The Lab launches six new finance solutions to drive climate action towards a net zero economy

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New instruments seek to unlock USD 380 million in climate finance for sustainable energy access, food systems, and urban infrastructure

Virtual Demo Day will showcase solutions to investors on October 20

The Lab has now a portfolio of 55 instruments and celebrates USD 2.5 billion milestone in finance mobilized for climate action in developing economies

London, 30 Sept 2021 – Today, the Global Innovation Lab for Climate Finance (the Lab) launched six innovative finance solutions to drive private capital to climate action in developing economies. After a thorough process of analysis, development, and stress-testing, these solutions are ready to channel investment towards a net zero economy.

The six instruments seek USD 380 million in climate finance from commercial, concessional, and philanthropic investors for sustainable energy access, food systems, and urban infrastructure. This Lab cohort also includes instruments with a regional focus on Brazil and Southern Africa.

The Lab, an initiative of over 70 public and private investors and institutions, accelerates investment solutions to support sustainable development goals in emerging markets. Created in 2014, the Lab has now launched 55 instruments that have collectively mobilized over USD 2.5 billion.

“These innovative instruments show there are plenty of investor-ready solutions to address the climate crisis,” said Barbara Buchner, Global Managing Director of Climate Policy Initiative, the Lab’s secretariat. “Through the Lab’s portfolio and beyond, we need investors to embrace these ambitious climate impact opportunities and bring them to market.”

Lab 2021 Demo Day

The Lab will host a virtual Demo Day on October 20 to present this year’s instruments to potential investors, funders, and implementation partners.

Information on all 55 endorsed Lab instruments, including investment opportunities, is available on the Lab’s website: innovative climate finance ideas.

The full list of instruments is:

The ARM-Harith Cities & Climate Transition Fund (The ACT Fund) expands the pipeline of sustainable infrastructure projects in West Africa through a unique blended-currency mechanism that reduces financing friction at early project stages while providing structured exit solutions that mobilize local institutional investment.

The Amazônia Sustainable Supply Chains Mechanismleverages off-take agreements for forest-compatible products to provide upfront finance, technical assistance, and structural community resources that catalyze the bioeconomy and keeps forests standing in the Brazilian Amazon.

Data-Driven Energy Access for Africa uses artificial intelligence to leverage customer and geospatial data to better understand solar distributors’ portfolio repayment risk and offer them sustainable and competitive financing, thus expanding PAYG energy access.

The Guarantee Fund for Biogas is the first environmental guarantee fund in Brazil and the first to focus on the biogas industry, providing construction-phase loan guarantees to project developers in Brazil, enabling existing credit lines that are currently difficult to access for small- and mid-size biogas developers.

The Peace Renewable Energy Credits (P-REC) Aggregation Fundis a unique financing facility monetizing unbundled environmental attributes of renewable energy, to provide project developers in fragile countries with an additional revenue stream that they can use to unlock further finance.

The Smallholder Resilience Fund (SRF)is a blended investment fund and supporting venture studio that deploys synchronized investments and provides technical assistance to small- and medium-sized enterprises across the entire agricultural supply chain of high-value, climate-smart crops.

Quotes

Lab members gathered virtually last week to endorse the financial instruments from the Lab 2021 class, echoing similar themes, while also committing to support for these instruments.

Abyd Karmali, Managing Director, Environment, Social and Governance Client Advisory at Bank of America – “The private sector must deploy and mobilize trillions by 2030 to accelerate the transition to a low-carbon, sustainable economy. This year’s class of Lab instruments, like years prior, demonstrate the need to scale investment and mobilize more capital to drive clean technology and innovation for a net zero future.”

Ashufta Alam, Deputy Director International Climate Finance: Policy and Investments, Department for Business, Energy and Industrial Strategy (United Kingdom) – The United Kingdom delivers on our commitment to global climate action through innovative climate finance investments such as the Lab. The work of the Lab is truly inspiring and it will contribute to securing a greener and more resilient future for all, which is why we are proud to be part of it. In the lead up to COP26, this is a great example of the type of collaboration needed in the transition to global net zero.”

Idsert Boersma, Director of Partnerships for Impact, FMO: the Dutch Entrepreneurial Development Bank – “The Lab’s message underpinned in actions, demonstrate to investors, both public and private, that strong financial returns and positive climate impact in emerging economies can go hand-in-hand. Tapping into the private sector innovation power for climate solutions is a necessity to building back better and allowing the poorest people to become climate-resilient. We are excited to see this year’s class move on to the implementation of these great ideas.”

Kome Johnson-Azuara, Associate Vice President, African Finance Corporation (AFC) – “The fact that four of the six endorsed ideas have pilots planed for Sub-Saharan Africa confirms what we have already known: the continent provides a myriad of opportunities for entrepreneurs and investors ready to pursue low-carbon and climate-resilient investments.”

Javier Manzanares, Deputy Executive Director, Green Climate Fund – “I am impressed by the level of innovation the Lab brings to the climate finance community. At GCF, we are pleased to be a part of it, supporting the development of instruments that strengthen resilience to climate change.”

Mike Peo, Head: Infrastructure, Energy and Telecommunications, Nedbank. “Meeting Africa’s big energy challenges would have an obvious positive economic impact on the continent. Doing so by not affecting the climate makes a compelling case for renewable energy projects. Financing them, of course, is a major barrier, but the Lab class of 2021 presents exemplary solutions of how to overcome them”.

Paul Currie, Chief Investment Officer, DBSA – “The Lab’s new class shows a lot of potential to drive crucial investment for climate action all over the African continent. It is remarkable to see Lab entrepreneurs focusing their efforts in geographies that need it the most, such as fragile states. It is also an inspiration for governments and the private sector.”

Stefanie Fairholme, Director of Investments, Power & Climate, The Rockefeller Foundation – “Philanthropic capital has a crucial role to play in enabling climate finance to flow into business models, companies and projects that positively impact the lives of vulnerable people and the environment in which they live, especially in the area of reliable, renewable energy access for all. Each selected Lab instrument is designed with an outsized impact in mind, and we are eager to see these solutions succeed.”

Susan Krohn, Head of Division, International Financing for Climate Action, German Federal Ministry for the Environment (BMU) – “The Lab plays a key role not only in bring the much-needed innovation to the climate finance realm, but also providing priceless coordination between the various stakeholders who influence climate policy and investments. That is what will ultimately lead us to advance the implementation of the Paris Agreement and other relevant climate-related milestones.”

True Schedvin, Unit Director, Global Sustainable Economic Development, Swedish International Development Cooperation Agency (SIDA) – “It is impressive how the six ideas selected in February have evolved so much in the last seven months. As one of the newest Lab members, we are inspired by the ability to develop a broad range of ideas, from different sectors and geographies, with such rigorous and tailored support. Agenda 2030 and leaving no one behind also reminds us of the importance to analyze and be aware of the groups that are directly and indirectly affected.”

About the Lab

The Global Innovation Lab for Climate Finance identifies, develops, and launches innovative finance instruments that can drive billions in private investment to action on climate change and sustainable development. The Lab is funded by the Dutch, German, Swedish, and UK governments, as well as the Rockefeller Foundation. Climate Policy Initiative serves as Secretariat.