Countries, Companies Signal Support for Energy Transition Accelerator

December 04, 2023

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(Rockefeller Foundation/PR Newswire) Today (December 3, 2023) at COP28, the United Nations Climate Change Conference, the U.S. Department of State, the Bezos Earth Fund, and The Rockefeller Foundation presented the core framework of the Energy Transition Accelerator (ETA), an innovative carbon finance platform aimed at catalyzing private capital to support ambitious just energy transition strategies in developing and emerging economies. As part of the announcement, the Governments of Chile, the Dominican Republic, Nigeria, and the Philippines expressed interest in participating in the ETA. Amazon, Bank of America, Boston Consulting Group, Mastercard, McDonald's, Morgan Stanley, PepsiCo, Salesforce, Schneider Electric, Standard Chartered Bank, Trane Technologies, and Walmart have expressed interest in continuing to engage with the ETA partners as the initiative moves towards its formal launch.

According to the International Energy Agency, clean energy investment in developing and emerging economies excluding China must increase seven-fold to $1.9 trillion a year by the early 2030s to keep a 1.5°C limit on warming within reach.

During today's announcement at the U.S. Center at COP28, the three ETA partners announced several major achievements since their partnership's creation at COP27 one year ago and their aim to formally establish the ETA as an independent initiative by Earth Day 2024.

The ETA will bring together governments and private sector stakeholders employing high-integrity carbon crediting to deliver faster, deeper greenhouse gas reductions and improve the lives of vulnerable people by accelerating the transition from fossil fuels to clean power in developing and emerging economies. Based on preliminary estimates, the ETA could mobilize anywhere from $72 billion to $207 billion in transition finance by 2035.

After a year of extensive consultations with government, business, and civil society stakeholders, the partners released the core ETA framework, which will serve as a foundation for the creation of the ETA Coalition. The framework describes the Coalition and its objectives and provides an overview of key elements of the ETA: its approach to carbon crediting, including the development of an independent sectoral-scale crediting standard for emissions reductions from electricity generation; criteria for participating companies and information on how they would use ETA carbon credits to help meet their voluntary climate commitments; just transition provisions to address worker and community needs; plans to dedicate a portion of the finance generated to address adaptation and resilience in vulnerable countries; and options for innovative financial structures to mobilize investment into energy transition strategies.

The partners were joined by countries and leading companies declaring their interest in engaging with the ETA partners in the continued development of the groundbreaking initiative. The governments of Chile, the Dominican Republic, and Nigeria announced they would be joining the ETA as pilot countries.

Ten leading companies signed a letter of interest welcoming the ETA as an opportunity to support large-scale power sector transformation while accelerating progress towards their ambitious climate goals: Amazon, Bank of America, Boston Consulting Group, Mastercard, McDonald's, Morgan Stanley, PepsiCo, Salesforce, Schneider Electric, and Standard Chartered Bank.

"I am absolutely convinced we can meet our climate goals – the question is, will we do it in time to avoid the worst consequences of the crisis," said John Kerry, U.S. Special Presidential Envoy for Climate. "We all know the challenges we face, and that no government can solve this alone. We must all come together with the innovative solutions to catalyze the financing at the scale and speed required to transition off of dirty power and accelerate the clean energy future."

"We know how to solve the climate crisis. Now we need innovative ways to finance it," said Dr. Andrew Steer, President and CEO of the Bezos Earth Fund. "The Energy Transition Accelerator brings a market-based solution to the table, in turn unlocking billions of dollars for clean energy. Countries and companies joining us will be guided by high-integrity methodologies and just transition safeguards that center environmental and social impact."

"If we invest in the climate response correctly, it can become a vehicle for human progress. The Energy Transition Accelerator's framework begins to answer the essential question of how we can help emerging and developing economies achieve their climate goals while simultaneously creating economic opportunities for vulnerable people in developing economies," said Dr. Rajiv J. Shah, President, The Rockefeller Foundation.

In parallel, Winrock International released draft elements of the sectoral-scale carbon crediting standard it is developing for use by the ETA as part of the broader ETA Framework.

In September, the ETA announced a strategic collaboration with the World Bank's Scaling Climate Action by Lowering Emissions (SCALE) partnership, the aims of which is to catalyze climate action by mobilizing finance for effective energy transitions, enabling developing countries to be directly rewarded for verified emissions reductions from a pool of payments committed by public and private sector contributors.

"At the global level, the Bank, through initiatives like Scaling Climate Action by Lowering Emissions, is partnering with the Energy Transition Accelerator, to remove the most critical impediments for carbon market expansion, including setting standards, and supporting countries access more affordable finance by helping them set up the necessary infrastructure to connect to a global market," said Ajay Banga, President, World Bank Group, who joined the ETA partners on stage from COP28.

The sectoral-scale crediting approach being pioneered by the ETA will incentivize participating countries to intensify their near-term activities contributing to power sector decarbonization, including to deploy and utilize clean power and retire fossil fuel assets, to enhance storage capacity, transmission, and distribution, and for any needed policy shifts.

The ETA partners received extensive input from a High-Level Consultative Group of more than 30 experts and intergovernmental, private sector and civil society leaders from all regions of the world. They have been supported in the design effort by the Center for Climate and Energy Solutions (C2ES), the Environmental Defense Fund (EDF), the Climate Policy Initiative (CPI), and the Glasgow Financial Alliance for Net Zero (GFANZ).

"The math is clear: we are falling short of the finance we need to drive a global just transition," said Fred Krupp, President, Environmental Defense Fund (EDF). "To fill this gap, we need innovative financing—including through leveraging carbon markets—that can mobilize the resources that developing countries need to secure a cleaner energy future. The energy transition isn't just about climate action, it must also be focused on improving health, expanding affordable energy access, and creating economic opportunity along the way. EDF is proud to have developed the Just Transition Framework for the Energy Transition Accelerator, guiding it toward a holistic approach with justice and equity at its core."

"We cannot tackle the climate crisis without urgently phasing out unabated fossil-fired electricity generation and replacing it with zero-carbon energy around the world. And as developing countries continue to face the worst impacts of the climate crisis, the rapid transition to clean energy is vital to strengthening their resilience and boosting economic growth," said Nat Keohane, President, C2ES. "The Energy Transition Accelerator can make a vital contribution to this transition by mobilizing a new source of climate finance, serving to bring together companies and others seeking to buy high-quality carbon credits with developing countries that are poised to invest. The ETA's innovative sectoral-scale crediting approach, and its emphasis on ensuring a just transition in participating countries, will help developing economies move to clean energy at the scale and speed needed, while providing companies with an additional high-integrity means of reducing emissions as part of their corporate climate strategies. C2ES looks forward to continuing to work with the partners and stakeholders involved in the ETA to continue to refine the ETA framework and bring it to fruition."

The Department of State, the Bezos Earth Fund, and The Rockefeller Foundation are collaborating for the purpose of developing the Energy Transition Accelerator as an independent initiative.

About the Bezos Earth Fund:
The Bezos Earth Fund is transforming the fight against climate change with the largest ever philanthropic commitment to climate and nature protection. We're investing $10 billion in this decisive decade to protect nature and drive systems-level change, creating a just transition to a low-carbon economy. By providing funding and expertise, we partner with organizations to accelerate innovation, break down barriers to success and create a more equitable and sustainable world. Join us in our mission to create a world where people prosper in harmony with nature.

About The Rockefeller Foundation:
The Rockefeller Foundation is a pioneering philanthropy built on collaborative partnerships at the frontiers of science, technology, and innovation that enable individuals, families, and communities to flourish. We make big bets to promote the well-being of humanity. Today, we are focused on advancing human opportunity and reversing the climate crisis by transforming systems in food, health, energy, and finance. For more information, sign up for our newsletter at rockefellerfoundation.org and follow us on X @RockefellerFdn. READ MORE

US outlines plan to help other nations shift from fossil fuels -- The framework would create a carbon market where developing nations could access billions of dollars in financing to speed the transition to cleaner energy. (Politico Pro)

An inclusive multi-stakeholder climate finance platform to advance the global energy transition -- The ETAF Platform has obtained more than US$1.25 billion in pledges to support the energy transition by 2030. (Energy Transition Accelerator Financing Platform (ETAF))

STATEMENT: New Framework for the Energy Transition Accelerator Launches at COP28 (World Resources Institute)

ENERGY TRANSITION ACCELERATOR AND WORLD BANK ANNOUNCE STRATEGIC COLLABORATION TO SCALE UP CLEAN ENERGY FINANCE (Bezos Earth Fund)

Energy Transition Accelerator: US government offset scheme risks weakening climate ambition (OxFam)

Excerpt from OxFam: In response to the Energy Transition Accelerator announcement made by the U.S. State Department, The Rockefeller Foundation, and the Bezos Earth Fund today at COP28, Abby Maxman, President and CEO of Oxfam America, said:

“While motivated by the right intentions, this initiative risks not only enabling companies to purchase carbon offsets instead of taking sufficient steps to reduce their emissions —it also puts a U.S. government seal of approval on it.

“We are also particularly concerned that the Energy Transition Accelerator would allow the use of a watered-down standard that enables companies to buy offsets for half of the emissions for which they are indirectly responsible. Instead, companies should be taking rapid steps to phase out all of these emissions.”

“Given the urgency of the climate crisis, it is essential to focus attention on the need for adequate international public climate finance for the energy transition. The carbon offsets market is worth only $2 billion globally, and is facing increased skepticism about whether it actually leads to emissions reductions. There are also concerns about the social harms that offsets cause and whether companies can credibly rely on them.

“Even the boldest projections about the carbon offsets market still fall far short of the $1.64 trillion needed each year for a just energy transition in low- and middle-income countries. At least half of the amount will need to come from public finance, with the large majority provided through grants and concessional funding by Global North countries.”

“Recent investigations in offset schemes around the world reveal real risks of land grabs, lack of robust community consultation, and failure to ensure that project benefits are shared with frontline communities. The Energy Transition Accelerator must ensure that it applies the highest social and environmental safeguards, reflecting international human rights and environmental law, in the scoping, development, and implementation of carbon projects.”

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The U.S. State Department, The Rockefeller Foundation, and the Bezos Earth Fund unveiled the core framework for the Energy Transition Accelerator, which aims to help participating low- and middle-income countries speed their electricity sector transition from fossil fuels to clean power by attracting investments from companies that would in return receive carbon credits for the emissions avoided.
The ETA allows use of the watered-down Voluntary Carbon Markets Initiative Scope 3 Flexibility Claim, which allows companies to buy offsets for 50% of Scope 3 emissions – emissions a company is indirectly responsible for, such as from the products they buy from suppliers and from its products when their customers use them. This potentially undermines progress on the higher bar being advanced by the Net Zero Standard of the Science-Based Targets Initiative.
Bold projections about the offsets market estimate that it may grow to $10-50 billion by 2030. This is still far short of the U.S. $1.64 trillion each year needed by 2030 for a just energy transition in low- and middle-income countries. READ MORE