India’s commitment to a greener future is reflected in the government’s multiple policy measures and financing solutions. There has been progress on multiple fronts aimed at achieving India’s net zero target by 2070.

This includes financing solutions like the Indian government’s 2023 sovereign green bond, subsidies such as the FAME scheme for green transportation, decarbonization measures like the National Green Hydrogen Mission, and Budget 2023’s US$4.3 billion outlay for priority capital investments in energy transition, net zero goals, and energy security.

Increasing investment from the private sector is essential to driving the country’s growth. A lack of access to credit, high risks, poor financing terms, and lack of innovative financing mechanisms may be limiting India’s investment potential in green sectors.

With support from Bloomberg Philanthropies, the Lab is seeking innovative solutions to finance India’s green growth, providing concrete solutions to the unique financing challenges to investment in green sectors in India.

The Lab’s East and Southern Africa program seeks innovative finance instruments to address the unique challenges of the Southern Africa Development Community (SADC) and East African Community (EAC) regions. These regions are among the most vulnerable to climate change due to their exposure to climate change stresses and low adaptive capacity.

National budgets cannot cover the entire cost of the necessary investments, so international public and private financing and capacity-building support are essential for these countries to meet their climate targets.

Latin America and the Caribbean (LAC), the world’s most biodiverse region with vast fossil fuel and critical mineral reserves, can play a pivotal role in the global energy transition. However, the region still faces challenges in this regard, requiring a robust climate finance ecosystem to support its growth and sustainable development.

Three key barriers to climate finance flow in the region are:

▶️ Mismatch between the type and scale of available and required financing options.

▶️ Lack of awareness and capacity to leverage climate finance among local financial institutions.

▶️ Conservative and risk-averse investment strategy among local stakeholders.

To address these challenges, the Lab is introducing a new regional program targeting LAC countries in 2024. The Lab will select two ideas, one each for adaptation and mitigation to climate change. Successful ideas will provide solutions to challenging investment barriers to climate projects in emerging economies in the region.

▶️ Mitigation-focused ideas should accelerate the transition to a net zero economy in LAC by reducing greenhouse gas emissions and mobilizing private capital. Submissions should identify how the proposed financing approach would achieve significant emission reductions, contribute to the long-term goal of a net zero economy, and be financially sustainable and scalable.

▶️ Adaptation-focused ideas should aim to channel investment into building climate resilience and responding to growing climate risk, including at a systemic level, in LAC. Submissions should identify how the proposed financing approach would address specific physical climate risks and overcome barriers to mobilizing finance for climate adaptation, particularly in smaller markets. Ideas should also demonstrate the potential to avoid maladaptation, support improved livelihoods, and strengthen the broader financial ecosystem in the implementation countries.

The U.K. Department for Energy Security & Net Zero and the U.S. Department of State support the Lab LAC regional program.

Located in the Tropical Cyclone belt, the Philippines is extremely vulnerable to climate-related hazards, including around 20 tropical cyclones every year. The country is also one of the world’s biodiversity hotspots, with approximately 20,000 species that cannot be found anywhere else. The Philippines faces additional challenges, such as a 16.7% poverty rate, aging infrastructure, and intermittent insecurities in the food, agriculture, and health sectors.

Despite these challenges, the Philippines remains committed to achieving zero poverty by 2040 and sustainable and inclusive economic growth. However, loss and damage from extreme weather events are increasing at an unacceptable rate, reaching 4% of GDP in 2013 due to Super Typhoon Haiyan.

Nevertheless, the Philippines has set ambitious climate targets, committing to reducing its greenhouse gas emissions by 75% by 2030. However, achieving them requires significant investment to adapt to the impacts of climate change and transition to a clean energy economy.

In line with Philippine climate goals, nature-based solutions (NBS) offer significant opportunities to increase resilience to climate impacts and address biodiversity loss while also supporting sustainable and inclusive economic growth. NBS encompasses both green-grey and natural infrastructure with specific NBS project opportunities in the country. These include, but are not limited to, topics such as flood risk management, domestic wastewater treatment, coastal hazards adaptation, and protection and restoration of forests, mangroves, and wetlands.

With funding from Global Affairs Canada through the United Nations Development Programme, the Lab seeks one solution that mobilizes private climate finance investment in the Philippines with the potential to scale across the Asia-Pacific region. The successful idea will focus on blended finance and financial innovation in NBS, though the Lab will still accept non-NBS solutions for consideration in our other thematic streams. The minimum threshold to qualify for the Phillipines stream is to have the Phillipines as one of the primary target markets.

Global food systems account for nearly one-third of total human-caused greenhouse gas emissions and nearly 60% of global biodiversity loss. Yet only 4.3% of global climate finance is directed to agrifood systems. To fulfill their potential and deliver climate mitigation and adaptation gains to people worldwide, global agrifood systems urgently need at least a sevenfold increase in climate finance from 2019/20 levels.

The ClimateShot Investor Coalition (CLIC) has been formed to address this challenge. CLIC is an action-oriented group for leaders in the impact investment community working in agriculture and food systems. This member-driven coalition aims to collectively scale up and accelerate finance for agriculture and food systems globally, with the goal of shifting them to a low-carbon and climate-resilient pathway by 2030.

With support from the U.K. Foreign, Commonwealth, and Development Office, CLIC has partnered with the Lab to develop an innovative solution to accelerate and scale up climate and nature finance for agriculture and food systems. The selected solution will demonstrate how to bridge demand and supply, making it easier for businesses and organizations in the sector to access the financing they need.

Scaling up investment in climate adaptation is critical to building global resilience to worsening climate impacts. While adaptation investment is growing, it is far from what is needed. In 2019-2020, of the total USD 653 billion annually tracked to climate finance, just USD 49 billion – less than 10% – was committed to climate adaptation. Creating opportunities in developing countries to attract public and private investment in adaptation is urgent.

With the support of the U.S. Department of State, the Lab is seeking proposals for innovative financial instruments and solutions that channel investment into building climate resilience and responding to growing climate risk, including at a systemic level. There is a critical need to develop and scale a broad array of financial solutions – including debt and equity facilities, results-based instruments, project finance, and insurance mechanisms – that enable capital to flow to adaptation.

Submissions should focus on climate-stressed regions in developing countries and identify how the proposed financing approach would address specific physical climate risks and overcome barriers to mobilizing finance for climate adaptation. Submissions should also include a plan to phase down public financial support while offering attractive risk-adjusted returns to investors to scale private investment. Lastly, ideas should demonstrate the potential to avoid maladaptation, support improved livelihoods, and strengthen the broader financial ecosystem in the implementation countries.

The Lab is looking for one outstanding concept for a financial instrument that targets investment opportunities in decarbonization that does not fit into the set sectoral and regional streams.

While the Lab will consider mitigation-relevant ideas from any region or sector, we are interested in scalable renewable energy solutions (especially energy access), low-carbon transit, buildings, industrial sectors, and/or the just energy transition, and the phase-out of coal and fossil fuels.

Submissions should explain clearly why the identified target sector and geography are key for climate finance mobilization and how they would benefit from the Lab’s support.

High Integrity Forests (HIFs) are forests that have maintained their ecological integrity due to a lower degree of modification or degradation from human activity. They provide various underappreciated social, environmental, and economic benefits. These benefits include carbon sequestration and storage, moderation of extreme weather events, preserving water tables, improving biodiversity outcomes, and the climate resilience of surrounding areas.

However, HIFs are not free from degradation or deforestation threats. Livestock and commodity expansion, the main drivers for deforestation worldwide, may pose a future risk to HIFs, even if such threats have yet to be realized. Potential risks to HIFs also include forest fragmentation by infrastructure such as roads and railways, unplanned urbanization, and mining.

Despite the considerable value generated through environmental services, HIFs continue to face a chronic lack of investment due to several key barriers, including the difficulty in establishing additionality for REDD+ results-based payments and carbon markets, small ticket size, higher risk profiles, transaction costs, land tenure, risk of regulatory non-compliance, and market development.

With support from the U.K. Department for Energy Security & Net Zero, the Lab seeks innovative finance solutions focused on mobilizing private capital for the protection and sustainable management of high-integrity forests across emerging economies, based on the Forest Landscape Integrity Index.

Successful ideas will demonstrate actionable strategies to overcome investment barriers and facilitate private capital mobilization for HIFs through blended finance mechanisms and other de-risking approaches such as insurance. Moreover, successful ideas will deploy robust monitoring and measurement components. Models may include a carbon component. However, any revenue generated from the sale of carbon must be a secondary revenue source rather than primarily dependent on it as a primary source. Eligible ideas could include sustainable agroforestry and agricultural value chain investments, which may consist of activity leveraging financial instruments such as blended debt and equity facilities, guarantees, first-loss mechanisms, results-based instruments, project finance, and insurance.