While our knowledge of how climate change challenges the global ecosystem is still growing, it is evident that urgent institutional support and policy interventions are required to build resilience. Climate Investment Funds (CIF) worth $ 8.5 Bn, established in 2008, bolster climate action by strengthening transformations through programmes in clean technology, energy access, climate resilience, and sustainable forests. CIF's large-scale, low-cost, long-term financing lowers the risk and cost of climate financing. These funds test new business models, build track records in unproven markets, and boost investor confidence to unlock additional sources of finance. CIF manages a collection of targeted programs that enable climate-smart development planning and action through 325 projects in 72 developing and middle-income countries worldwide.
CIF Funding and Governance
CIF seeds climate action through governments, the private sector, civil society organizations. It is the only multilateral climate fund to work exclusively with Multilateral Development Banks (MDB) including African Development Bank (AfDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), Inter-American Development Bank Group (IDB), and World Bank Group. CIF's resources are disbursed as technical assistance and advisory services for public and private sector operations, often through non-reimbursable grants; and as investments. In June 2021, the G7 countries committed up to $ 2 billion in additional resources for CIF.
Working through a pragmatic, country-led process, CIF practices equitable governance, with equal representation for donor and recipient countries. It seeks to forge connections with communities most vulnerable to climate change and most dependent on natural resources. They are responsible for translating Nationally Determined Contributions (NDCs) and other national development and climate measures into an actionable CIF investment strategy. CIF is pioneering investments in five new areas: the transition from coal, climate-smart cities, nature-based solutions, industry decarbonization, and renewable energy integration.
CIF Work in India
According to a report jointly prepared by the international trade promotion agency London and Partners and the Amsterdam-based database management company Dealroom.co., India ranks ninth in the list of 10 countries for climate tech investment. Indian climate tech firms have already received $ 1 billion in VC funding between 2016-2021.
The majority of India’s $ 775 Mn Clean Technology Fund (CTF) investment plan supports the development of over 3 GW of new installed solar power capacity and associated transmission infrastructure. India is a leader in a new era of low carbon development, and its high potential for solar power is reflected in its position as home to the world’s fifth largest fleet of solar installations. In particular, CTF concessional financing is helping offset the high upfront costs of large-scale solar park projects and to de-risk investments in rooftop solar photovoltaics to unleash its full market potential.
Investments in ‘Innovations in Solar Power and Hybrid Technologies’ project will finance large-scale solar-wind hybrid power plant(s), potentially with short-term energy storage, with a cumulative capacity of about 230 MW. Such subprojects are expected to improve power generated per unit piece of land. The project will also bring out approaches for successful implementation of such technologies through suitable risk mitigation strategies and prudent project design and implementation. The approved CIF funding for this project is $ 49.81 Mn, and the expected co-financing is $ 350 Mn.
CIF strategy continues to channel long-term, sequenced investments that mutually reinforce each other and link to other critical activities, such as policy and regulatory rehabilitation and capacity building. The need of the hour is to rally stakeholders behind climate goals and mobilise investors for India’s 'Decade of Energy Transition.'
This article has been co-authored by Paridhi Puri and Aarushi Aggarwal.