Nov 03, 2021
A powerful evolution of the CIF - Clean Technology Fund will ensure next generation transformational clean energy and transport happens when we need it to – now!
The Climate Investment Funds have unveiled a transformative evolution of their Clean Technology Fund; the CIF Capital Market Mechanism
As the world faces the urgent need to address climate action, another pressing realization becomes clear; public capital is not enough to fund global transition to a low-carbon future.
Private capital and participation of the financial sector in this transition are critical to meeting the net zero goals agreed in 2015. In response the CIF Capital Market Mechanism aims to issue investment-grade bonds and raise significant new finance for scaling clean energy and sustainable infrastructure in emerging economies.
It's thought this groundbreaking initiative could mobilize $500 million of additional concessional capital every year for developing countries, leading to an estimated $50 billion in total investment over ten years.
How it has worked so far
The CTF is a $5.8b program operating within the CIF, originally established with funding from nine sovereign sponsors; the biggest of which are the UK, the USA and Japan. As a source of much-needed concessional capital, the fund has provided emerging economies with loans, equity investments, guarantees and grants to contribute to transformational clean tech projects such as the 580MW, $3.9b Noor Concentrated Solar Power Project Complex (Morocco) or the 330MW, $1.7 b Sarulla Geothermal Power Plant (Indonesia).
Why this new move now?
To enable the flow of capital to help fund a just and equitable low-carbon transition to developing countries, a reliable flow of concessional finance at-scale is essential.
It’s the ability to scale that’s important…
The CIF CMM is groundbreaking because it will be the first time a multilateral climate fund has leveraged its balance sheet in the capital markets. This will unlock urgently needed private investment to help narrow the clean infrastructure gap in developing countries.
As leaders gather at COP26 to agree ways of containing global temperature rise and increasing financial support for climate-stricken nations, it’s this access to capital markets that will provide an important contribution to scaling up scarce public capital to help achieve a just transition. When it comes to climate finance investments, scale matters.
This exciting metamorphosis of the fund will provide investors with an attractive new series of investment-grade green bonds. The monies raised from the bond issue can rapidly enable clean technologies, create new industries in developing economies and support them in achieving their Paris agreed NDCs. As CIF CEO Mafalda Duarte points out…
“Consistent with CIF’s innovative mission, we’re trailblazing a capital mobilization model that is scalable, replicable, and game-changing. Emerging economies need significantly more resources to realize their climate ambitions and we’re heeding their call. Public capital has an essential role in unleashing trillions of dollars in private investment to where it will yield greatest social impact.”
With COP26 upon us and emissions targets looming large in our minds, the time is right to scale up. The time is right for the CIF Capital Market Mechanism.
Learn more about the press release: New CIF Bond Offering Could Mobilize $50B for Clean Technologies in Developing Countries
