UK’s Climate Finance Accelerator launches in Egypt to support low-carbon projects

Government-funded programme set up to help potential projects become more bankable and appealing to investors

Egypt is working to encourage investment in green energy projects, as it prepares to host Cop27 in November. Victoria Hazou / The National
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The Climate Finance Accelerator (CFA), a technical assistance programme funded by the UK government, will support promising low-carbon projects in Egypt and connect them with investors.

Applications for the four-year programme will open next month, with each accelerator cycle for the selected project developers lasting six to nine months.

It comes at a time when Egypt is working to encourage investment in green energy projects, as it prepares to host the Cop27 UN climate change conference in Sharm El Sheikh in November.

“We’re really excited to see the kind of projects that are out there in Egypt,” Alex Clarke, technical lead for the CFA, said at the launch of the programme on Monday.

Founded in 2017, the CFA has supported more than 50 projects across a variety of sectors in Colombia, Nigeria, Mexico, Turkey, South Africa, Peru and Pakistan.

While the CFA does not itself provide grants, the £10 million ($11.8m) programme is funded by International Climate Finance (ICF) through the UK government’s Department for Business, Energy and Industrial Strategy.

The CFA “is part of the UK’s efforts to support climate action by providing practical ways to help governments in middle-income countries finance and deliver their commitments under the Paris Agreement”, the British government said.

The pact, adopted by 196 countries at Cop21 in 2015, set a goal of limiting global warming to 1.5°C above pre-industrial levels.

At the time, developed countries committed to providing $100 billion per year in climate finance from public and private sources to support developing countries. As part of this commitment, the UK pledged to provide at least £5.8bn between 2016 and 2020.

However, climate finance has been a point of contention and is expected to be one of the main topics of discussion at Cop27.

Egypt, for example, faces a funding gap of about $250bn out of the $324bn it requires to introduce the mitigation and adaptation measures outlined in its National Climate Change Strategy 2050.

The country has “many projects that are already under way to steer the country towards an environmentally friendly future”, Sara Lemniei, managing director of SLK Capital in London, said on Monday.

Many are funded by large institutional investors, such as the European Bank for Reconstruction and Development, the International Finance Corporation and the Africa Development Bank, as well as the private sector.

“However, given the enormous financing requirements, the scale that is needed to ramp up climate action and advance the sustainable development goals [SDGs] is just not there,” Ms Lemniei said.

The CFA will help to bridge “the gap disconnect between investors and projects in need of investments”.

Projects will be selected by Egyptian and international experts based on four main criteria: climate mitigation potential, project maturity, financial structuring, and gender equality and social inclusion.

The most important is climate mitigation potential, which is “the central driving force of the CFA”, Mr Clarke said.

In terms of maturity, businesses should be “beyond the proof-of-concept stage and ready to begin speaking to investors”.

The CFA is looking at projects with a ticket size of at least $1m “and ideally a bit larger than that”.

Partners on the ground include Acumen Consulting, an Egyptian managing consultancy specialising in supporting small and medium enterprises, and Genesis Analytics, based in Johannesburg.

The CFA will publish a landscape map of Egypt's climate finance demand and supply, as well as listing relevant stakeholders, in the coming weeks.

Once the selection process is complete in October, projects will go through the CFA capacity-building process and receive support from technical, financial and gender and social inclusion experts in the first quarter of 2023.

This will be followed by an event in London, bringing together project proponents and financiers.

The aim is for “businesses to meet investors and build their understanding of what it is that investors are looking for, as well as for investors ... to really gain access to a pipeline of investable opportunities in the climate space”, Mr Clarke said.

Updated: August 22, 2022, 2:44 PM
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