Important issues were highlighted by local and regional leaders at the COP22 conference in Marrakech, the most urgent one: access to finance for cities and regions. To find solutions to this problem, AER participated, in June 2016, in the launch of the R20 “100 Climate Solutions Project Campaign”.
This initial launch was made possible by a grant the R20 received from the Leonardo DiCaprio Foundation.
This worldwide campaign aimed to show investors that well-designed, geographically-balanced & green projects existed at subnational level. Little-to-no money is going to green projects at a subnational level partly because investors are not yet convinced that regions need help and can also deliver on high-quality projects.
AER’s role in the campaign was to identify serious regional green projects in Europe.
The campaign was much more successful than expected. Indeed, thanks to the support from numerous networks of cities and regions, and other organisations (ORU-FOGAR, ICLEI, FMDV, GIB, SALGA, TGO, ISWA, Gold Standard, ARC, BG, among others), the consortium led by R20 identified more than 650 green infrastructure projects, 36 of which came from AER member regions.
A first selection had to be made based on certain criteria, such as field of activities, objectives, expected impacts and results, CAPEX and return on investments. After an initial selection, some 400 projects were made public on the R20 website, where the project summaries can be downloaded (here).
We understand that many of you have been patiently waiting for an update on the campaign, and we thank you for your patience.
Now that we have collectively shown investors that high-quality projects exist, there is an increasing interest in investing in green projects at subnational level. The initiative is therefore going in the right direction but will not happen overnight.
AER is continuously working with its partner R20 to build an environment in which investors will help finance your projects.
The following positive steps have been achieved:
Training: together with the R20 we will soon be providing interested civil servants with two-day training sessions, allowing them to structure their projects in line with standards and requirements set by development banks and investors. These training sessions will also give regional projects exclusive access to the new SOURCE software to better prepare and present their projects to maximise access to international funding, including development banks, development finance institutions, private equity, pension funds, sovereign funds, etc. To know more about this please see HERE.
R20 and AER will offer such trainings during 2018. Algeria and South Africa have already benefited from such training sessions in March and April 2017.
Additionally, R20, with a number of top engineering infrastructure companies, has created dedicated Pre Investment Facilities (PIFs or project preparation facilities) on waste, renewable energy and energy efficiency. The best pre-structured projects will benefit from direct support for feasibility studies, thus fast-tracking the best projects to bankability.
Financing: AER, the European Investment Bank and the R20 are working together to facilitate access to European funds for European regions. Furthermore, an MOU has been signed between the R20 and an Impact Investment Fund Manager (Blue Orchard), to structure a first dedicated 350 Million USD fund. This fund will allow co-investment in the equity first loss junior tranche. In other words, this will allow final selected projects, among which some of the 36 European projects from AER members, to go to financial close and therefore unlock debt senior tranche, at best interest rates.
All of this may seem to be a long process, but it is the most efficient way to fast-track and develop large green infrastructure projects at sub-national level, hopefully making this business-as-usual in the coming years.