PRESS CONFERENCE BY GLOBAL ENVIRONMENT FACILITY

There could be no talk of poverty alleviation as long as most of the 2 billion people in the world were poor and without access to modern energy services, particularly electricity, Mohamed T. El-Ashry, Chief Executive Officer and Chairman of the Global Environment Facility (GEF), told correspondents at a Headquarters press briefing this morning.

Renewable energy was the only form of modern energy services those people could hope for, Mr. El-Ashry added, as he briefed journalists on what the Facility had done, and what needed to be done in the future, by the public and private sectors to bring affordable electricity to rural communities in developing countries. 

In the past seven years, he said, the Facility had become the principal financier of renewable energy in the developing world, having committed over $580 million in grants and mobilized another $2.5 billion for renewable energy in developing countries.  While much had been said about the “digital divide”, there was also what was known as the “energy divide”, and the key was to link the two.

Yesterday, at the ministerial segment of the Commission on Sustainable Development, he had made a proposal in that connection and had invited other donors, both private and public, to join with the Facility in bridging those two divides.  There had been much talk of the need for information technology to help alleviate poverty.  It should be remembered, however, that information technology ran on electricity and if there was no electricity in villages, then they had no hope of getting the information technology they needed. 

Using renewable energy to power that information technology was at the heart of his proposal to the Commission, he continued.  One solar panel could support the cellular phone network in an area.  Since the Facility dealt with the energy side of the issue, it would partner with anyone who wanted to support the closing of the digital divide.  It would be interesting to see how the Commission addressed that proposal in their final communiqué. 

Responding to questions, Mr. El-Ashry said that the Facility had made renewable energy a priority.  It was not going to promote fossil fuels, which caused not only local pollution, but also the carbon dioxide that contributed to global warming.  The Facility was contributing and supporting clean energy technologies, with renewable energy at the top of the list.  The Facility’s projects were country-driven and reflected the national priority for sustainable development.  While some countries had a great potential for wind power,

others -- with a tremendous amount of sunlight -- had the potential for solar power.

The Facility, which had over 600 projects in about 130 countries, dealt not only with energy and climate, but also with biodiversity, water issues, land degradation and the ozone layer, he continued.  Countries determined their priorities and then requested the assistance of the Facility in those areas.  That

could explain why a country such as Haiti, which had a need for renewable energy, decided to come to the Facility for land degradation and deforestation as its first priority. 

Mr. El-Ashry noted that there were a number of impediments to the spread of renewable energy, which the Facility was working to remove.  The first major barrier was the cost.  For example, if an individual wanted to acquire a solar system for his or her home, he or she would have to pay for it up front. 

The second barrier, he continued, was the availability of credit, particularly from local banks.  Someone needed to provide guarantees, and that was part of the work of the Facility.  In a project in Indonesia, the Facility was sharing the risk with the local financial institutions.  In other cases, the Facility was helping to contribute to paying that up-front cost. 

A third barrier, he noted, was the institutional arrangement itself -- the legal and policy framework in a country and the subsidized price of electricity.  If the subsidy was very high, the price of electricity was so low that renewable energy became non-competitive.

The Facility, Mr. El-Ashry said, was funded mainly by the Organisation for Economic Cooperation and Development (OECD) countries, thanks to their commitment to international environmental conventions, particularly those signed at the 1992 United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro.  Those countries had committed themselves to provide additional financial resources to assist developing countries to implement those conventions, and the Facility was the financial mechanism for those conventions.

The Facility, he continued, was re-funded every four years.  The last time that happened was in 1998 for the period from 1998 to 2002, on the order of $2.75 billion.  The Facility was now beginning negotiations for the next re-funding phase, which would be completed by February or March 2002.

He added that the United States had arrears amounting to a little over $200 million.  It was his hope that they would be able to pay those arrears in the coming year.  There were also some developing countries, including China, India, Brazil, Argentina, Egypt and Nigeria, which were providing resources. 

Asked what the Facility could do about the fact that the United States Administration was going to abandon the Kyoto Protocol, Mr. El-Ashry replied that since the Protocol was an agreement between governments, there was nothing the Facility could do about it.  What was needed first was ratification of the Protocol; then the Facility could help with its implementation. 

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