UNEP has begun an effort, with the support of the Italian Ministry of Environment and Territory, to promote increased investment in the renewable energy sector in the southern Mediterranean. This finance facilitation programme is one of three elements of a comprehensive WSSD Type II initiative "Promotion of Renewable Energy Technologies in the Mediterranean Region" coordinated with the International Energy Agency (IEA), the Observatoire Méditerranéen de l'Energie (OME) and the Mediterranean Association of the National Agencies for Energy Conservation (MEDENER). The other two elements of the initiative focus on strengthening policy frameworks and building private sector project development capabilities.

The key objectives of MedREP are to investigate different options for increasing finance flows to renewable energy companies and projects in target countries, and to help structure various support mechanisms that help lenders and investors scale up financing to this clean energy sector. Tunisia, Morocco, and Egypt are the first three Mediterranean countries to be reviewed for the programme. It is envisaged that in the future other southern Mediterranean countries will also be added. The current budget for the finance facilitation programme is 4 million euro.

Based on stakeholder consultations and an assessment of existing barriers to investment, UNEP will identify and implement targeted financial support mechanisms beginning fall 2003. Examples of possible mechanisms include seed or patient capital funds, interest rate subsidies, and investment advisory support facilities*. Parallel activities will also be undertaken to help financiers become more aware of the renewable energy investment opportunities, to streamline and lower the transaction costs, and to assess and manage the risks and returns associated with the deployment of clean energy technologies. The selection of the appropriate financing mechanisms for each country will be based on a detailed study of the technical-economic characteristics of renewable energy technologies in each target countries, based on which specific renewable energy technologies and specific economic sectors will be selected to receive the planned financial support mechanisms. UNEP RISOE Center in Denmark is actively involved in the provision of technical and administrative support towards the implementation of the project activities.

(*)  Several examples of such mechanisms already in place in other regions are www.areed.org and www.b-reed.org for seed finance, www.uneptie.org/energy/Indian-Solar-Finance for interest rate subsidies and www.uneptie.org/energy/IAF for investment advisory support facilities.