EIB approves US$95m financing for geothermal power generation in East Africa

EAST AFRICA – The European Investment Bank (EIB) has approved US$4.9 billion financing for renewable energy, clean transport, COVID-19 recovery, social housing and education.

Of this amount, US$95 million will be allocated to the East Africa Rift Geothermal Project.

The operation is an envelope for financing individual private sector investments into geothermal power generation projects in different countries in the East African Rift region and the sub-operations under the envelope will undergo individual project appraisals and be separately approved for bank financing.

Funding will be available for the countries of: Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Mayotte, Mozambique, Reunion, Rwanda, Seychelles, Somalia, South Sudan, Tanzania, and Uganda.

The proposed envelope will allow the EIB to provide financing to several projects implemented by promoters active in the geothermal power sector in the region (individual private sector investments into geothermal power generation).

Eligible projects will typically include greenfield development and brownfield expansions, with proven geothermal resources.

Investments in geothermal energy will help diversify base load renewable electricity supply in the region and contribute to the reduction in greenhouse gas (GHG) emissions compared to fossil-fuel based alternatives, thereby supporting the sustainable economic development of the East African Rift countries.

Werner Hoyer, President of the European Investment Bank, said: “The projects approved highlight the EIB’s engagement across Europe and around the world to unlock private and public investment that addresses local priorities and global challenges. Tomorrow I will update the EIB’s Governors, EU finance and economy ministers, on the EU Bank’s rapid response to challenges caused by the COVID-19 pandemic and our strong and growing support for green transition and climate action across the world.”

“The projects approved highlight the EIB’s engagement across Europe and around the world to unlock private and public investment that addresses local priorities and global challenges”

Werner Hoyer – President, EIB

US$1.6 billion for renewable energy

The EIB approved new support for large-scale solar power generation across Spain, small-scale renewable energy projects in Germany, support investment in clean energy and energy efficiency by companies in Austria, and geothermal power in East Africa.

The Board also approved financing and technical support to increase sustainable and reliable energy supply and improve energy efficiency in schools, hospitals and businesses across Africa.

This comes as the board of the European Investment Bank (EIB) having agreed in 2015 on a new energy lending policy and confirmed the EIB’s increased ambition in climate action and environmental sustainability.

Under the revised energy lending policy, the EIB will no longer consider new financing for unabated, fossil fuel energy projects, including gas, from the end of 2021 onwards.

In addition, the bank set a new Emissions Performance Standard of 250g of CO2 per Kilowatt/hour (KwH) that will replace the current 550gCO2/KwH standard.

A previous review of energy lending in 2013 had already enabled the EIB to be the first international finance institution to effectively end financing for coal and lignite power generation through adoption of a strict Emissions Performance Standard.

“Climate is the top issue on the political agenda of our time,” said EIB President Werner Hoyer in November 2015.

Hoyer continued: “Scientists estimate that we are currently heading for 3-4°C of temperature increase by the end of the century. If that happens, large portions of our planet will become uninhabitable, with disastrous consequences for people around the world. The EU bank has been Europe’s climate bank for many years. Today it has decided to make a quantum leap in its ambition. We will stop financing fossil fuels and we will launch the most ambitious climate investment strategy of any public financial institution anywhere.” 

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