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Egypt’s Nexus for Water, Food and Energy programme – the blueprint to fight climate change?

Blended financed water, food and energy projects in Egypt show how we can achieve climate goals ahead of schedule.

Blended financed water, food and energy projects in Egypt show how we can achieve climate goals ahead of schedule. Image: REUTERS/Sayed Sheasha

Rania Al-Mashat
Minister of International Cooperation, Egypt
Gim Huay Neo
Managing Director, World Economic Forum
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  • Egypt, as the outgoing convener of the United Nations Conference on Climate Change, is finishing its term by securing the necessary financing for the implementation of its country platform for the Nexus of Water, Food and Energy (NWFE نُوَفِّـــي).
  • A novel approach to promote international cooperation has emerged, combining resources from government budgets, private sector, philanthropies and multilateral and bilateral development partners.
  • Various examples from the country prove how multi-stakeholder finance models can help bring results ahead of schedule.

It’s a race against time. In just a few months, Egypt will hand over the baton of its presidency at the 2023 United Nations Climate Change Conference (COP 28) in Dubai, United Arab Emirates (UAE).

However, this race is a collective endeavour and by working together, we can cross the finish line more swiftly.

One of Egypt’s prominent implementation legacies is now being realized and scaled as the North African Arab Republic secures fund agreements for the Nexus of Water, Food and Energy (NWFE نُوَفِّـــي) programme worth $14.7 billion. The programme is a replicable model to mobilize and scale climate investments that can be adopted in other countries.

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New financing for water, food and energy

In an ever-evolving world, building resilience and preparing for the future has become necessary to protect the next generation in the face of complex global challenges. Energy, water and food are some of the planet’s most vulnerable sectors and where converging issues are most pertinent.

In July 2022, Egypt launched the Country Platform for NWFE نُوَفِّـــي to attract funds and investments for green projects in these critical sectors, addressing both adaptation and mitigation. The aim was to accelerate Egypt’s national climate agenda and transition towards a sustainable, green, and resilient economy.

NWFE نُوَفِّـي integrates a set of high-priority projects for adaptation and mitigation worth $14.7 billion, where government and concessional financing will unlock vast opportunities for private sector engagement.

These climate action projects are to be implemented under a programmatic approach and include initiatives that would replace existing inefficient thermal power plants with renewable energy, enhance small farmers’ adaptation to climate risks, increase crop yields and irrigation efficiency, build the resilience of vulnerable regions, establish early warning systems and modernize on-farm practices.

Egypt has led the race on mobilizing finance, availing technical assistance and catalyzing private investment through innovative financing modalities, including blended finance, debt swaps, and guarantees.

Furthermore, ambitious plans are in motion to introduce a pioneering system of resilience credits. These credits are designed to provide valuable support to farmers, enabling them to secure funding for innovative and regenerative agricultural practices that will drive sustainable and progressive change in agriculture. The programme gained significant momentum during its launch in Sharm el-Sheikh, and there are high expectations for even more substantial growth in Dubai.

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In the last 15 months, international and national actors have rallied behind Egypt’s NWFEنُوَفِّـــي, - uniting governments, development partners, the private sector and intergovernmental agencies. Notable organizations in this coalition include the Glasgow Financial Alliance for Net Zero, HSBC, Citi, the International Renewable Energy Agency, the European Bank for Reconstruction and Development, the International Fund for Agricultural Development, the African Development Bank, the World Bank, as well as countries like the United States and Germany, among others.

This multi-stakeholder collaboration was supported by a joint political declaration endorsed by the United States and Germany, where both countries pledged to support Egypt’s transition to a low-carbon development pathway. Capitalizing on this commitment, Egypt and Germany solidified their collaboration by entering into a debt-swap agreement within the energy sector, valued at more than $100 million.

The NWFE نُوَفِّـــي energy pillar is expected to unlock at least $10 billion in private investment to install 10 gigawatts of renewable energy, mainly solar and wind, by 2028 and to retire 5 gigawatts of inefficient fossil-fuel plants by 2025.

This goal is in line with the updated nationally determined contribution (NDC), announced by the government of Egypt in June 2023, which reflects the country’s commitment to transition towards a low-carbon development pathway through increasing the development and deployment of renewable energy to reach the target of 42% installed capacity in its energy mix by 2030 instead of 2035.

With this world-class renewable energy resource and its proximity to European and Asian markets, Egypt is uniquely positioned to transform its energy sector and become a global hub for green fuels and products.

These innovative finance projects, supported by various partners, serve as integral components of Egypt’s broader strategy to transition towards a low-carbon development pathway, exemplifying how a collaborative, multi-stakeholder approach and concentrated efforts can achieve high ambitions. These blueprints can be lifted and shifted to help other countries.

Sovereignty for impact

These value-driven partnership models extend well beyond financial considerations and have massive potential to address critical tipping points while building scale where it is most needed. A fundamental success factor for the NWFE نُوَفِّـــي programme lies in the concept of “country ownership.”

This in-country accountability has been essential to coordinating stakeholders behind a shared strategy, leading to more successful, impactful and sustainable results at scale. Guided by political commitment, this national-level coordination resulted in the launch of the National Climate Change Strategy 2050 and the announcement of the NDCs.

These important milestones have led to the development of more effective impact investment projects that benefit the people.

Within the 2050 Climate Strategy context, 26 high-priority projects were identified to be completed by 2030. Among these, a focused subset of nine projects has been strategically bundled around NWFE نُوَفِّـــي. This approach signifies the clarity of climate goals and targets in line with the Sharm El Sheikh Guidebook for Just Financing.

The guidebook emphasizes the pivotal role of governments as the primary drivers for mobilizing additional climate finance, stressing the need for a clear vision and bolstering credibility through robust governance frameworks.

Potential of big philanthropy

The final push continues to COP28 but there is an opportunity to further enhance these efforts by bringing new financial actors in, such as philanthropies, to be part of the accelerated solution. NWFE نُوَفِّـــي is one of the World Economic Forum’s Giving to Amplify Earth Action (GAEA) big bets focused on uniting philanthropy, private sector and governments in strategic partnerships designed to address systemic challenges across value chains.

GAEA is already exploring ways big philanthropy can catalyze financing and enhance on-the-ground capacity in Asia in collaboration with Philanthropy Asia Alliance. These efforts aim to establish best-in-class public-private-philanthropic partnership models, with philanthropies, that can serve as a blueprint for the different actors to unlock action at scale across industries and geographies.

The synergy between NWFE نُوَفِّـــي and GAEA also aspires to create a similar blueprint for a new type of country package vehicle, as exemplified in Egypt. Such a model can be scaled and adapted by other countries to unlock additional finance and projects related to climate adaptation and resilience.

In the race against climate change, we must adopt a strategic approach: turning pledges into implementation, leveraging knowledge and implementing successful practices through partnerships to expand our impact even further.

The potential for big philanthropy to step into this race holds the promise of accelerating progress for the greater good of both people and the planet. Working across the public and private sectors best leverages the design, structuring and preparation of tangible and implementable climate action projects.

With finance and capacity-building efforts facilitating collective action across these sectors, we can ensure a fair transition towards environmentally sustainable practices. This transition entails directing investments towards adaptation projects that improve in-country water resource management and promote sustainable agriculture, thus advancing global water, energy, and food security.

Through strategic partnerships, we can strengthen national capacities to enhance institutional and technical skills, share knowledge and exchange experience and scientific know-how that ultimately contributes to measurable and sustainable results. Embracing a global perspective through these collaborative efforts and blueprints, we can now extend our support to other countries.

Succeeding in this endeavour hinges on mobilizing climate-related finance and facilitating the exchange of experiences and innovative ideas to meet ambitious global goals. Egypt has made significant progress, providing valuable lessons and insights for others to emulate.

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World Economic Forum

May 21, 2024

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