Proposal for a Global Credit Guarantee Facility

This research paper proposes a Global Credit Guarantee Facility (GCGF) to reduce the high cost of capital for renewable energy projects in developing economies, outlining three funding scenarios and their potential impact on risk premia and credit ratings.

• The cost of capital for renewable energy debt in developing economies is on average 7 times higher than in developed economies, with spreads ranging from 3% to 50%, even though the marginal cost of mitigation per unit of carbon is less than half that of developed economies.
• The paper proposes three sizing approaches for a Global Credit Guarantee Fund (GCGF) based on funded and callable capital: a Conservative approach with USD 4.1 billion in capital (28x debt mobilization leverage), a Moderate approach with USD 1.2 billion (98x leverage), and an Optimistic approach with USD 660 million (250x leverage).
• For a sample of 40 analyzed countries, the implementation of the GCGF could lead to an average improvement in credit ratings of 2-6 notches and an average reduction in risk premia of 3%-6%.

APA

Climate Policy Initiative (2023). Proposal for a Global Credit Guarantee Facility. https://www.climatepolicyinitiative.org/publication/proposal-for-a-global-credit-guarantee-facility/

Chicago

Climate Policy Initiative. Proposal for a Global Credit Guarantee Facility. 2023. https://www.climatepolicyinitiative.org/publication/proposal-for-a-global-credit-guarantee-facility/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Proposal for a Global Credit Guarantee Facility |date=13 October 2023 |url=https://www.climatepolicyinitiative.org/publication/proposal-for-a-global-credit-guarantee-facility/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2023proposal, author = {{Climate Policy Initiative}}, title = {{Proposal for a Global Credit Guarantee Facility}}, institution = {Climate Policy Initiative}, year = {2023}, month = oct, url = {https://www.climatepolicyinitiative.org/publication/proposal-for-a-global-credit-guarantee-facility/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }