Five 2nd Cycle Instruments Move Forward from Instrument Scoping Phase

Following the 3 December Advisors’ Meeting in Paris, in which Lab Advisors voted in six Lab ideas as finalists The Lab’s Second Cycle (Lab 2.0, 2015-2016), the Secretariat led a scoping process with proponents for each idea. This scoping process aimed to address concerns expressed by Lab Members during selection regarding the viability of the ideas. The scoping process was meant to ensure The Lab only takes ideas forward into the Instrument Design phase that have addressed all significant outstanding concerns and meet the overarching Lab criteria.

The Secretariat, with input from Advisors, drafted a series of questions to stress-test the ideas based on Lab criteria, which proponents responded to in early January 2016. Proponent responses, along with Secretariat input, were presented to Advisors on 11 January.

Advisors voted on 12 January to move five Lab ideas forward into the Instrument Design phase, which kicked off the following day. Three of these ideas focus on enhancing climate resilience and two are mitigation-focused instruments, detailed in the tables below.

The instruments which will move forward from the scoping phase are:

Final Lab 2.0 Instruments | Adaptation
Oasis Platform for Catastrophe and Climate Change Risk Assessment and Adaptation

Proposed by Imperial College and Oasis LMF, this idea would develop an open access system that can plug-and-play data to create risk and loss information for the investment and insurance sector to increase households’ insurance coverage in Asia.

Climate-Smart Finance for Smallholder Farmers

Proposed by F3 Life, this idea would provide climate-smart credit scoring, including a credit scorecard, loan tracking, and monitoring software to encourage smallholder farmers’ adoption of new climate-smart agricultural practices/technologies and overcome their lack of access to capital.

Water Financing Facility

Proposed by the Dutch Ministry of Foreign Affairs, this idea would issue “water bonds” and provide technical assistance to raise funds for investments in, and the set-up of, bankable water projects. Bonds would have a fixed return for private investment and would be offered through a pooled fund that diversifies project risks.

Final Lab 2.0 Instruments | Mitigation
Mobilizing Equity to Drive Energy Efficiency Investments

Proposed by the Inter-American Development Bank, this idea is a tiered equity fund that mobilizes investments into small and medium enterprises and real estate, while a parallel equity guarantee facility mobilizes investments at the asset level. It aims to mobilize private capital at scale for energy efficiency financing in emerging economies.

Mezzanine/Discounting Facility

Proposed by IFC, this idea is a small-scale renewable energy financing facility that will provide two synergistic products: Mezzanine finance for the construction phase of small RE projects where developers are struggling to reach financial closure and for more established projects, a discounting facility to refinance projects using cash flows as collateral.

 Next Steps

The Secretariat will establish Working Groups for each instrument, consisting of proponents of the selected idea, Lab Advisors, and external experts. These Working Groups will lead the Instrument Development phase, which will conclude in April, 2016.

Lab Advisors will meet at the margins of the Climate Action 2016 Conference, on 4 May in Washington D.C., to provide technical feedback on the final instrument designs, and offer input on the Pilot Support phase.

Lab Principals, supported by their Advisors, will then meet in July once the Pilot Support phase concludes to endorse their final Lab Instruments.