German, KfW Development Bank Climate Fund to Reach $500 Million by 2011
A fund supported by Germany’s KfW development bank that aims to invest in energy efficient projects in developing nations will likely have financing sources worth $500 million by the end of the year.
The fund, which has commitments worth about $100 million now, is meant to reduce the risk for private investors and leverage private capital, German environment minister Norbert Roettgen said today in Berlin.
A combination of private and public money will be necessary to boost investment in renewable energy and energy efficiency in developing nations because the risks for investors are too high, Roettgen said. The KfW fund has three tranches of financing, with the first two made up of public sources from the environment ministry as well as European Union development funds and other national development banks.
“With very little public capital, it’s possible to leverage an enormous amount of private capital for these projects,” said Caio Koch-Weser, Deutsche Bank AG’s vice chairman and former German deputy finance minister.
Developing countries require $100 billion annually by 2020 to help them grow their economies without relying on polluting fossil fuels like coal and oil, Koch-Weser said. The proposed money is part of on-going United Nations-sponsored climate change talks are attempting to limit output of greenhouse gases.
Insurance companies and pension funds offer an “enormous potential” for climate-related investment, said Koch-Weser. Such funds are potentially worth “trillions” if mobilized, he added.
To contact the reporter on this story: Jeremy van Loon in Berlin at jvanloon@bloomberg.net
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