. In principle, the AfDB could continue to hold these responsibilities, or the AREI could opt for other institutions.

The AREI’s three different working methods are also described in greater detail in the Governing Instrument.

  1. The IDU will carry out activities identified in the AREI Action Plan – in particular on knowledge generation, capacity-building and cooperation with African governments and other stakeholders – such as the development of projects, programs, national action plans and long-term objectives. In practical terms, the IDU is to become a platform for cooperation and exchange of experience in the field of renewable energies on the African continent.
  2. Projects and programs shall be deemed AREI-compliant if they have been reviewed by the initiative and meet the AREI criteria. Funding for AREI-approved projects and programs can come from nation states, the private sector, civil society or national/international institutions.
  3. An expansion of the trust fund is envisaged. In principle, any institution that has been recognized by the Board of Directors should be able to pay into the trust fund. Projects and programs by African countries and institutions, but also by the private sector or civil society, can then be financed from this fund as long as they are in line with the objectives and criteria of the initiative. Special attention is to be paid to countries in which the expansion of renewable energies has hardly progressed to date. This type of “single source” financing would give the initiative much more room to maneuver, making it easier to act strategically. The exact function of the trust fund is to be developed on the basis of proposals by the IDU and the Technical Committee. The biggest problem, however, is that so far none of the donors have indicated their willingness to pay into such a fund.

In addition, the IDU has submitted a further action plan and budget, which have been approved by the Board of Directors.

Next steps for the AREI

Two questions must now be resolved as quickly as possible:

  1. The structures and processes within the initiative must be finalized. This includes the open question about the new “home” of the initiative, should the AfDB no longer be willing to host the AREI, as well as any remaining issues related to finalizing the criteria. The AREI has spent a lot of valuable time on these questions. If 10 GW of additional renewable generation capacity is to be put in place by 2020 – in a way that triggers a true transition to renewable energy in Africa, creating 300 GW of additional renewable capacity by 2030 – then time is getting tight.
  2. A suitable way should be found to achieve a better balance between concrete renewable energy projects (i.e. the construction of power plants) and supporting programs (i.e. political, regulatory and financial instruments for the promotion of renewable energies). Individual projects are definitely still needed. However, only a systemic, transformative approach can provide the necessary momentum to successfully realize the initiative’s goals. This should include placing a particular focus on programs to promote decentralized, smaller projects in rural regions.

German non-governmental organizations are supporting African civil society in its efforts to promote the AREI’s human rights-based, climate-compatible and sustainable implementation. They are committed to ensuring that the demands and positions of African civil society are heard by German decision makers in particular. As one of the largest donors to the initiative, Germany has a special responsibility to ensure that AREI projects and programs do in fact contribute to climate protection and sustainable development. Now that the implementation of the initiative is starting, it will be essential to urge the German government and the European Commission to transparently and comprehensibly earmark financial support for the AREI, and to ensure that only those projects are counted that meet the ambitious criteria of the initiative and directly or indirectly lead to new and additional renewable energy capacity in Africa. In order to improve civil society support for the initiative, organizations such as Germanwatch and Brot für die Welt are organizing workshops and meetings to improve the networking of African and international civil society and maintain constant communication with African partner organizations such as the Pan African Climate Justice Alliance or the African Coalition for Sustainable Energy and Access.

Jens Klawitter / Lutz Weischer, Germanwatch