Andrew Mitchell announced two public-private partnership projects in Africa and Asia to stimulate investment in renewable energy schemes. Photo: UPPA
By Louise Gray, Environment Correspondent 4:20PM GMT 19 Nov 2010 Andrew Mitchell, the International Development Secretary, said aid money will be used in a new way to tackle climate change, as well as funding health and education.
In a controversial move, the Coalition Government will be using tax-payer’s money to encourage private investors to put further funds towards ‘green’ development projects.
However aid agencies and charities argue it is dangerous to involve big business in aid because they will only help people while there is the potential for profit.
Mr Mitchell announced two public-private partnership projects in Africa and Asia to stimulate investment in renewable energy schemes.
The UK Government has already put aside £2.9 billion of the aid budget to tackle climate change over the next four years.
From this grants will be put in a central pot and then matched by private investors, renewable energy projects can then dip into the fund to develop hydro-electric plants and other schemes.
Once the money is flowing private investors will see that there is profit to be made from investing in solar panels and other technologies for poor people. A ‘green market’ will be created for the first time in some of the most ‘energy poor’ areas of the world.
Initial modelling of the fund estimates £9 of private investment could be raised for every £1 put in by the UK Government.
DfID estimates that, over 25 years, the project could generate energy for millions of rural homes, create 60,000 jobs and save 150 million tonnes of carbon dioxide.
The project is all part of international efforts to fight climate change by making sure that developing countries, which will produce the most carbon in the future, grow in a green way.
The last round of United Nations (UN) climate change talks in Copenhagen failed and the next major session in Cancun at the end of this year are not expected to end in a deal to halt global warming.
But Mr Mitchell said Britain must continue to fight climate change despite the failure of the talks.
He said one of the best ways to do this is to reduce emissions in the developing world, at the same time as funding development.
"When it comes to tackling climate change across the world, we have to get on with the job,” he said. "At the same time as working tirelessly towards a global deal, we must not be paralysed into inaction on the ground.
"The private sector is certainly not waiting. Decisions are being made every day on where to locate, on investments and on insurance premiums. These decisions are based on the business reality of climate change."
Kirsty Hughes, Oxfam’s Head of Advocacy, gave a cautious welcome to the promise of funds - as long as the money does not come out of funding for health and education.
“We welcome Mitchell's emphasis on the need for urgent action because climate change is hitting the poorest now, especially women,” she said.
“But we need to know how that action is going to be paid for without dipping further in to pledged aid money.”
But Kirsty Wright from the World Development Movement, said it was dangerous to involve big business.
“The message from Andrew Mitchell’s speech is clear - the UK government is once again ignoring the voices of people in the developing world and prioritising the needs of big business,” she said.
Commentators have expressed concern about ‘aid’ money going towards the renewables business in countries like India, which is investing its own money in energy projects, at a time of austerity for Britain.
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