The investments are intended to develop Africa’s weak energy infrastructure as well as create a diversity of energy sources for power generation purposes. Such investments in renewable energy will create energy security at precisely the time when it is most needed.
The African Development Bank increased its climate finance levels by half from 2011 to 2012, funding energy programs as well as landscape conservation and low-carbon technology efforts. These efforts are lasting, too. Currently, the African Development Bank provides six dollars for every external dollar invested in climate adaptation finance in Africa.
Such efforts have established the bank as the leading development institute on the continent. Over three quarters of its climate financing was allocated to mitigation, revealing the precarious environmental position of African markets. Concerns over environmental damage have only been increased in recent days after the cataclysmic typhoon in the Philippines and similar extreme weather events worldwide.
The bank has stepped up its renewable energy investments in recent weeks as well. On November 13, the bank approved an investment package in the Africa Renewable Energy Fund (AREF) to promote small and medium sized renewable energy projects in sub-Saharan Africa. AREF, a private equity fund, is hoped to increase private investment into clean energy in sub-Saharan Africa. Its structure and conceptual development were both designed by the African Development Bank.
Other large scale recent projects from the bank include large geothermal and wind power facilities in Kenya and surrounding nations. However, the bank has also explored financing mechanisms to promote smaller scale projects, including a hydropower plant in Uganda and biomass cogeneration plants in Kenya.
According to officials from the bank, investment in renewable energy projects is the best way to both preserve the environment and spur economic development in impoverished regions.