CIF experience in financing long-term low GHG emission development strategies and enhancing climate resilience

Chris Head, Private Sector Specialist, Climate Investment Funds OECD CCXG Global Forum March 15, 2017

The Climate Investment Funds

The Climate Investment Funds

The 4 Programs of the Climate Investment Funds

Gaps and Barriers to Climate Action

Lack of access to affordable long-term capital • Main barrier scaling up investments for mitigation and adaptation

Sustained access to concessional sources of climate finance • To meet 2020 climate targets, MDBs likely to require concessional finance

above current levels

High commercial risk • Including off-taker risk, currency and political risks, technology costs, uncertain

payback time

Non-financial risks such as information, capacity, or policy gaps • Poor enabling and regulatory environments often restrict the development of

low carbon markets

Across CIF countries, governments and investors face similar challenges to deploying low-carbon solutions

CIF Business Model

MDBs as Implementing Agencies

• AAA rated institutions with strong expertise in deal structuring, E&S, and client engagement in challenging market for relevant climate-smart activities

Programmatic Approach

• Bringing MDBs, governments, private sector, and CSOs together to link planning and investment across sectors

Toolkit of Financing Instruments, at Scale

• Suite of risk-appropriate tools - equity, loans, guarantees, grants, and local currency lending alongside advisory services

• Large envelope + substantial co-financing ($50+ billion)

Strong Governance with Flexible Business Model

• Agile operational approach that can be adjusted according to the needs of both MDBs and the market

Key Features of CIF Business Model

Indicative Allocation Approved Disbursement

TOTAL IP DPSP TFC MDB CTF Funding (in $M) 5,804.0 5,312.5 491.5 4,962.6 3,757.1 1,664.5 Number of projects 121 102 19 100 80 61

Clean Technology Fund (CTF) Overview

CTF Portfolio Analysis

Energy Efficien

cy 14% Renew

able Energy

69% Renewable

Energy/Energy Efficien

cy …

Transport

11%

By sector

Geothermal 18%

Hydropower

3% Mixed 16% Solar

48%

Waste to

Energy 1%

Wind 14%

By renewable energy technology

AFR 26%

ASIA 35%

ECA 18% LAC

18%

DPSP-Region

al 3%

Share by region

• Less than 7% of global geothermal potential tapped

• Approximately $850M in CIF financing has been allocated for geothermal investments in 15 countries.

• Funds have been allocated both through Investment Plans, as well as dedicated private sector windows

• CTF funds enables MDBs to support earliest, riskiest stages of geothermal development to prove resource availability

• Potential to contribute to over 25% of current global installed capacity.

Risk-Appropriate CTF Financing Tools and MDB Expertise has Generated Major Impacts in Geothermal Market

The 330MW, $1.6B Sarulla geothermal project in Indonesia received $80M of mezzanine finance from CTF that was crucial for the project to reach financial close

CTF Transformation in Action - Geothermal

Pilot Program for Climate Resilience

PPCR Operational Overview

The PPCR aims to improve the climate resilience of its pilot countries by using a two-phase, programmatic approach: • Phase 1: The PPCR assists national governments in

integrating climate resilience into development planning across sectors and stakeholder groups

• Phase 2: PPCR provides additional funding to put the plan into action and pilot innovative public and private sector solutions to pressing climate-related risks

• The PPCR is active in 30 pilot countries and regions • To date, PPCR has approved over $900 million in funds for

54 projects which are expected to leverage $1.3 billion in co-financing

• Sectors supported by PPCR include Infrastructure, Water Resources Management and Agriculture

PPCR Portfolio

PPCR – Private Sector

• A financing gap of USD tens of billions/year exists for developing countries to make their economies climate resilient

Private Sector Initiatives Under PPCR

Three key takeaways from PPCR private sector climate resilience report:

1.) Addressing Knowledge Gaps in the Private Sector Matters

2.) Concessional Financing When Returns are Uncertain is Important 3.) Intermediated Financing Can be Effective for Engaging Small Businesses

• The private sector will be critical to fill this gap, though the sector faces unique challenges to support climate resilient investments

• $137.06 million of PPCR funds are dedicated to help MDBs and the private sector overcome these barriers

• 96% of PPCR private sector funds support projects in least developed countries (IDA)

PPCR – Private Sector Case Study

PPCR Private Sector in Focus – Innovative Financing to Help Improve the Climate Resiliency of Small Businesses in Tajikistan

• Tajikistan is one of the most climate vulnerable countries in Central Asia, and adverse climate effects on food and energy production and the availability of water are already being felt

• In 2014, $5.0 million in PPCR PSSA concessional finance was approved for an innovative financing facility led by the EBRD to support the uptake of climate-resilient, water-efficient and energy-efficient technologies by small businesses, farmers and households

• The new financing facility combines commercial and concessional funding to scale up financing – through local currency lending - for climate resilience through local banks and microfinance institutions

• The project also provides critical advisory services for local financial institutions and lenders

www.climateinvestmentfunds.org

@CIF_Action

https://www.youtube.com/user/CIFaction

https://www.flickr.com/photos/cifaction/sets

Chris Head Chead@worldbank.org (202) 458 - 2776

Thank You!