The UNEP Sustainable Energy Finance Initiative (SEFI)

"Climate change poses a major risk to the globaleconomy…Worldwide economic losses due tonatural disasters appear to be doubling every10 years and, on current trends, annual losses willreach almost $150 billion in the next decade." - Click here to download UNEP 2002 FI Study

UNEP is working to create the policy and economic framework where sustainable energy can increasingly meet the global energy challenge. Changing attitudes and helping mainstream financiers to consider sustainable energy investments are key components of the energy work within UNEP and the starting point for the UNEP Sustainable Energy Finance Initiative (SEFI).

With support from the United Nations Foundation, SEFI's goal is to provide current and targeted information to financiers while facilitating new economic tools that combine social and environmental factors - both risks and returns - as integral measures of economic performance.

SEFI is modeled in part on the UNEP FI initiative as a platform to provide financiers with the tools, support and networks to drive financial innovation that improves the environmental performance of the energy mix. The overall strategy is to use this platform and modest amounts of capital to convene financiers, engage them to do jointly what they may have been reluctant to do individually, and to catalyse public-private alliances that together share the costs and lower the barriers to sustainable energy investment.

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Creating the Climate for Change
The global energy industry powers an incredible global economy, but the reliance on fossil fuels also creates serious environmental and social impacts. Local air pollution, regional acid deposition and global climate change affect us all, regardless of our local address.

In many developing countries, the economic benefits derived from access to a modern energy system are elusive, although the environmental costs from using basic fuels are not. Nearly three billion people - half of the world's population - rely on biomass, charcoal and kerosene for cooking and heating in simple devices; producing large amounts of indoor and local air pollution that is linked to between four and five percent of the global disease burden.

Providing modern energy services to these people and reducing the global environmental impacts of energy use is thus a substantial challenge, but one where renewable energy and energy efficiency - sustainable energy - can make a significant contribution. Technologies such as wind generators and solar cells have advanced rapidly and their costs continue to decline. However, achieving mainstream primary and secondary markets for sustainable energy will require a range of new financial products.

Superficially at least, money does not seem to be the problem - billions of dollars will continue to be invested each year in the development of global energy systems. It is, however, the nature of these investments in highly damaging fossil fuel options that is the cause for concern. Further, if the fossil fuel 'business as usual' mindset continues in the planning and financing of future energy infrastructure, the resulting serious and irreparable environmental and social harm could dramatically affect the health of human societies, economies and the ecosystems on which they depend.

Clearly, if present trends continue, the risk to global societies and economies from environmental degradation, climate change and the continued poverty of the world's poor will increase. Instead of climate change from continued investment in fossil fuels, we need to create the climate for change towards a sustainable energy path.

Investment companies representing $4.7 trillion under management have joined under the Carbon Disclosure Project to request that Fortune 500 companies disclose their carbon emissions, while the UK Government's Export Credits Guarantee Department will provide £50 million of cover for creditworthy renewable energy exports. A number of groundbreaking clean energy funds have also been launched, such as the $61 million Dexia FE Clean Energy and the €45 million FIDEME fund in Eastern Europe.

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Activities to Develop Markets
The scope of SEFI includes renewable energy and energy efficiency investments in both developed and developing countries, including climate change and carbon trading activities related to sustainable energy. To address the need for the finance community to include environmental and climate issues in their investment decisions for new or replacement energy infrastructure, SEFI's main focus is to:

Provide information
In any new economic sector, the need for current, relevant and timely information is critical. To provide this information, SEFI:

• Develops Resources, risk management tools and activities that lower barriers to investment in this sector;
• Communicates investment activity in the sustainable energy sector to the broader finance community; and
• Promotes policy frameworks within financial institutions for investing in sustainable energy.

Facilitate networks
To facilitate and develop networks, SEFI:

• Brings financiers and developers together to share best practice on sustainable energy finance and promote investment in the sustainable energy sector;
• Builds credibility in the finance sector and within financial institutions for investment in sustainable energy; and
• Helps financiers create common platforms on sustainable energy finance, such as investment forums.

Develop partnerships
To create partnerships with and within the finance sector to launch innovative financial products tailored to sustainable energy investments, SEFI:

• Develops and promote joint FI/UN initiatives and other public-private partnerships;
• Links donor funding with the finance sector to buy down and share risks; and
• Provides incentives for new financial product development that targets regions of the world currently without access to modern energy services.

 

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A Joint UNEP Initiative

SEFI is a UNEP programme jointly implemented by:

UNEP Energy
UNEP's Energy Program was established in 1996 within the Division of Technology, Industry and Economics (TIE) to address the most serious environmental consequences of energy production and use - particularly global climate change.

UNEP FI
UNEP FI is a global partnership between UNEP and more than 275 financial institutions to develop and promote the links between the environment and financial performance. The UNEP FI partership includes commercial banks, investment banks, insurance and re-insurance companies, fund managers, multilateral development banks, and venture capital funds.

BASE
BASE was founded in 2001 as a non-profit foundation and UNEP Collaborating Centre to mobilize investment in energy efficiency and renewable energy. BASE helps to build strategic partnerships between entrepreneurs and investors to finance sustainable energy in developing and industrialized countries.