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Ikea Foundation, the nonprofit arm of the furniture retailer, and the Rockefeller Foundation are planning to create a $1bn global fund to finance renewable energy projects in developing nations.

Each foundation will provide $500m to the fund, which is slated for launch later this year, in a bid to lift more than one billion people out of energy poverty and reduce one billion tonnes of greenhouse gas emissions, the partners said in a statement.

According to the Financial Times, the fund hopes to attract additional funds of up to $10bn this year from international development agencies, before inviting institutional investors to back individual energy projects.

The fund will operate as a public charity, and will focus on developing ‘distributed’ renewable energy projects in emerging nations, in the form of mini-grid and off-grid solutions rather than large centralised power plants.

In doing so, it hopes to help poorer countries leapfrog to renewable energy sources, while also delivering clean and reliable power to communities.

“If global energy consumption doesn’t change from fossil fuels to renewable energy, we will not meet the Paris Agreement ambitions and millions of families will be left behind in poverty,” Per Heggenes, CEO of the IKEA Foundation, said in a statement.

“We need to replace polluting sources of energy with renewable ones, provide access to energy to communities and unlock further funding for sustainable models,” he added. “Ultimately, we aim to unite countries and communities in urgent action to tackle the climate crisis.”

Rajiv Shah, president of the Rockefeller Foundation, said the pandemic had set back global development gains and there was an urgent need to invest in tackling the climate crisis.

“Millions of lives and trillions of dollars have been lost to Covid 19, forcing people back into poverty after decades of progress. The effects of the climate crisis will make this even worse, which is why we must invest now to reverse this downward spiral,” he said.

“Big, bold, and pioneering collaboration and investment is required not only for the short term, but also the long term, to galvanize a better future.”

The fund will be incubated within RF Catalytic Capital, which was launched by Rockefeller Foundation last year. The partners have already signed agreements with the World Bank-linked International Finance Corp and the US International Development Finance Corp, the Financial Times reported. – PA