U.S. DEPARTMENT OF STATE
For Immediate Release
November 9, 2022
U.S. Government and Foundations Announce New Public-Private Effort to Unlock Finance to Accelerate the Energy Transition
U.S. Special Presidential Envoy for Climate John Kerry, The Rockefeller Foundation, and the Bezos Earth Fund announced a partnership today to work toward the creation of an Energy Transition Accelerator (ETA) intended to catalyze private capital to accelerate the clean energy transition in developing countries.
Unprecedented investment in clean energy is needed in this critical decade to limit warming to 1.5°C and avert catastrophic climate impacts on communities worldwide. Annual clean energy investment must triple to $4.2 trillion by 2030, according to the International Energy Agency, and more than half of that investment must be in emerging and developing economies.
The partnership will work towards launching the ETA as an innovative, independent initiative to drive private investment in comprehensive energy transition strategies that accelerate the deployment of renewable power and the retirement of fossil fuel assets in developing countries.
The ETA is expected to deliver deeper and earlier emissions reductions, help developing countries achieve and strengthen their nationally determined contributions (NDCs) under the Paris Agreement, and help them advance broader sustainable development goals, including expanded energy access. It will also generate new finance to strengthen adaptation efforts in vulnerable countries.
The U.S. government and the two philanthropies will work with input from governments, experts, the private sector, and civil society to develop and launch the Energy Transition Accelerator. The ETA is expected to operate through 2030, possibly extending to 2035.
Chile and Nigeria are among the developing countries expressing early interest in exploring the ETA’s potential benefits. Bank of America, Microsoft, PepsiCo, and Standard Chartered Bank have also expressed interest in informing the ETA’s development, with decisions on whether to formally participate pending the completion of its design. The ETA will also be open to sovereign government investments and engagement.
Vision for a High-Integrity Framework
The goal of the partnership is to establish a high-integrity framework enabling developing countries to attract finance to support their clean energy transitions. Operating at the scale of national or subnational jurisdictions, the ETA will produce verified greenhouse gas emission reductions, which participating jurisdictions will have the option of issuing as marketable carbon credits.
The jurisdictional approach, similar to approaches currently employed in the forestry sector, will help avoid emissions leakage, ensure that emissions reductions are real and additional, and align a jurisdiction’s power sector policies, investment priorities, and just transition strategies. While incentivizing system-wide transformation, jurisdictional arrangements can also help steer finance to discrete projects producing deep, rapid emission reductions.
Revenue raised through the ETA will supplement other sources of finance being mobilized by governments, donors, and multilateral and private financial institutions in support of developing countries’ energy transition. It will also help catalyze additional investment. By providing jurisdictions with fixed-price advance purchase commitments for verified emission reductions, the ETA will create a predictable finance stream that can unlock upfront private finance at more favorable rates.
Social and Environmental Safeguards
To help promote an inclusive, just transition, the energy transition strategies of participating jurisdictions will include social safeguards and benefits to local economies, including support for job creation and training.
To promote environmental integrity in the use of carbon credits, one idea for the ETA will be to open it only to companies committed to achieving net zero no later than 2050 and science-based interim targets. Other provisions will establish strong transparency requirements and address how companies’ investments in verified emissions reductions through the ETA could be recognized.
For instance, companies could use credits to support mitigation above and beyond their interim targets, to contribute to climate finance or other voluntary goals, or to contribute to a host country’s NDC achievement. Another approach to be explored is the use of some credits to address a limited portion of Scope 3 emissions within a company’s near-term target, in which case companies would be required to pay for additional credits solely to magnify the ETA’s financial and climate benefits.
A range of stakeholders will be consulted on the ETA’s technical aspects as well as environmental, social, and just transition safeguards. Organizations to be consulted include the Science Based Targets Initiative (SBTi), the Voluntary Carbon Markets Initiative (VCMI), the Integrity Council for the Voluntary Carbon Market (ICVCM), and the World Resources Institute (WRI) for GHG Protocol.
With safeguards in place, participating companies will need to achieve deep reductions in their own value chain emissions, with emission reductions generated through the ETA supplementing their internal abatement. The final ETA participation and use criteria will be informed by further analysis of potential emissions and financial implications and will seek broad alignment with evolving best-practice standards, including those of SBTi and VCMI.
To help strengthen climate adaption efforts in vulnerable countries, five percent of the value of all credits generated through the ETA will be dedicated to international support for adaptation and resilience.
To express interest in the ETA, please contact: ETA@rockfound.org
For media inquiries, please contact ClimateComms@state.gov
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