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New Investment Index Set To Focus On Developing World

In an effort to provide investors with up-to-date information and governments with the kick-up-the-pants necessary to reform outdated regulation and infrastructure, the Multilateral Investment Fund (MIF) have conceived of a investment index which will be compiled by Bloomberg New Energy Finance (BNEF) to examine government policies and the level of investment in clean energy in 55 countries across Africa, Asia, and Latin America.

The Climatescope index will list the countries according to which has the most potential for private investment, answering one key complaint had bey investors for years now, specifically, that there is a lack of clear and reliable information on the risks and regulatory issues investing in developing world energy projects.

Climatescope is a ‘first step’ for the US and UK governments as they move towards increasing their investments in clean energy in Africa, by way of the Power Africa initiative. The Power Africa initiative “addresses one of the most pressing challenges to sustainable economic growth and development in sub-Saharan Africa – access to electrical power.” The initiative was announced earlier this year, by US President Barack Obama in remarks given at the University of Cape Town, South Africa. It will be funded by the UK Department for International Development (DFID), the US Agency for International Development (USAID) and the Multilateral Investment Fund, part of the Inter-American Development Bank (IADB) group.

Nearly 70% of sub-Saharan Africa has no access to electricity, a figure that increases to 85% in rural areas. This equates to over 600 million Africans going without electricity, which according to Bloomberg hampers “business growth” and makes “it difficult to access education and health services,” and according to me is a massive failure on the part of ‘first world’ humanity.

“Economic growth and the jobs that come with it offer the best route out of poverty for families across the developing world,” said the UK’s Justine Greening, International Development Secretary. “Yet in many developing countries a lack of reliable energy is acting as a brake on growth.

“Investors are clear – they have the capital but need reliable information to decide where and how to invest it. This index will provide the research investors need, helping to drive investment into new areas and to secure clean, stable energy supplies for millions of the world’s poorest people.”

“Through public-private partnerships, Power Africa is addressing the single greatest barrier to growth on the continent: access to power,” said Dr. Rajiv Shah, USAID Administrator. “An effective tool to measure our progress, the Climatescope provides important and relevant information that will shape new opportunities for private investment in clean energy. This innovative index will not only accelerate our collective efforts through Power Africa, but will help ensure that children everywhere have a light to read by at night.”

Climatescope will build on the existing Latin American Climatescope established by MIF,  the Inter-American Development Bank (IADB) fund that supports micro, small and medium enterprises. The tool currently measures 26 coutnries across Latin America and the Caribbean. So far the Latin American Climatescope has received 15,000 views and 6,000 downloads since its launch in 2012, and according to Bloomberg, “has encouraged government energy policy reform.”

“We are delighted to continue and expand upon the important work we began with the MIF two years ago,” said Michael Liebreich, CEO of Bloomberg New Energy Finance. “Thanks to the additional support of the UK and US, we will widen the lens to profile activity in other developing nations where clean energy investors want to put capital, but lack information to make critical decisions. This project will help fill a longstanding knowledge gap that has slowed private investment.

“The past two years have shown that Climatescope is helping identify progress made by Latin American countries in attracting clean energy investment, and is informing investors where to allocate capital. With the project now expanded to cover key nations in Asia and Africa, Climatescope is on track to become a key tool for those driving the global shift to a cleaner energy system.”

The news of the wide-ranging Climatescope index comes hot on the heels of the UK’s Department of Energy & Climate Change’s Edward Davey announced at last week’s international climate change talks in Warsaw that “the UK will join the United States in agreeing to end support for public financing of new coal-fired power plants overseas, except in rare circumstances in which the poorest countries have no feasible alternative.”

“It is completely illogical for countries like the UK and the US to be decarbonising our own energy sectors while paying for coal-fired power plants to be built in other countries,” Mr Davey said. “It undermines global efforts to prevent dangerous climate change and stores up a future financial time bomb for those countries who would have to undo their reliance on coal-fired generation in the decades ahead, as we are having to do today.”

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