Climate Action 2016-2017

finance is available and terms for available financing
are unattractive for project developers.
The Rooftop Solar Private Sector Financing
Facility addresses these barriers by structuring
small projects together to bring the aggregate
deal to a large enough size and sufficient credit
quality to attract more investment. In addition,
the Facility could demonstrate the commercial
viability of the sector, enabling it to issue asset
backed securities (ABS) to institutional investors,
helping reduce the cost of capital and expand
the investor base.
These instruments are examples of the sweet
spot where CPI works, bringing together public,
private and philanthropic actors to seek out and
help implement novel solutions for unlocking and
scaling up investment for green infrastructure,
products and business practices.
The Global Innovation Lab for Climate
Finance (the Lab, http://climatefinancelab.org)
works in a similar way to its sister initiative in
India but seeks to identify, develop, and pilot
transformative climate finance instruments
that can mobilise private investment in climate
action in all developing countries. Indeed, Lab
ideas have already attracted US$600 million
in seed funding and will drive billions more in
investment.
INTERNATIONAL REACH
Some of these instruments are already driving
investment on the ground. For instance, in 2015
the Lab selected, supported and endorsed
Energy Savings Insurance (ESI), an instrument
that guarantees the financial savings of energy
efficiency projects in order to help small and
medium-sized businesses invest in more efficient
practices.
Led by the Inter-American Development Bank
(IDB) with funding from the Danish government,
ESI is currently operating in Mexico and
Colombia. The Green Climate Fund also recently
decided to finance the instrument allowing IDB
to partner with the National Development Bank
of El Salvador (BANDESAL) to expand the ESI
programme to over 500 small and medium-sized
enterprises in that country.
By unlocking investment, ESI will save these
businesses money, make them more productive
and deliver an estimated 560,000t CO2eq in
emission reductions over a 15-year period.
Ultimately, it will build a trusted and credible
market for energy efficiency investments in
sectors where they are not currently taking place.
If implemented in all relevant developing
countries, the ESI would drive US$10-100
billion in investment and provide annual
emissions reductions of 27-234 Mt CO2 by
2030. CPI hopes that this will be the first of
In under two years and backed by
just around US$1 million of public
grant funding, the Global Innovation
Lab for Climate Finance has sourced,
developed, and endorsed new
financial instruments that have
attracted nearly US$600 million in
seed funding.
many investment-ready Lab instruments that
the Green Climate Fund and other important
players choose to support.
The policy analysis and innovative
financial solutions we offer are based on
years of experience investigating the financial
implications of acting on climate and building
the networks of public, private and philanthropic
actors that can make a difference.
For instance, since 2010, CPI has worked
with decision-makers at international, national
and local levels to help them track their flows
of climate finance, for two main reasons. Firstly,
to enable decision-makers to see how they are
progressing against investment goals and needs
and, secondly, to improve their understanding
of how public policy, finance and support drive
climate-relevant investment.
TRACKING AND ASSESSMENT
CPI’s Global Landscape of Climate Finance
(www.climatefinancelandscape.org) has
become a benchmark for information about
how finance is flowing from actors and sources,
toward low-carbon and climate-resilient
activities and we have worked with Germany,
Indonesia and Côte d’Ivoire to improve their
ability to track this finance.
There are many benefits to carrying out such
tracking exercises. Around three quarters of total
global climate finance and over 90 per cent of
total private climate finance is raised and spent
in the same country so, clearly, understanding
"We have identified policy
adjustments that can
reduce the costs and
maximise the benefits of
the transition to a cleaner,
more resilient economy."
how climate finance flows at the national level is
key to scaling up investment.
Supporting governments to identify, tag, and
track budget allocations that respond to climate
change challenges enhances their ability to plan
and better coordinate spending at the national
and local levels and reallocate finance to areas
where it will have more impact. Ultimately, this
tracking of climate finance also supports the
design of policies and financial instruments by
helping to assess whether spending is achieving
climate and growth goals cost effectively.
CPI has carried out assessment of the
effectiveness of projects, investment portfolios,
financial instruments and support policies. This,
in turn, helps us to support development of ideas
like those from the India and Global Labs, ideas
that are driving investment in different countries
around the world.
Our analysis in India demonstrates that
meeting green growth targets is not just
a question of scaling up finance. We have
identified policy adjustments that can reduce the
costs and maximise the benefits of the transition
to a cleaner, more resilient economy. Our support
for the development of new and innovative
financial instruments will mobilise concrete
investment in projects on the ground.
Around the world, hundreds of millions have
been lifted out of poverty over the last decades.
But many have been left behind and the costs
for our environment threaten to undermine the
progress that has been made. There is now an
opportunity to mainstream clean and resilient
growth models to meet climate and development
goals.
CPI is committed to bringing its approach to
other countries around the world to help others
meet the climate and growth goals laid out in
the Sustainable Development Goals and the Paris
Agreement.
Dr Barbara Buchner is Executive Director of the
Climate Finance programme at Climate Policy
Initiative and is based out of San Francisco.
Named one of the 20 most influential women
in climate change, Barbara advises leaders
on climate, energy, and land use investments
around the world.
Climate Policy Initiative (CPI, http://
climatepolicyinitiative.org) was founded in 2009.
CPI’s analysts and advisors work to improve the
most important energy and land use policies in
the world, with a particular focus on finance.
Their efforts help nations grow while addressing
increasingly scarce resources and climate risk.
BUSINESS & FINANCE
www.climateactionprogramme.org 67