The European Commission (EC) has proposed creating a global risk capital fund to mobilise private investment for energy efficiency and renewable energy projects in developing countries including India, Nepal and Bhutan.
The EC intends to kick-start the fund - Global Energy Efficiency and Renewable Energy Fund (GEEREF), with a contribution of up to euro 80 million (approx $100 million) over the next four years, and expects that financing from other public and private sources will take funding to at least euro 100 million, an official release said Tuesday.
"The GEEREF will accelerate the transfer, development and deployment of environmentally-sound technologies and help to bring secure energy supplies to people in India, Nepal and Bhutan," the statement said.
These projects will also help combat climate change and air pollution problems.
Altogether the fund is expected to help contribute to the financing of investment projects of up to euro 1 billion, the risk capital need in developing countries is estimated to be over euro 9 billion, far above the current levels, the EC estimates.
"This is an innovative mechanism. It underlines the EC's commitment to help developing countries invest in renewable energy and energy efficiency," said EC's Environment Commissioner Stavros Dimas.
"It will contribute to bringing clean, secure and affordable energy supplies to the 1.6 billion people around the world who have no access to electricity," added Dimas.
Development Commissioner Louis Michel emphasised that the lack of access to energy is a major obstacle for regions that already experience problems in accessing to capitals.
"This fund can mobilise private investments and become a real source of development, especially in Africa," said Michel.
One of the EU's goals is to ensure that the global temperature rises no more than 2 degrees Celsius above pre-industrial levels, since beyond this level the impacts of climate change are forecast to be far more severe.
EC estimates that greater focus on alternate energy sources is expected to reduce the demand on fossil fuels for global electricity generation from the current 13 percent to 34 percent in 2050.