Proposal for a Global Credit Guarantee Facility

The document proposes a Global Credit Guarantee Facility (GCGF) to address the disparity in capital costs for renewable energy, which are on average 7x higher in developing economies than in developed ones. It outlines three funding scenarios—Conservative, Moderate, and Optimistic—ranging from USD 660 million to USD 4.1 billion in capital, with potential debt mobilization leverage up to 250x. For a sample of 40 countries, the GCGF could reduce risk premia by 3%-6% and improve credit ratings by 2-6 notches.

• Renewable energy project debt costs in developing economies are on average seven times higher than in developed economies, with spreads ranging from 3% to 50%, despite lower marginal mitigation costs per unit of carbon in developing nations.
• The proposed Global Credit Guarantee Fund (GCGF) could be structured using three different funding and leverage approaches: a Conservative model (USD 4.1 billion capital, 28x leverage), a Moderate model (USD 1.2 billion capital, 98x leverage), and an Optimistic model (USD 660 million capital, 250x leverage).
• Based on an analysis of 40 countries, the implementation of the GCGF could lead to an average credit rating improvement of 2-6 notches and a 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} }