The challenges of climate change are well-documented: both restoring the climate and adapting to altered weather patterns for increased resilience. Meeting these challenges represents a massive opportunity for the transformation of the global economy into a resilient one that is cleaner, more sustainable, and meets the needs of developed and developing countries alike.
To realize this opportunity requires major investment on a global scale. The $8.5 billion Climate Investment Funds (CIF), established in 2008, represents one of the most ambitious efforts to unlock this investment. CIF accelerates climate action by empowering transformations through its existing programs clean technology, energy access, climate resilience, and sustainable forests in developing and middle income countries.
The CIF’s large-scale, low-cost, long-term financing lowers the risk and cost of climate financing. CIF tests new business models, builds track records in unproven markets, and boosts investor confidence to unlock additional sources of finance. CIF manages a collection of targeted programs that enable climate-smart development planning and action through 325 projects in 72 developing and middle-income countries worldwide.
On October 1, 2021, Mafalda Duarte, CEO of Climate Investment Funds, issued the following statement welcoming the Netherlands’ new $100 million contribution to CIF’s Renewable Energy Integration program:
“The Netherlands is joining forces with the Climate Investment Funds to ensure power systems in low-income countries are ready for a clean energy future that benefits all. The Dutch are showing real leadership in climate finance, and I warmly welcome their significant investment in CIF efforts to accelerate clean energy uptake,” he said.
“Bolstering renewables capacity in power systems is essential to solving the climate crisis. If we want 21st century energy, we need 21st century energy infrastructure. Power grids—most of all in developing countries—must be better equipped to integrate high shares of variable renewable energy, accelerate the electrification of energy demand, and tap the potential of decentralized renewable energy to deliver universal access to electricity. We cannot achieve our climate goals unless these barriers are overcome,” he continued.
“CIF’s tried-and-tested concessional finance aims to demonstrate renewable energy integration in power systems at scale. This means working hand in hand with partners and stakeholders to drive transformational investment, supported by sound policy and robust institutions. Crucially, it also entails lowering obstacles to private investment in the technologies we need to deliver on global climate goals,” Duarte concluded.
CIF is one of the world’s largest and most ambitious multilateral climate finance mechanisms for developing countries seeking to shift to low carbon and climate resilient development, and to accelerate climate action. Its launch in 2008 emerged from recognition by world leaders that climate change and development are inextricably intertwined, and that climate-smart investment is needed at scale to deliver on the opportunities for green growth identified in the UN‘s Sustainable Development Goals (SDG’s).
Working in partnership with governments, the private sector, civil society, local communities, and six major multilateral development banks (MDBs), CIF provides highly competitive financing that reduces risk for investors, lowering barriers to piloting new technologies, scaling up proven solutions, opening up sustainable markets, and mobilizing private sector capital for climate action. Rallying stakeholders behind increasingly ambitious climate goals and complementary action, CIF draws in diverse partners who might otherwise be deterred from investing alone.
Independent evaluations have shown that CIF has succeeded in accelerating progress in the areas of clean technologies, energy access, climate resilience, and sustainable forests. After widespread consultation to identify next-frontier climate challenges, CIF is pioneering investments in five new areas: the transition from coal, climate-smart cities, nature-based solutions, industry decarbonization, and renewable energy integration. In 2021, recognizing the urgency of this mission and strong demand from developing countries, the G7 committed up to $2 billion in additional resources for CIF.
CIF practices equitable governance, with equal representation for donor and recipient countries, and active observer status for private sector, civil society, and indigenous peoples representatives. CIF teams forge connections with communities most vulnerable to climate change and most dependent on natural resources. To mitigate the disadvantaged position held by women and young people in relation to climate change impacts, CIF supports both groups as leaders and decision-makers in climate action, and prioritizes gender equality in its programs.
In addition to the CIF programs, the Technical Assistance Facility backs upstream activities to strengthen policies and regulatory environments, build human and institutional capacities, and design innovative market-facing climate solutions. All activities have one overriding goal: accelerating clean energy investments. A window tailored to COVID-19 recovery helps countries restart economies through low-emission, climate-resilient growth unlocking socioeconomic and environmental benefits.
Image courtesy of CIF.