Prosus and South Pole Collaborate on Innovative New Climate Finance Instruments with High Social Impact

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by KnowESG
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At COP27, there were more and more calls for businesses to do more to help the environment. In response, global technology investor Prosus and leading climate solutions provider South Pole have joined forces to bring distributed renewable energy projects to life using the new D-REC market instrument. Their focus will be on high-impact social projects in India and South Africa.

Between 2022 and 2025, Prosus has agreed to purchase 3GWh of D-RECs from South Pole, supplying 1GWh every year. This groundbreaking deal will provide much-needed proceeds to help build transformative renewable energy projects that will replace electricity that uses a lot of carbon and give rural communities access to energy. On Finance Day at the COP27 UN Climate Change Conference in Sharm El-Sheikh, Egypt, the deal was made public.

Prajna Khanna, Global Head of Sustainability at Naspers and Prosus, said:

"D-RECs are an innovative and verifiable way to help underserved communities get access to clean, cheap energy faster. With Prosus's portfolio of companies in high-growth markets, our multi-year partnership with the D-REC Initiative shows our commitment to transition to a greener economy that is inclusive, leaving no one behind."

D-RECs make Renewable Energy Certificates (RECs), which are a popular market tool, more useful for smaller projects that have trouble connecting to the grid or getting funding.

D-RECs make it possible for renewable energy solutions, like solar mini grids, to work. This clean energy is used in irrigation systems, hospitals, schools, and homes.

D-RECs' huge development potential contributes to UN Sustainable Development Goals on health, food security, education, and combating climate change through strengthening key services for communities.

By buying D-RECs, Prosus is providing climate funding for renewable energy projects that replace dirty off-grid energy sources like diesel generators and energy from some of the world's most carbon-intensive networks.

The open technology ledger that the D-REC Initiative made gives buyers like Prosus confidence in where their certificates came from. It also makes it easy for companies to report on whether they are meeting their goals for buying renewable energy.

Gian Autenrieth, Renewable Energy Platforms Manager at South Pole and D-REC Initiative co lead, said:

“D-RECs are all about extending affordable access to renewable energy to those who lack it. It gives climate leaders a tool they can use to make a real difference in reducing emissions and promoting sustainable development. Prosus is demonstrating how the inclusion of D-RECs in their renewable energy strategy has catalysed much-needed capital to deploy new distributed renewable energy assets.

"At COP27, there is a strong emphasis on the "just transition." For the D-REC Initiative, this means using D-RECs to connect global businesses, developers of renewable energy projects, and communities in emerging markets. This will speed up investments in renewable energy. D-RECs allow companies like Prosus to rise above the flurry of commitments to deliver real climate and social impact by extending their renewable energy procurement to power those who need it most."

The scope of the energy access crisis is enormous: 759 million people worldwide currently lack access to power, and more than US$500 billion is required annually until 2040 to fulfil rising electricity demand. However, concerns about traditional renewable energy financing, as well as a perceived lack of transparency and the ability to prove impact, have stifled the REC market. D-RECs remove the risk constraints inherent in traditional renewable energy financing by leveraging corporate investments, among other benefits, including:

  • New sources of revenue and improved unit economics for DRE projects

  • Improved economics for Results Based Financing (RBF) programmes

  • New mechanisms for corporates to achieve Scope 2 and 3 targets and secure verifiable impacts from ESG investments

  • New ways to measure and monetise other environmental and social benefits, such as carbon, energy access, and other Sustainable Development Goals (SDGs)

  • Accelerated deployment of DRE in emerging markets

Source: South Pole

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