On March 13, the British newspaper ‘The Telegraph’ published an article about the Climate Investment Funds that contained a number of claims with which we strongly disagree:
The CIF Secretariat would like to provide some clarifications in the following areas:
The Purpose of the CIF
The CIF has been a crucial part of the international response to climate change as the largest source of multilateral concessional climate finance available to date. They have played a pivotal role in helping to increase the volume of climate investment going to developing and emerging economies and have been instrumental in financing projects that would not have happened because of high costs and perceived risks.
The CIF has been addressing the main gaps and barriers to climate investments for many developing countries. These include the lack of access to affordable long-term capital, high commercial risks, and non-financial risks such as capacity gaps.
The CIFs are a tried, tested, and trusted financing mechanism. Countries are now reaping the benefits from CIF investments in the form of cleaner and more reliable energy, new industries and markets, climate resilience and sustainable forestry. None of this would have happened without CIF involvement.
The CIF is delivering – supporting over 300 projects in 72 developing countries, and mobilizing billions of dollars from development banks and the private sector that have scaled up new renewable technologies at an unprecedented rate.
The CIF’s Clean Technology Fund is reporting greenhouse gas emission reductions equivalent to taking 1.4 million cars off the road and it has supported installed power capacity of 3.3 Gigawatts.
In Morocco, the CTF supported the phased construction of the Noor Concentrated Solar Power (CSP) plant – the largest of its kind in the world. The first facility of the 3-phase Noor plant became operational in December 2015 and, by 2018, will be on track to generate over 500 megawatts of installed capacity, reduce carbon emissions by 760,000 tons per year, and supply power to 1.1 million Moroccan households. Low-cost debt provided by the CTF helped cut the cost of power production and slashed the Moroccan government’s power subsidy from $60 million to $20 million per year.
In South Africa, in 2014, KaXu Solar One Concentrated Solar Power project, financed by IFC and CTF, became the first private sector utility-scale CSP plant in the developing world. This 100 MW plant supplies enough base-load energy for 80,000 households. And the 100 MW Sere Wind Farm - one of the largest in Africa – is the first commercial utility-scale renewable energy project of the national energy utility Eskom. It will save nearly 6 million tons of greenhouse gas emissions over its 20-year expected operating life. Average annual energy production is estimated at about 298,000 megawatt hours (MWh), enough to supply about 68,000 standard homes. A total of $100 million in concessional funds from CTF were essential to bridge the cost gap relative to coal power generation and in providing the positive incentives required for Eskom and its lenders to proceed with the investment.
And in Thailand, the CIF’s Clean Technology Fund provided $4 million in debt, blended with $8 million of debt from IFC, to support a dynamic entrepreneur as she attempted to develop some of the country’s first utility-scale solar plants and move this high-potential market off the ground. CTF funds helped reduce long-term project finance risks for lenders and sent positive signals to the local financial markets for utility-scale solar. By late 2011, new solar farms began supplying clean and renewable power to Thailand, and the entrepreneur and her company have attracted over $800 million for their clean energy investments in the country.
Every Clean Technology Fund dollar leverages a further nine dollars from other sources. As of December 31, 2016 the CTF has approved $4.1bn in projects, which in turn have crowded a total of $46.9 billion in in co-financing, including $12.9 billion in MDB funding and $19.2 billion in commercial finance.
Established in 2010, the Program for Scaling up Renewable Energy in Low Income Countries (SREP) aims to demonstrate the economic, social and environmental viability of low-carbon development pathways in the energy sector by creating new economic opportunities and increasing energy access through the use of renewable energy. By design, it aims to tackle a challenging development issue (energy access) in the most challenging countries.
The 18 projects that have been approved to date by SREP and reporting results are at various stages of implementation but even in these challenging markets and for these first-of-its kind investments in low income countries SREP is delivering. In Nepal, for example, the SREP supported project is providing access to electricity and facilitating productive end uses of energy at the “bottom of the pyramid” in rural locations, which are beyond the “last mile” of the grid. About 1,500 households, or 6,600 people are already benefiting from installation of lighting and mobile radio charging systems, displacing expensive diesel and gasoline use in generator sets and kerosene for lighting.
The Pilot Program for Climate Resilience has already supported 2.8 million people – half of them women - to cope with the adverse impacts of climate change, and is on course to support 40 million people through the implementation of 44 of its current 58 projects.
While most Forest Investment Program projects only started implementing in the field in 2015 they have already supported 65,000 people in Lao PDR, Mexico and Ghana through livelihood co-benefits. Good progress has also been observed on forest law enforcement, ensuring participation of all key stakeholders in decision making processes and tenure access and rights.
Value for Money
The article also implicitly argues that helping developing countries tackle climate change is a bad deal for UK taxpayers. We disagree. Helping people prepare for the impacts of climate change – including floods, droughts, and natural disasters – and reducing the emissions that cause them, is an investment that will pay back many times over.