What do you do when a climate investment fund celebrates its 10-year anniversary and you are called to stage-manage the whole production?
That’s the question I was asking myself when I joined the Climate Investment Funds (CIF) about three months ago.
I knew I was heading into a busy year. Not least because of the learning curve: before CIF, I hadn’t known much about climate finance, let alone what CIF was or how it contributes to a lower-carbon world.
But now I do, and I want others to understand what funds like CIF do, and how this dynamic, nimble unit supports countries in adopting clean, renewable energy and ditching fossil fuels.
But besides explaining why climate finance is critical to addressing the most pressing and urgent challenge facing humankind, I also feel the need to recall why climate change is such a threat.
Climate change cannot be reduced to a narrative about melting glaciers and rising temperatures. Yes, they are important, but unless you personally experience them, you don’t feel particularly threatened by them. That’s why, to understand the scale of this threat, we need to look at how climate affects nearly every aspect of our daily lives.
I’m talking about pollution, from the small particulate matter (PM) we inhale every time we’re around car exhaust fumes or simply walking through town. Or the diseases, like yellow fever, malaria, dengue fever, or zika, now reaching new latitudes – and more people. And then there are the spikes in food prices as climate-related droughts and floods decimate crop yields, potentially triggering food scarcity and large movements of climate refugees. Hotter and dryer conditions are also fueling wildfires that threaten our homes and neighborhoods. Not to mention torrential rains and landslides that wipe out entire villages, from Italy to Japan, California to Brazil.
This is climate change. It affects us all. This is why we all need to pay more attention to the work that CIF and other climate funds are doing on the ground to respond to this challenge.
In this respect, CIF is a game changer. We work with governments, cities, and the private sector, including those developing and adopting cutting-edge technologies. But first and foremost, we work with multilateral development banks, whose regional expertise helps speed up complex investments and deliver on our mission in disparate operating environments.
The CIF financing model is straightforward. We lend money with very low interest rates — in some cases, no interest at all — to support the climate needs and ambitions of developing and emerging countries. Our funding is designed to absorb the risk associated with investing in new frontiers in climate-smart development. This encourages other investors, like governments or the private sector, to step in and do the same. This is called “de-risking” investments, and it’s core to our mission because without our initial investment, it is very unlikely that these projects would have gotten off the ground in the first place. Take a geothermal plant. CIF will absorb the riskiest part of the plant’s construction — the drilling – which then clears the way for private sector co-financing in the $100s of millions to build the plant itself.
But CIF also works to foster what we call an “enabling environment” for change. We support capacity development and advise on the design and implementation of policies that encourage adoption and investments in clean energy, which help lead to the creation of jobs and opportunity for all members of society, including women entrepreneurs.
Sustainability is the name of the game, whether it is the largest solar plant of its kind (i.e., the Noor concentrated solar power facility in Morocco, supported by a CIF investment of over $400 million and featured in Leonardo Di Caprio’s beautiful “Before the Flood” documentary), building the resilience of Indigenous peoples with more climate-resilient infrastructure, or helping clean up emissions-choked cities with fleets of hybrid buses.
This is just scratching the surface of what we do and wish to do in the future. It is my hope that this ten-year anniversary will be an important step toward promoting understanding of how we can live in a more sustainable world through disruptive clean technologies, as well as the lessons we have learned — and are learning still — along the way.
Get ready and join us on this journey!