This year’s 2021 United Nations Climate Change Conference (COP26) was a gamechanger for the Climate Investment Funds (CIF). With two new programs launched, twenty-five COP26 events, and a myriad of program endorsements from around the world, the response to and recognition of CIF’s work dominated the headlines, and helped spearhead the direction of climate finance, clean energy transition, just transitions and climate action. At a time when the climate crisis is negatively impacting the environment, livelihoods, and people’s health there needs to be an immediate, efficient, accelerated, and large-scale transition to low-carbon, net zero development.
CIF Ignites Shift to Renewables
This year’s COP26 was heavily focused on reducing the world’s dependency on coal and phasing it out in favor of renewable energy. Coal combustion is dangerous for the climate, the economy, and public health. It is the single-largest source of global temperature increase and contributes to air pollution that causes over 4 million deaths every year. The transition to clean energy represents an enormous economic opportunity for developing countries. Low-cost renewable technologies including solar power, wind power, and energy storage systems give countries the opportunity to retire or re-purpose existing coal assets and save money, create jobs and provide important climate, public health, and environmental benefits.
CIF is leading the way to the transition to clean, renewable energy with its two new programs, Accelerating Coal Transition (ACT) Investment Program and Renewable Energy Integration (REI) Program. Both ACT and REI are dedicated to supporting a just transition to clean energy for developing countries, which is essential to limiting global temperature rise to 1.5°C by 2030. ACT is a $2b program, the first of its kind, designed to de-risk, pilot, and scale investments across three critical dimensions of the coal transition: governance, people, and infrastructure. The $300m REI is the world’s only large-scale investment program dedicated to tackling barriers to clean energy integration in emerging economies.
The positive response and commitments to these programs has been profuse. On day one of COP26, Canada committed $1bn to the Accelerating Coal Transition Investment Program with Prime Minister Trudeau recognizing CIF as a climate leader with the capability and know-how to help developing countries transition from coal-fired electricity to clean power as quickly as possible. Additional support and pledges flooded in from the United States, Britain, Germany, and Denmark with a total commitment of almost $2.5bn. The first round of beneficiaries - South Africa, India, Indonesia, and the Philippines – were announced during COP26 and were selected based off of national ambition, potential for transformational change and private sector mobilization.
The Renewable Energy Integration Program not only acquired endorsements from the Group of Seven advanced economies earlier this year, but the program also received financial pledges from Britain, Switzerland, and the Netherlands. The strong need and interest for renewable energy integration programing is evident, when REI originally sent out a call for expression of interest earlier this year there was an overwhelming number of applications. So much so that when announcing the first rounds of REI recipient countries at COP26 - Ukraine, Fiji, Colombia, Kenya and Mali – CIF CEO, Mafalda Duarte, also announced that the second round had already been identified and would be Brazil, Costa Rica, India, Indonesia and Turkey.
And finally, during COP26 it was announced that CIF had joined the Powering Past Coal Alliance (PPCA). PPCA is a powerful organization comprised of a diverse array of governments, sub-governments, businesses, and organizations in its ranks. The alliance is dedicated to working to phase out coal and deliver a just transition to clean energy, and because of its strong network has the capacity to help enact accelerated and large-scale clean energy transition.
Mobilizing Capital
As one of the largest multilateral climate finance mechanisms, CIF has become a trusted institution from all sides. Donors and investors interested in green, clean technology feel safe with CIF’s competitive financing that reduces risk. And developing countries interested in transitioning to a clean, sustainable low-carbon economy know that CIF works hard to lower barriers to piloting new technologies, scale up proven solutions, open up sustainable markets, and mobilize private sector capital for additional climate action projects.
During COP26, CIF received numerous endorsements for its new CIF Capital Market Mechanism, which focuses on issuing investment-grade bonds and raising significant new finance for scaling clean energy and sustainable infrastructure in emerging economies.
U.S. Treasury Secretary, Janet Yellen, recognized that, “This innovative initiative will help attract significant private climate finance and provide new funding for the Clean Technology Fund with its valuable work in assisting countries with their transition to a clean energy future.”
UK Chancellor of the Exchequer, Rishi Sunak, said, “The UK has already invested over £2.5 billion in the Climate Investment Funds, unlocking billions more in private finance for clean energy projects round the world, and is now backing the launch of the innovative new CIF Capital Markets Mechanism, which will turbocharge green investment in emerging economies.”
Minister of Finance of Japan, Shunichi Suzuki, also added his countries support, “In order to achieve our common goal of 1.5-degree target, Japan supports developing countries to accelerate the transition away from coal through the financing mechanism with relevant multilateral development banks.” Said Suzuki, “Japan sees that the importance of transition finance and supports best available options based on each country’s circumstance.”
Related to CIF Capital Market Mechanism, CIF and BloombergNEF released the report ‘Multiplying the Transition: Market-based solutions for catalyzing clean energy investments in emerging markets’ that details how private capital has been successfully leveraged to support renewable energy growth in developing nations. The report examines the evolution of fund-deployment and fund-raising activities in emerging markets and looks at examples from around the globe of how “financial intermediaries” are mobilizing clean energy investments.
ChangeMakers Campaign
CIF’s ChangeMakers campaign was recognized by The United Nations (UN) virtual exhibits gallery recently, and because of its exemplary climate action dedication and innovative development work has the honor of being showcased in the virtual exhibit. Additionally, CIF in partnership with the City Council of Glasgow hosted a projection exhibit at the St. Andrews Cathedral in Scotland shining ChangeMakers from around the world on the cathedral facade.
Strengthening Collaboration and Complementarity
In the last two weeks CIF has:
During Youth Day at COP26, The Climate Investment Funds (CIF) and The European Bank for Reconstruction and Development (ERBD) co-hosted the event, “Youth, Climate Funds, and MDBs: Forging Meaningful Partnerships Towards More Inclusive Climate Action”. The event focused on the working relationships between multilateral development banks (MDBs), climate funds, and youth climate action activists and seeks to find ways in which the three entities can support and collaborate with one another to advance youth climate action work.
And on COP26 Nature Day, CIF revealed a new initiative to harness the potential of land resources and other ecosystems, including coastal systems in climate action - the Nature, People and Climate Investments Program. In a world where 75% of the total land-based environment and 66% of the marine environment have been severely altered by human activity and an estimated 23% of total anthropogenic greenhouse gas emissions (2007-2016) derives from agriculture, forestry and other land use, there is a unique need for the CIF’s new Nature, Climate and People Investment Program.
It’s only been two weeks but CIF has achieved so much, forged strong partnerships, and gained the recognition of and received support from climate leaders and countries around the world. CIF’s ambitions will always be focused on providing at scale, accelerated climate finance to the countries that it need it most, and this year’s COP26 shows that the world wholeheartedly supports CIF’s objectives.