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New Initiative Seeks to Unlock Billions in Private Investment to Tackle Climate Change in Developing Countries

June 3, 2014

The UK, German, and U.S. governments today launch the Global Innovation Lab for Climate Finance, a global public-private initiative that will identify, design, and support the piloting of new climate finance instruments with the aim of unlocking billions of dollars of fresh private investment for climate change mitigation and adaption in developing countries. Members of “The Lab” – which include leaders from governments, pension funds, investment banks, project developers and development finance institutions – will identify cutting edge climate finance instruments with the potential for large scale application from proposals gathered from private, public, and civil society organizations from around the world.

Over the coming nine months, The Lab will analyze, test, and refine these proposals to select and recommend new climate finance instruments for piloting by investors in projects in developing countries. This process will draw on The Lab’s private sector members’ extensive experience of risk-return requirements for investing in climate-related activities in different markets, and its public sector members’ expertise in using public support to support adaptation and mitigation activities, and enabling new private investment by reducing risk or increasing financial returns.

Climate Policy Initiative (CPI) and Bloomberg New Energy Finance (BNEF) are leading the analysis of proposed instruments, drawing on the expertise of Lab members, and outside advice from leading experts in finance and investment where appropriate.

QUOTES
Gregory Barker, UK Minister for Energy and Climate Change and Lab Principal: “As around two thirds of greenhouse gas emissions are forecast to come from the developing world by 2020, the UK has a direct national interest in supporting international action. This exciting new global venture will allow the public and private sectors to work together to catalyze the investment needed to help developing countries mitigate and adapt to the unavoidable impacts of climate change.”

Elizabeth Littlefield, CEO of the Overseas Private Investment Corporation (OPIC) and Lab Principal: “Over the last three years, OPIC has committed roughly a third of our portfolio toward renewable energy projects, including over $1.2 billion in 2013 alone. While significant challenges remain to mobilizing climate finance on the scale that is needed, our rapid growth in the renewables field is proof that it’s a high-impact sector that investors find rewarding. I’m pleased to take part in this international initiative to identify and promote measures to increase flows of private capital to this most central global concern.”

Jochen Flasbarth, State Secretary of Germany’s Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety and Lab Principal: “The just-published IPCC report has clearly highlighted: We need substantial private investments into climate friendly technologies as soon as possible. To unlock such investments, we need ambitious and intelligent policies. The Lab is perfectly placed to find and test new, smart approaches to mobilize such investments.”

Gilbert Mbesherubusa, Vice-President, Infrastructure, Private Sector and Regional Integration of the African Development Bank and Lab Principal: “As we move toward a global climate agreement in 2015, AfDB remains committed to supporting the transition of African countries to climate-resilient and low-carbon development pathways. The Bank has planned to dedicate USD 10 billion for the implementation of its Climate Change Action Plan covering the period 2011 – 2015. AfDB will contribute its expertise to The Lab to help identify new financial instruments that can unlock further private investment in coming years.”

Colin Grassie, Deutsche Bank UK CEO and member of the Group Executive Committee, and Lab Principal: “Deutsche Bank is committed to using our financial expertise to address issues such as climate change which is illustrated by our strength in financing renewable energy, energy efficiency, structuring green bonds and advising innovative public-private investment funds. We welcome this initiative’s aim to deepen cooperation between governments, development banks and the financial sector in order to secure higher levels of private sector investment in low-carbon technologies around the globe.”

Purna Saggurti, Chairman of Global Corporate and Investment Banking, Bank of America Merrill Lynch and Lab Principal: “Having committed to mobilise USD 70 billion for low-carbon business opportunities, Bank of America Merrill Lynch is pleased to partner with other leaders to explore innovative financing tools that will attract new pools of capital to invest in low-carbon opportunities. We look forward to sharing our experience from structuring and financing numerous transactions in clean energy, green bonds, and environmental markets.”

Elizabeth Corley, CEO, Allianz and Lab Principal: “The Lab can showcase to investors like us that climate protection has a strong underlying business case and that private investments can be scaled up if derisking and scale come together.”

Paddy Padmanthan, CEO, ACWA Power and Lab Principal: “ACWA Power is already committing significant capital to renewable energy. The Lab is a great initiative for key stakeholders in this sector to share experience and develop implementable solutions to accelerate the pace of investment in this sector.”

Barbara Buchner, Senior Director at Climate Policy Initiative and head of the secretariat for The Lab: “Our analysis shows that private investment makes up the majority of climate finance. However, some of the largest pools of capital have yet to invest at scale. By developing and piloting innovative instruments, The Lab can unlock new sources of private investment accelerating countries’ transition to a low-carbon, climate-resilient economy.”

Michael Liebreich, Chairman of the Advisory Board at Bloomberg New Energy Finance and Lab Principal: “Over the past decade, clean energy has become increasingly competitive with fossil-based solutions. However, it does require more capital spending up-front, which is then compensated by very low running costs, as well as a wide range of co-benefits. Access to low-cost finance is absolutely key to the rapid adoption of clean energy, and the goal of the Lab is to identify new and innovative ways of providing it.”

To read more visit: www.ClimateFinanceLab.org

Contact

U.S. – Ruby Barcklay, +1 510 612 5180, ruby@cpisf.org
Europe – Dan Storey, +39 041 270 0475, dan.storey@cpivenice.org