The International Solar Alliance(ISA) is planning on a $300 billion fund to support green energy projects in member countries. Specifically, the plan is to introduce an insurance mechanism aimed at mitigating the risks associated with investment in solar projects. Furthermore, the alliance is thinking of creating this fund over a period of next 10 years.
The ISA is a global alliance of 121 countries currently headquartered in India. This world alliance solely promotes clean energy reforms all over the world. Moreover, it was launched in November 30, 2015 as a coalition of solar resource rich countries jointly by India and France.
Funding mechanism of the ISA:
There would be no need for countries to deposit currency to this fund. The officials are in touch with the Green Climate Fund and the World Bank to create a global mega fund. The World Bank only has to mobilize a commitment for $30 billion per year over 10 years. Afterwards, this payment guarantee from the World Bank can be used for credit enchantment or hedging to lower foreign exchange risk.
Incidentally, at the launch of the ISA, one of the mentioned goals was to mobilize $1 trillion of investments by the year 2030. This fund will provide one third of that. Another third is possible from a similar commitment from the Green Climate Fund. The rest of the amount is to come from member countries.
However, ISA is yet to attain the status of a legal body under international law. It needs ratification from at least 15 countries to make it a governmental body under the UN. Indian and French government are working on getting 13 more on board within a few months. As a legal body, the ISA will be able to spend these funds.
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