April 22, 2015

Initiatives begin fundraising efforts, collectively raise over $100 million in initial funding

NEW YORK – As nations work to address climate change, access to finance has emerged as a critical element particularly in developing countries, which are often unable to attract private investment to low-carbon and climate resilient activities. Today, The Global Innovation Lab for Climate Finance (The Lab) announced four pilot initiatives designed to overcome investment barriers in renewable energy, energy efficiency, and adaptation in developing countries.

Lab members, who include high-level experts from public and private institutions, endorsed the launch of the pilot initiatives after a year-long process supported by rigorous analysis to determine which instruments showed the most promise. The initiatives have collectively raised over USD 100 million in initial funding, with more expected to follow through an ongoing process that will draw on expertise and resources of additional Lab member institutions, as well as other private and public stakeholders.

• The Climate Development and Finance Facility will facilitate early-stage development, construction financing, and refinancing to fast-track renewable energy projects in developing countries, mobilizing at least USD 2 billion in private finance out to 2020. The pilot is being taken forward by FMO, the Netherlands Development Finance Company, which proposed the idea to the Lab in partnership with Phoenix Infraworks from South Africa. FMO is exploring partnerships with guarantors and investors, including EKF, the Danish Export Credit Agency and BlackRock. The Dutch government has committed EUR 7 million to the Facility, and FMO is also interested in investing up to USD 75 million from its own balance sheet.
• Energy Savings Insurance will insure the value of savings generated by energy efficiency investments. In Mexico, the Inter-American Development Bank (IDB) has already committed a USD 20 million credit line and secured USD 2.5 million in grants from the Clean Technology Fund (CTF) and the Danish Energy Agency for a pilot, which is expected to attract up to USD 25 million in private finance through 2020. The Danish Energy Agency will also provide USD 5 million to IDB to replicate the pilot in Latin America and the Caribbean, which may in turn provide a platform for eventual expansion in Asia and Africa by additional implementing entities.
• The Agricultural Supply Chain and Adaptation Facility will partner with agribusiness companies to provide local farmers with technical assistance and access to finance for climate-resilient investments. The Inter-American Development Bank, in partnership with Calvert Investments, is committed to piloting the facility in Latin America and the Caribbean through seed funding from the USD 5 million Climate-Smart Agriculture Fund for the Private Sector.
• The Long-Term Foreign Exchange Risk Management instrument will provide tools to address currency and interest rate risk for climate relevant projects in developing countries. The TCX investment management company and IFC (International Finance Corporation) will act as implementing agencies for a pilot with the aim of mobilizing up to USD 2 billion in hedging capacity.

“The momentum for these pilots helps to ensure The Lab lives up to its promise to move quickly from talk to action,” said Barbara Buchner, Senior Director of Climate Policy Initiative, which serves as Secretariat of The Lab. “Our analysis for The Lab has shown that these pilots provide concrete solutions to financing challenges faced in real projects by real investors. Together, these pilots can drive billions in new climate investment.”

More information can be found at http://www.ClimateFinanceLab.org.

The Global Innovation Lab for Climate Finance is a global initiative that supports the identification and piloting of cutting edge climate finance instruments. It aims to drive billions of dollars of private investment into climate change mitigation and adaptation in developing countries. Analytical and secretariat work of The Lab has been funded by the UK Department of Energy & Climate Change (DECC), the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB), and the U.S. Department of State. Climate Policy Initiative serves as The Lab Secretariat.

Contact:
Elysha Rom-Povolo, +1 415 728 3613, elysha@cpisf.org