With forced labor and climate change narrowing their options, the United States’ development finance institution’s energy investment portfolio is looking pretty thin.
Today we’re also looking at how the war in Ukraine is forcing strategic rethinks, and asking if countries are following through on safe migration commitments.
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Polysilicon, a key raw material in the manufacture of solar panels, created a roadblock for the U.S. International Development Finance Corporation's solar investment pipeline.
Much of this high-purity form of silicon is produced in western China, where the government has forced Uyghurs into labor camps. After the White House announced a crackdown and imposed a ban on imports of polysilicon from the Xinjiang region in August, DFC followed suit by shutting off any of its own financing for projects that could be linked to forced labor.
My colleague Adva Saldinger reports that DFC has not directly financed companies accused of using forced labor, but it may have financed solar projects in the past that may have used solar panels or components from Xinjiang — and the agency is working to ensure that doesn’t happen. Now, with a new policy in place to protect against forced labor, DFC is investing in solar projects again.
But the pause as DFC worked on a new policy resulted in about $1 billion in projects and tenders related to solar lost, or delayed for so long they became irrelevant, according to an official inside the agency.
Separately, DFC is also subject to climate directives that limit its investments in oil and gas projects.
Adva tells me that the politics are also complicated here. While it is undoubtedly true that lawmakers have human rights concerns about Chinese-sourced raw materials, some of those same lawmakers also have strong feelings that U.S. development finance ought to take an “all of the above” approach to energy investment. So a single-minded focus on renewable energy, in their view, is not the right way to go.
Read: DFC faces China forced-labor challenges with solar investments
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Take a moment
The European Bank for Reconstruction and Development is hitting pause on its plans to expand to sub-Saharan Africa, Vìince Chadwick reports. The decision comes as the bank’s founding mission — helping post-Soviet states — has taken on renewed urgency due to Russia’s invasion of Ukraine.
“The text of the resolution was shared with Devex on Tuesday but is not yet publicly available on the bank’s website. However, statements by most of the bank’s 73 shareholders are available, revealing subtle differences in enthusiasm for the sub-Saharan endeavor,” Vince writes
He adds that “most supported the sub-Saharan African move in principle, while also favoring the wait-and-see approach to prioritize needs in Ukraine. Egypt said it could be the bank’s ‘gateway’ to a wider expansion into Africa, while France and Germany jointly said that ‘we believe the expansion will send a strong signal of support to EBRD’s strategic ambition and will give confidence that the Bank can play an important role in the stabilization and economic prosperity regarding all its countries of operation.’”
“Others were less convinced,” Vince goes on in his report. “The European Union, while still broadly supportive of the move, said that ‘it is important not to lose sight of broader strategic interests for the Bank,’ while Switzerland was among the most hostile.”
Read: EBRD postpones sub-Saharan move amid Ukraine war
Number crunching
The African Development Bank boosted its funding allocations by more than 20% last year. My colleague Miguel Antonio Tamonan has a breakdown of where that money will go.
Read: AfDB allocated over $5B in 2021. Here’s where it's going (Pro)
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Moved but not moving
Meanwhile, AfDB President Akinwumi Adesina has politely declined the invitation to run for Nigeria’s presidency.
“While I am deeply honored, humbled and grateful for all the incredible goodwill, kindness, and confidence, my current responsibilities at this time do not allow me to accept to be considered,” he said in a statement.
Unsafe passage
“This lack of data leads to ineffectual policies and programs aimed at preventing migrants’ deaths and saving lives because they are not informed by a robust evidence base.”
— Wilfried Coly, regional data analyst, International Organization for Migration’s office for West and Central AfricaMost United Nations member states adopted the Global Compact for Safe, Orderly and Regular Migration in 2018. Among its commitments is the mandate to “save lives and establish coordinated international efforts on missing migrants.”
But many countries aren’t following through, and the failure to collect accurate and complete data about missing migrants is part of the problem, IOM’s Wilfried Coly writes for Devex.
Opinion: Saving lives on migration routes is everyone’s responsibility
Straitjacket
The U.S. Agency for International Development is “massively earmarked,” limiting the agency’s ability to innovate or pivot programs to address emerging needs, USAID Administrator Samantha Power said at a House Foreign Relations Committee Tuesday.
Even though Power is a veteran government official, the amount of earmarking at USAID — 96% of the agency’s funding was directed to a region or geography and a sector — was more than she imagined, Power said.
One update to her U.S. Congress hearings last week: USAID has finalized a consortium agreement with an international NGO that will help get $120 million in funding to local partners in Ukraine.
ICYMI: US Congress grills USAID chief on localization, Ukraine, food crisis
+ Catch up on all the latest news in U.S. aid.
In other news
A cholera outbreak has killed six and affected more than 2,000 in Pakistan, where people are also grappling with a heat wave. [CNN]
Venezuelan government officials and opposition members met in Mexico Tuesday to chart a way forward from the political crisis that has seen millions flee the country. [BBC]
U.N. Special Envoy for Yemen Hans Grundberg is hoping for an extension of a two-month truce as the Yemeni government and Houthis hold talks. [AP]
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Update, May 19, 2022: This newsletter has been updated to clarify that DFC paused potentially problematic projects in its solar pipeline as it put in place a new policy to address human rights challenges in solar supply chains. It is currently investing in solar projects.
About the author
Michael Igoe@AlterIgoe
Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C. He covers U.S. foreign aid, global health, climate change, and development finance. Prior to joining Devex, Michael researched water management and climate change adaptation in post-Soviet Central Asia, where he also wrote for EurasiaNet. Michael earned his bachelor's degree from Bowdoin College, where he majored in Russian, and his master’s degree from the University of Montana, where he studied international conservation and development.
