Search Climate Insights Directory

Climate Investor One is an integrated financing mechanism designed to overcome barriers to renewable energy investment in low and lower-middle income countries. It combines a Development Fund for early-stage bankability, a Construction Fund to reduce debt costs and negotiation complexity, and a Re-financing Fund to attract institutional investors to de-risked projects. A pilot phase aims to deploy 300 MW of capacity and reduce 600ktCO2 emissions annually, with a goal to mobilize USD 2 billion in private finance by 2020.

The Energy Savings Insurance (ESI) instrument is designed to stimulate energy efficiency investments by small and medium enterprises (SMEs) by mitigating the risk that actual energy savings fall below projections. A pilot in Mexico's agro-industry sector targets 10 fast-track projects valued at USD 2.14 million, utilizing a package of surety insurance, credit lines from FIRA, and third-party verification by ANCE. Financial modeling indicates that the ESI package can absorb 60-80% of the impact of underperformance on debt service repayments, significantly reducing risk for both equity investors and loan providers. The report proposes scaling the initiative to 6-14 additional Latin American and Caribbean countries through a regional facility, with further replication planned for China, India, Indonesia, and Africa, aiming for a global potential of USD 10-100 billion in investments by 2030.

The Climate Development and Finance Facility (CDFF) is designed to address financing gaps for wind, solar, and hydro projects in low- and lower-middle income countries. It utilizes a three-stage approach: a Development Fund for early-stage due diligence, a Construction Fund that uses equity to avoid high-cost construction debt, and a Refinancing Fund to attract institutional investors once projects are operational. A pilot implementation requires USD 150 million in donor capital to mobilize USD 1.88 billion in private capital, aiming to install approximately 300 MW of clean energy and reduce annual CO2 emissions by around 600 ktCO2.

The Climate Development and Finance Facility (the Facility) is a proposed investment structure designed to overcome financing barriers for renewable energy projects in developing countries. It integrates three stages of support: a Development Fund for early-stage due diligence, a Construction Fund that uses equity to finance construction costs and avoid expensive early-stage debt, and a Refinancing Fund to attract institutional investors once projects are operational. The pilot targets projects between 25-75 MW in specific low- and lower-middle income countries across Africa, Asia, and Latin America. To launch, the Facility requires USD 150 million in donor capital, which is projected to mobilize USD 2 billion in private capital, install approximately 300 MW of clean energy, and reduce annual CO2 emissions by around 600 kt.

The Long-Term FX Risk Management instrument, developed by The Lab in collaboration with the International Finance Corporation (IFC) and The Currency Exchange Fund Management Company (TIM), aims to unlock climate-relevant investments in emerging markets. By offering long-term fixed and inflation-linked cross-currency swaps, interest rate swaps, and local currency loans, the instrument addresses the financial uncertainty caused by currency mismatches in capital-intensive clean infrastructure projects. A proposed pilot requires USD 250 million in donor risk capital to provide up to USD 1 billion in hedging capacity, potentially supporting USD 1.5 billion in clean investment projects and reducing annual greenhouse gas emissions by 1.7 MtCO2.

The report finds that wind power is already cost-competitive with imported coal, while solar power is expected to become competitive by 2019. It argues that the total cost of government support for solar energy can be reduced by 96% if the government shifts from accelerated depreciation to a policy of reduced cost, extended tenor debt. To further minimize costs, the report suggests accelerating wind deployment in the near term and ramping up solar deployment after 2019.

This case study examines the role of public finance in mitigating early-stage exploration risks for geothermal energy, focusing on the Gümüşköy Geothermal Power Plant in Turkey as the first instance of private sector financing for an unproven field in the country.

The analysis finds that while agricultural prices influence deforestation, conservation policies implemented in 2004 and 2008 were critical in curbing forest loss. These policies helped avoid an estimated 73,000 km2 of deforestation between 2005 and 2009, preventing the release of approximately 2.7 billion tons of stored CO2.

The study finds that while agricultural prices drive deforestation, conservation policies implemented in 2004 and 2008 significantly curbed forest loss. Counterfactual simulations estimate that these policies avoided approximately 73,000 square kilometers of deforestation from 2005 to 2009, equivalent to 2.7 billion tonnes of stored carbon dioxide. The analysis indicates that the deforestation slowdown did not result in a major downturn for the local agricultural sector or municipal GDP per capita.

The analysis concludes that conservation policies introduced in 2004 and 2008 were effective in reducing deforestation in the Brazilian Amazon, preventing the loss of approximately 73,000 km² of forest between 2005 and 2009. While agricultural prices positively correlate with deforestation, the study finds that policy interventions mitigated the impact of rising prices, avoiding an estimated 2.7 billion tons of CO2 emissions valued at USD 13.2 billion.

The Gümüşköy Geothermal Power Plant (GPP) represents the first instance in Turkey where the private sector financed the exploration of an unproven geothermal field. Developed by BM Holding, the 13.2MW project utilized a combination of USD 15.1 million in private equity and USD 34.5 million in debt, including a USD 24.9 million loan from the EBRD-funded Mid-size Sustainable Energy Finance Facility (MidSEFF) channeled through Yapikredi. The project's financial viability was secured by a ten-year USD-denominated feed-in tariff (FiT) of 10.5 USD¢/kWh, which increased equity returns from 10% to 16%. The study finds that while Turkey's geothermal sector grew rapidly from 30MW in 2008 to 405MW in 2014, most projects relied on government-proven fields. Gümüşköy demonstrates that private-led exploration can be cost-competitive, with an LCOE of 10.3 USD¢/kWh, and can build local banking capacity for sustainable energy finance. However, the report warns that scaling the sector requires addressing high carbon emissions from non-condensable gases, suggesting binary systems and carbon capture for industrial use as solutions.

The research evaluates the gap between the potential economic benefit of price risk hedging and the actual value delivered by Brazil's Minimum Price Guarantee Policy (PGPM). Using a neoclassical growth model for soybean, sugarcane, corn, and coffee, the authors find that farmers would value full price insurance at BRL 49.6 billion (25.9% of total production value), while the current policy provides only BRL 3.982 billion in value, representing just 8.0% of the potential market. The study argues that the PGPM is an inefficient, anachronistic tool that focuses on preventing extreme poverty rather than managing the price volatility that affects both small and large-scale commercial agribusiness. It recommends shifting toward market-oriented instruments, such as direct payments or revenue insurance, similar to transitions made in the United States and European Union.

The report finds that Brazil's current public price risk mitigation policies are inefficient, providing only R$ 4 billion in gains despite a R$ 5.4 billion federal budget in 2013. Simulation results indicate that farmers would be willing to pay approximately R$ 50 billion to mitigate price risks for soy, sugarcane, corn, and coffee, suggesting a significant unmet market demand. The authors recommend that the Brazilian government move away from direct production purchases and instead subsidize private market instruments, such as put options, to improve agricultural productivity and economic growth.

The report finds that Brazil's current agricultural price risk policies are inefficient and cost-ineffective, providing only BRL 4 billion in gains despite a BRL 5.4 billion budget in 2013. It suggests that farmers would be willing to pay BRL 50 billion to avoid price risk for soybean, sugarcane, corn, and coffee. The authors recommend that the Brazilian government move away from direct output buyouts and instead incentivize market-based tools like sell options, similar to programs in the United States, the European Union, and the state of São Paulo.

This fact sheet highlights the high cost of transporting grain in Brazil compared to the United States, citing the BR-163 highway and the Porto de Santos as key examples of infrastructure and cost inefficiencies. It advocates for regulatory reforms in public ports and the replacement of implicit subsidies with more attractive long-term private investment frameworks to improve transport quality and reduce costs.

The Global Innovation Lab for Climate Finance conducted a Phase 2 analysis of seven climate finance instruments based on four criteria: actionability, innovativeness, catalytic potential, and transformative impact. Following this assessment, four instruments—the Agricultural Supply Chain Adaptation Facility, Climate Development & Finance Facility, Energy Savings Insurance, and Long-term Currency Swap—were selected to move into Phase 3 for detailed financial modeling and implementation planning. The report details the goals and analytical findings for all seven instruments, including those focused on renewable energy, energy efficiency, and agricultural resilience, while highlighting the need for public sector support and donor capital to mitigate risks and catalyze private investment.

The Global Landscape of Climate Finance 2014 executive summary analyzes global climate finance flows for 2013, noting a decrease in total investment and highlighting the role of falling technology costs and domestic policy frameworks in driving climate finance.

The Climate Policy Initiative (CPI) is implementing a Production-Protection strategy in Indonesia, specifically in Central Kalimantan, to reconcile economic growth with environmental conservation. This approach focuses on increasing oil palm productivity through modern agricultural systems and a jurisdictional model to be developed by the end of 2015. The strategy involves partnerships with the Central Kalimantan Government, the Palangkaraya Institute for Land and Agricultural Research (PILAR), and the national Fiscal Policy Agency of the Ministry of Finance to align fiscal mechanisms with a green economy transition.

In 2013, global climate finance flows totaled USD 331 billion, a decrease of USD 28 billion from 2012. This decline was primarily driven by a USD 31 billion drop in private investment, largely due to falling solar PV costs. Public finance remained stable at USD 137 billion, with Development Finance Institutions (DFIs) acting as the primary public source. Mitigation accounted for 91% of total flows, while adaptation received 7% (USD 25 billion), all of which originated from public sources. The report highlights a significant gap between current flows and the estimated USD 1.1 trillion annual investment needed in the energy sector to limit global temperature rise to 2 degrees Celsius.

The Agricultural Supply Chain Adaptation Facility (ASCAF) is a proposed financing mechanism to help small- and medium-sized farmers in the Latin America and Caribbean region invest in climate-resilient agricultural measures. By using donor-backed first-loss guarantees and technical assistance provided through Multilateral Development Banks (MDBs), ASCAF aims to enable agribusiness corporations to extend medium- to long-term loans (5-7 years) to their suppliers. The facility targets 'tight' value chains for high-value crops like coffee, sugarcane, and cocoa to reduce credit risks and capacity gaps. If scaled, the facility could potentially protect or increase the revenues of 63,000 to 420,000 farming households by 2030, with a total market investment potential estimated between USD 2.5 billion and USD 4.4 billion for four sample crops.