The US and European Union today unveiled further details of their plan to collectively mobilise $600bn-worth of investments in “sustainable transparent and quality infrastructure” in low and middle income countries worldwide by 2027 on the sidelines of the G20 Summit in Indonesia.
Under the Partnership for Global Infrastructure and Investment (PGII), the US has agreed to mobilise around $200bn in grants, deferral funds, and private sector investment over the next five years, while the EU is set to provide around $300bn through similar means over the same period.
The PGII initiative, which was formally launched at the G7 Summit back in June, also envisages billions of dollars being provided by multilateral development banks, financial institutions, and sovereign wealth funds.
New projects announced by the US today through the PGII include a deal with Indonesia to jointly funnel almost $700m towards the latter’s development goals, including through the roll out of “high-quality, climate-conscious transportation infrastructure”.
The US has agreed to provide the bulk of the funding – totalling $649m – to the so-called ‘Millennium Challenge Corporation (MCC) Compact’, with Indonesia providing a further $49m.
Other projects unveiled today include $30m of US investment in support of the development of sustainable critical minerals mining projects for nickel and cobalt in Brazil, which is designed to bolster supply chain resilience for the renewable energy transition, and a $52m loan guarantee to finance the purchase of US equipment for a 53.4MW solar energy project in Honduras.
The moves came on top of the Just Energy Transition Partnership (JETP) with Indonesia which was announced earlier today and aims to mobilise $20bn to help wean the country off coal power and accelerate its clean energy transition. The new partnership forms part of the PGII, according to the US and EU.
The EU, meanwhile, has also provided further details on projects it is supporting through its side of the PGII programme, including plans for green hydrogen projects in Namibia, Egypt, Kazakhstan, India, and Chile that are set to be accompanied by the deployment of new solar and wind energy capacity.
Other EU-backed projects include the installation of a 12.9MW floating solar plant in Albania that is expected to displace 8,700 tonnes of CO2 each year and a partnership to develop a major hydropower plant in Tajikistan.
The PGII is widely viewed as an attempt by the West to provide an alternative to China’s multi-billion dollar ‘Belt and Road’ initiative, which was launched by President Xi in 2013 to boost the nation’s investment in developing economies worldwide.
European Commission President Ursula von der Leyen today hailed the PGII as “an important geostrategic initiative in era of strategic competition”.
“Together with leading democracies we offer values-driven, high-standard, and transparent infrastructure partnerships for low and middle income countries,” she said. “The launched Just Energy Transition Partnership with Indonesia is a critical example.”
Also speaking at the G20 event earlier, US President Joe Biden said the PGII would help “to deliver real results for people around the world”.
“Today, G20 leaders highlighted the importance of investing together and investing stronger to fill the enormous need for better infrastructure in low and middle income countries around the world, and we welcome all who share this vision to join our efforts,” he said.