Ethiopia’s Green Finance and Energy Landscape Takes Center Stage at Annual Development Conference
January 17, 2025
Addis Ababa, 17 January 2025 – UNDP commits to help Ethiopia innovatively mobilise US$ 2 billion in green financing by 2030 by helping the country explore green bonds, carbon credits, debt swaps, and payment for ecosystem services.
Ethiopia’s commitment to innovative approaches to address persistent challenges in the realm of green finance and renewable energy will be spotlighted at UNDP’s Annual Development Conference, where experts, policymakers, and global implementers will today discuss the intersection of climate resilience and sustainable development.
UNDP-Ethiopia Resident Representative, Samuel Doe said: “As we stand at a critical juncture in history, we are acutely aware of the unprecedented global challenges posed by climate change. These challenges demand urgent action, driven by global solidarity and a shared vision for a sustainable future.”
Addressing a Climate Crisis with Innovation
Ethiopia, a nation navigating the complex challenges of climate change, has been disproportionately affected by global warming, ranking 155 out of 187 countries on the global climate vulnerability index in 2022.
With a rapidly growing population, deforestation, and soil degradation exacerbating economic and environmental stresses, the nation has adopted bold strategies to address these challenges, including the Climate Resilient Green Economy (CRGE) initiative, Ethiopia's Long-Term Low Emission and Climate Resilient Development Strategy (2020-2050) and the Green Legacy Initiative (GLI).
The conference highlighted Ethiopia's successes, such as mobilizing $400 million in grants from multilateral and bilateral funds over the past decade and leveraging its hydropower and renewable energy potential, alongside the barriers it continues to face.
Taking in Global and Regional Context
The recent breakthrough at COP 29 in Baku, Azerbaijan, which saw developed nations commit to tripling climate finance to $300 billion annually by 2035, offers new opportunities for countries like Ethiopia.
Additionally, agreements on carbon markets under the Paris Agreement provide mechanisms to generate and trade carbon credits, presenting another avenue for resource mobilization.
East Africa, including Ethiopia, has demonstrated progress by securing nearly $44 billion in climate finance from 2011–2021.
However, with Africa receiving only 11% of the required funding to meet its NDCs, innovative solutions are urgently needed.
Key Annual Development Conference Discussion Areas
This year’s Annual Development Conference will delve into Ethiopia's roadmap for sustainable energy, focusing on:
Energy Mix Optimization: Building on hydropower as a baseload energy source while integrating mini-grid, solar, wind, and geothermal projects.
Policy Frameworks: Strengthening climate finance policies including de-risking to attract private investment and foster public-private partnerships (PPPs).
Financial Innovations: Expanding the use of green bonds, carbon credits, and debt swaps to bridge financing gaps.
Institutional Capacity: Addressing institutional fragmentation and enhancing technical expertise to navigate complex financing mechanisms.
Pipeline Development: Creating bankable projects with robust feasibility studies to attract global and regional funding.
According to UNDP’s latest working paper on Financing Ethiopia’s Green Transition, Ethiopia’s progress is a testament to its climate resilience and commitment to sustainable development, however, there is a big gap between ambition and the required financing for implementation.
Economic Advisor and team lead for UNDP-Ethiopia's Policy Development and Research Hub, Mr Ali Zafar said: “Our analytical study documents Ethiopia’s journey towards expanding renewable energy and mobilizing new and innovative sources of climate finance to improve the country’s energy production and boost access for communities. This report identifies promising financing for both climate change mitigation and adaptation.”
Call to Action
International collaboration and innovative financing mechanisms are imperative given the increasing frequency of droughts, and flood adverse impacts on GDP, and welfare losses projected to rise in the face of new natural disasters including landslide and earthquake, which will be a heavy burden on agri-reliant vulnerable communities.
About the Conference
The Annual Development Conference is a premier knowledge event organized by UNDP-Ethiopia to bring together policymakers, development experts, and business leaders to address critical issues in sustainable development. For more information or media inquiries, please contact: Communication.et@undp.org
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