The Climate Investment Funds (CIF) is a leading multilateral climate finance partnership that channels concessional finance through six multilateral development banks (MDBs) for both upstream advisory and downstream investment activities to support climate action.
The World Bank Group, including the International Finance Corporation, the African Development Bank, the Asian Development Bank, the European Development Bank, and the Inter-American Development Bank, are the implementing partners of CIF’s investments.
CIF comprises two funds: the Clean Technology Fund (CTF) and the Strategic Climate Fund (SCF).
CTF provides large-scale financial resources for investing in clean technology projects in low- and middle-income countries. They contribute to the demonstration, deployment, and transfer of low-carbon technologies with significant potential for reducing long-term greenhouse gas emissions.
The fund uses a blend of financial instruments, including grants, contingent grants, concessional loans, equity, and guarantees to make investing in low-carbon technologies more attractive to both public- and private-sector investors in low- and middle-income countries.
CIF-CTF funding is only accessible through the MDBs (the World Bank Group, the Inter-American Development Bank, the African Development Bank, the European Bank for Reconstruction and Development, and the Asian Development Bank), which serve as implementing partners.
SCF provides financing for piloting innovative approaches or scaling up activities aimed at specific climate change challenges or sectoral responses. It is designed to address the following areas:
SCF serves as an overarching framework that provides funding through the following CIF programs:
The Forest Investment Program provides direct investments to address the drivers of deforestation and forest degradation. It also offers grants and low-interest loans to help governments, communities, and businesses work together to define sustainable solutions for people and economies relying on forests, while maintaining important ecosystem services.
The Pilot Program for Climate Resilience provides funding support for some of the most vulnerable low- and middle-income countries and regions in building adaptation and resilience to climate change.
The Scaling Up Renewable Energy in Low Income Countries program supports the scaled-up deployment of renewable energy solutions, such as solar and geothermal, to increase energy access. It is one of the biggest global funders of mini-grids — a game changer for isolated, off-grid communities.
The Renewable Energy Integration program provides funding that helps address system-wide barriers to the integration of higher shares of intermittent renewable energy generation into the grid and takes advantage of the opportunities emerging as part of the clean energy transition.
The Nature, People and Climate program provides funding to help governments, industries, and communities to harness the potential of land resources and ecosystems in climate action, and reduce barriers to sustainability in key areas, such as agriculture and food systems, forests, and other land-based ecosystems.
CIF-SCF funding is only accessible through the MDBs (the World Bank Group, the Inter-American Development Bank, the African Development Bank, the European Bank for Reconstruction and Development, and the Asian Development Bank), which serve as implementing partners.
Fast-growing developing countries need trillions of dollars of additional investment to achieve low-carbon, climate-resilient economies. The private sector is critical to mobilizing the financing volumes needed to help developing countries move toward low-carbon economies.
By providing highly competitive financing, CIF reduces risks for investors, thereby lowering barriers to piloting new clean technologies and scaling up proven solutions.
CIF also helps the private sector to enter emerging markets, where it may otherwise be unwilling or unable to invest.
Essentially, CIF’s combination of technical advisory and financial resources (including equity, grants, loans, guarantees, and local currency hedging) helps reduce investment barriers, test new business models, and de-risk new low-carbon, climate-smart markets, thus enabling the private sector to participate in clean-energy economies at a faster rate and on a greater scale.
Approximately 30 percent of CIF’s funding is invested in private-sector operations. These funds are deployed via the MDBs to private-sector sponsors and companies through both national and regional investment plans, as well as dedicated funding mechanisms, such as CIF’s Dedicated Private Sector Programs (DPSP).
In 2019, the CIF Technical Assistance Facility (CIF-TAF), supported by the Government of Denmark, was established under CTF. Its aim is to provide funding to support upstream activities that lead to the strengthening of policy and regulatory environments, the building of human and institutional capacities, and the design of market-facing solutions, such as innovative instruments and business models. These activities have the overriding goal of accelerating downstream clean-energy investments in client countries.
A mounting body of evidence shows that pursuing low-emissions and climate-resilient growth is the best way to unlock the lasting socioeconomic and environmental benefits that will be central to a greener, more resilient future. However, urgent and sizable development assistance is still needed to support governments, businesses, and communities in recovering quickly from the economic downturn.
The COVID-19 pandemic resulted in the tragic loss of many lives, and caused severe disruptions and negative economic impacts, resulting in a shrinking of the global economy, widespread unemployment, and a growing gap in financing and investment. During this period, CIF-TAF was chosen as the delivery mechanism of choice to help countries’ efforts toward building back a green and resilient recovery through technical assistance on a rapid response basis. CIF-TAF was uniquely positioned to play a critical role in reducing the risks of climate change and realizing the potential of sustainable development in client countries. This led to the launch of the COVID-19 Technical Assistance Response Initiative for green and climate-resilient recovery in December 2020, with the support of the governments of the United Kingdom, the Netherlands, and Switzerland.
Billions of dollars have been committed by countries to rebuild and reform their economies. CIF-TAF plays a critical role in supporting developing countries under these challenging and continuously changing circumstances to rebuild their economies, while reducing the risks of climate change and realizing the potential of sustainable development.
Focus Areas
CIF-TAF’s first call for proposals, launched in December 2019, focused primarily on energy efficiency, in addition to renewable energy. This round supported programs across five countries with just over $2.5 million in funding. These proposals included activities to develop policies and regulations, build institutional and individual capacities, offer implementation support, and design innovative approaches to drive clean energy-driven economic recovery and development. Through the first call for proposal projects, TAF was able to mobilize an additional $8.8 million in co-financing from other MDBs.
The second call for proposals in 2021 generated around $30 million through a two-pronged approach to support developing countries in achieving their green and resilient priorities.
The first and second CIF-TAF calls for proposals have supported a number of activities in the energy sector, which reflected country-level priorities in the areas of renewable energy and energy efficiency, along with limited projects approved in the areas of financial focus with energy relevance. In line with the recognition of the importance of the financial sector, the third and final call for proposals will focus on the financial sector and transaction enablers, with the goal of creating market-facing solutions (for example, innovative business models and instruments) that can accelerate clean energy investments globally. The third call for proposals, launched in May 2022, will receive final funding approvals by September 2022.