Recommendation 22

HM Government · verbatim extract Accepted in Part

Partially Agree 50. The FCDO understands the interconnectedness between energy access and climate adaptation, including, critically, water security. If well designed, access to energy can help communities reduce their vulnerability to climate change. Social and economic benefits of energy access can contribute to building resilience to climate change, such as health, education, and economic opportunities. Conversely, energy systems and infrastructure need to be adapted and made more resilient to the impact of climate change. 51. We support collaborative research networks and capacity-building initiatives to strengthen the global knowledge base, while our coordination groups seek to align policy and delivery across departments. Progress is tracked through joint monitoring frameworks to maintain coherence and impact. 52. We agree that energy access and climate adaptation objectives could be better integrated across relevant programmes. This coordination is driven by cross-departmental groups and mainstreamed through the UK’s ICF portfolio. We will explore upgrading the governance and coordination across the climate finance portfolio, building on the recommendations of the ICAI review into our Energy Transitions portfolio – and building on the Ayrton Fund experience. 53. There are further opportunities to increase integration and cross-team collaboration on energy access, including areas such as sustainable cooling and solar water pumping as they link with adaptation, as well as reducing pressure on forests and nature through transitions from firewood/charcoal to electricity. However, at this stage, decisions on resourcing prioritisation beyond FY25/26 have not yet been taken, but we commit to bearing the recommendation of the Committee in mind in allocations. 5 Research and Innovation for Scale Conclusion and Recommendation 13 (Conclusion 11, paragraph 75) The Government’s aid strategy rightly emphasises research and innovation, leveraging FCDO’s distinctive ability to connect global expertise with local knowledge and fostering strong partnerships with the UK research community. However, overreliance on innovation carries risks that need to be acknowledged and mitigated. (Recommendation 13, paragraph 76) The Government should maintain its commitment to research and innovation while increasing investment in the operationalisation of existing, effective energy solutions. Funding mechanisms must bridge the gap between early-stage R&D and market- ready technologies, providing opportunities for commercialisation and ensuring sustained support for community-based systems. Government Response: Partially Agree 54. The FCDO’s Research and Development ODA portfolio leverages UK scientific, engineering, business, and financing strengths to deliver practical, scalable innovations that address global development challenges. These include low-cost technologies and business models that help some of the poorest and most remote communities in the world to access clean energy. We have seen good success with some of the innovations supported under the Ayrton Fund in the last period, particularly the TEA and MECS programmes, which are moving to scale-up investment from FCDO-backed instruments and private investors. This includes Sheffield-based MOPO, which recently raised more than $7m from BII, raised additional investment from Octopus, and more recently partnered with International Finance Corporation (IFC) to extend its battery-as-a-service model in Africa, which has already delivered more than 30 million battery swaps across 7 African countries. Clean cooking innovators such as BURN and ATEC have also started to scale, raising significant investments from other funders, although not yet UK-backed instruments. 55. We agree on the importance of making transitions from R&D, to Demonstration, to at-scale investment more systematic, as well as accelerating and multiplying those transitions–including increasingly with locally-led solutions and UK-southern partnerships. We are developing a number of tools to help join up assessments and decisions between programmes and instruments, including a form of Customer Relationship Management (CRM) system giving our programmes and partners better visibility of interactions and ongoing due diligences for example with individual innovators and businesses – which we would hope in due course to also extend to other development partners and investment funds. The TEA programme has also convened a Venture Facility Steering Group consisting of representatives of many of the investment instruments as well as the Tier 1 innovation partners, with a view to improving the co-ordination and flow of information, identifying gaps and disconnects in the continuum of capital, and filling these gaps as necessary. 56. However, we acknowledge the concerns around overreliance on innovation and share the view that risks must be managed effectively. To mitigate these, we will balance innovation with proven approac