The Lab launches a new class of sustainable finance instruments
NEW YORK, September 20, 2017—Today, investors and government representatives met in the margins of the United Nations General Assembly and New York Climate Week to launch a new class of businesses and initiatives that will mobilize finance for addressing climate change.
Founded in 2014, the Lab incubates a small number of initiatives each year. Past instruments have mobilized USD 822 million to-date. They have included Climate Investor One, a fund that provides early-stage finance for renewable energy in developing countries, and recently reached a successful USD 412 million close; and Energy Savings Insurance, which insures the cost savings from energy efficiency investments, and is developing pilots in seven Latin American countries.
Each of the new instruments has been subject to nearly a year of vetting and development by a high-level group of investors and policy makers including: Africa Finance Corporation, Blackrock, Bloomberg Philanthropies, the Brazilian National Development Bank (BNDES), CAIXA, Climate Investment Funds, Development Bank of South Africa, DeutscheBank, IDB, IFC, OPIC, The Rockefeller Foundation, Willis, and the Brazilian, Dutch, German, Indian, Rwandan, US, and UK governments, among others.
The 2017 Lab instruments are:
- The Cloud Forest Blue Energy Mechanism, which will engage hydropower operators in Latin America to pay for upstream forest conservation and restoration. Proposed by Conservation International and the Nature Conservancy, at scale, the initiative would restore and conserve 60 million hectares of cloud forest – an area nearly the size of Texas – with an associated market size of $12 billion to 2030.
- Climate Smart Cattle Ranching, which will provide technical assistance and finance for Brazilian cattle ranchers to adopt sustainable ranching practices. Proposed by Naturevest and The Nature Conservancy, operations could scale to cover 300,000 hectares in the first five years, mobilizing 200 million US dollars for sustainable cattle ranching practices.
- CRAFT, which will be the first private equity fund to focus on expanding available technologies and solutions for climate adaptation. Developed by the Lightsmith Group, the fund already has an initial pipeline of investments under due diligence.
- Distributed Generation for Cooperatives, which will scale up distributed renewable energy by partnering with agricultural cooperatives in Brazil. Proposed by Renobrax, will provide renewable energy that’s 10-20% less expensive than existing options.
- The Green FIDC, which tailors an existing financial structure in Brazil to provide lower-cost, long-term capital to renewable energy and energy efficiency projects. Proposed by Albion Capital and Get2C, the instrument is considering two initial pilots – energy efficient street lighting in Rio de Janeiro and a 90 MW solar PV project in the state of Ceará.
- The Renewable Energy Scale up Facility, which will use an innovative options mechanism to drive long-term, low-risk private finance into earlier stages of renewable energy projects in emerging markets. Proposed by Baker & McKenzie and Get2C, as it scales, the facility is expected to mobilize around $25 of commercial investment for every $1 of concessional investment, while significantly contributing to countries’ climate and energy goals.
More information on each instruments, including short videos, fact sheets, and analytical reports are available at www.ClimateFinanceLab.org.
The Lab also launched a new call for submissions into its 2017-2018 cycle. Interested parties can visit www.ClimateFinanceLab.org to learn more and submit proposals.
QUOTES FROM SELECT LAB MEMBERS AND FUNDERS:
Claire Perry, Minister of State for Climate Change and Industry, UK: “The UK Government takes its international responsibilities on climate change seriously, played a vital role in securing the historic Paris Agreement and wants to build on our position as a global hub for investment in clean growth. It’s vital for governments and the private sector to work together on initiatives like the Lab to provide financial support to developing countries, helping them transition to a low carbon economy.”
Ambassador J. Antonio Marcondes, Under Secretary-General for the Environment, Energy, Science and Technology, Ministry of Foreign Affairs, Brazil: “Finance is critical to implementing Brazil’s goals to increase renewable energy, energy efficiency, and move toward sustainable land use. By developing bankable, actionable initiatives that can scale up finance quickly, the new Brasil Lab instruments will be additional tools to the achievement of our climate and sustainable development goals”.
Karsten Sach, Director General Climate Policy, European and International Policy, Federal Ministry for Environment, Nature Conservation, Building and Nuclear Safety, Germany: “Germany has been a proud supporter of the Lab and its instruments since its inception. We are pleased to see the rapid progress, particularly for sustainable development in Africa. This next round of instruments have strong potential to address the most critical climate change and development challenges.”
Linda Broekhuizen, Chief Investment Officer, Netherlands Development Finance Company (FMO): “Investing in climate solutions is a real opportunity in both developed and developing markets. The Lab represents some of the best, most innovative thinking to offer more attractive investment opportunities and track records. Climate Investor One, which FMO played a key role in developing and supporting through the Lab, is a prime example of accelerating the delivery of renewable energy in emerging markets.”
Daniel Firger, Environment Program, Bloomberg Philanthropies: “By demonstrating that innovative climate-friendly investment can scale quickly and effectively, the Lab is showing the world that investors, businesses and entrepreneurs are leading on the Paris Agreement and climate action.”
Saadia Madsbjerg, Managing Director of The Rockefeller Foundation: “We need to ensure that future economic development is sustainable. The Rockefeller Foundation is proud to support the Lab’s work to launch innovative financing mechanisms that can build greater resilience, particularly for the world’s most vulnerable.”
Dr. Barbara Buchner, Executive Director, Climate Finance, Climate Policy Initiative, Lab Secretariat: “While private finance has grown for renewable energy and energy efficiency, it is still a challenge for earlier-stage sectors, technologies, and markets. The new class of Lab instruments shows incredible promise for addressing some of the most critical and difficult problems in climate change.”
The Lab identifies, develops, and launches sustainable finance instruments that can drive billions to a low-carbon economy. It is comprised of several regional and sectoral programs: The Global Innovation Lab for Climate Finance, the Brasil Lab for Green Finance, the India Innovation Lab for Green Finance, and the Fire Awards for Sustainable Finance. The Lab’s programs have been funded by Bloomberg Philanthropies, the David and Lucile Packard Foundation, the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB), the Netherlands Ministry for Foreign Affairs, Oak Foundation, the Rockefeller Foundation, Shakti Sustainable Energy Foundation, the UK Department for Business, Energy & Industrial Strategy, and the U.S. Department of State. Climate Policy Initiative serves as Secretariat.
Head of Communications, Climate Policy Initiative
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