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The Ikea and Rockefeller foundations are making their largest investments to start a fund they hope can fund more than $ 10 billion in small-scale renewable energy projects to try to lift more than 1 billion people out of energy poverty.
Each foundation will provide $ 500 million in venture capital and hopes to attract $ 10 billion in additional funds from international development agencies this year, before opening up to institutional investors to try to expand investment in renewable energy in countries such as India, Nigeria and Ethiopia.
“This can be commercially viable. There are $ 1 billion risky ahead, and that can unlock tens of billions of dollars. We don’t bet here. We have seen it work in India. We know what it takes to be successful. ” Rajiv Shah, told the Financial Times, president of the Rockefeller Foundation.
For Heggenes, executive director of the Ikea Foundation, he said it offered a “very important” opportunity to address the two biggest threats in developing countries: poverty and climate change.
Investing in renewable energy has become big business in Europe and the United States, but the Ikea-Rockefeller platform aims to do something similar with smaller-scale projects in emerging markets. It aims to develop “distributed” renewable energy projects, rather than power plants, mainly in the form of mini-solar projects, but also microenergy.
The foundations said they had already signed agreements with the International Finance Corporation, an organization affiliated with the World Bank, and the International Finance Corporation of the United States, and hoped that Ikea’s participation would unlock the support of similar agencies. in Europe.
Its goal by the end of this year is to have $ 10 billion in development agency funds to add to the initial $ 1 billion and then invite commercial investors to support individual projects.
Shah said he thought the platform could grow to $ 100 billion or even $ 1 billion, using its “philanthropic capital as leverage to get commercial capital.”
He said that since his days as an Obama administration official addressing the Copenhagen and Paris climate change conferences, he had seen “many commitments made and many good intentions, but little execution.”
“This has the opportunity to be the most significant investment and with the most funding aimed at the two goals of lifting people out of poverty, but in a climate-friendly way.”
Heggenes said the Ikea Foundation, created by the flat-packed furniture retailer protect it from acquisition and invest in projects to combat inequality – considered energy poverty as the main obstacle to the growth of the poorest countries.
The two foundations have set themselves the goal of reducing 1 billion tonnes of CO2 emissions and lifting 1 billion people out of energy poverty by the end of the decade.
Shah said the pandemic had slowed development in the poorest countries for up to two decades, and that there was a great need to foster environmentally friendly economic growth in those nations. “Now is the time to act,” he said.
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