2016 is a hot year for climate finance. Following the Paris Agreement in December and its ambitious pledges on clean energy and low-carbon investments, it is time for action and implementation.
The developed countries have committed to mobilizing $100 billion USD a year by 2025. Keeping this pledge to the developing world requires dedicated work steering both public and private resources.
Global Innovation Lab for Climate Finance is seeking to speed up innovation to solve these worldwide challenges. It is engineering new solutions and supporting the development of new finance instruments that unlock private investment for climate-resilient and low-carbon growth in developing countries.
Some ideas have already made it through the crucible of the lab’s highly selective project cycle.
Energy efficiency is one area with significant impact leverage. Two financial vehicles for mitigation have gained the support of the lab.
Energy Savings Insurance seeks to mainstream investments in efficiency by limiting investors’ risk in the case of underperformance.
Energy Efficiency Enabling Initiative is a newly-endorsed project idea that would operate as a private equity fund, aiming to scale the market in the developing world. According to the Secretariat’s analysis, a $100 million USD fund could generate up to 225 GWh of annual savings. This corresponds to 100 KT of CO2 emissions.
Water, agriculture, energy and infrastructure ideas are also in the works. The Water Financing Facility concept aspires to mobilize institutional capital for resilient water infrastructure. An Agricultural Supply Chain Adaptation Facility would channel private funds for agricultural supply-chain resilience. Climate Investor One would employ an innovative approach to infrastructure development. This would accelerate the deployment of renewable energy in Africa, Asia and Latin America.
“There is no fixed number of projects in either the mitigation or the adaptation space, although we are trying to strike a balance between the two. Ultimately, it comes down to the views and expertise of the lab members, who know where the barriers to green investment lie,” said Barbara Buchner, executive director of the Climate Finance program at Climate Policy Initiative.