The Lab: 2016-2017 Cycle Instrument Analysis
Published: September, 2017
The Lab aims to drive billions of dollars of private investment to the low-carbon economy, by identifying, developing, and supporting transformative sustainable finance ideas. Founded in 2014, the Lab incubates a small number of initiatives each year. Past instruments have mobilized USD 977 million to-date.
Each Lab instruments receives support from CPI’s analyst team to complete financial modeling, build an implementation pathway, and assess the instrument against Lab criteria. This process is conducted in coordination with, and guided by, the Lab’s members. The instrument analyses are the result of this nearly year-long process.
The 2017 Lab instruments are:
- The Cloud Forest Blue Energy Mechanism, which will engage hydropower operators in Latin America to pay for upstream forest conservation and restoration. Proposed by Conservation International and the Nature Conservancy, at scale, the initiative would restore and conserve 60 million hectares of cloud forest – an area nearly the size of Texas – with an associated market size of $12 billion to 2030.
- Climate Smart Cattle Ranching, which will provide technical assistance and finance for Brazilian cattle ranchers to adopt sustainable ranching practices. Proposed by Naturevest and The Nature Conservancy, operations could scale to cover 300,000 hectares in the first five years, mobilizing 200 million US dollars for sustainable cattle ranching practices.
- CRAFT, which will be the first private equity fund to focus on expanding available technologies and solutions for climate adaptation. Developed by the Lightsmith Group, the fund already has an initial pipeline of investments under due diligence.
- Distributed Generation for Cooperatives, which will scale up distributed renewable energy by partnering with agricultural cooperatives in Brazil. Proposed by Renobrax, will provide renewable energy that’s 10-20% less expensive than existing options.
- The Green FIDC, which tailors an existing financial structure in Brazil to provide lower-cost, long-term capital to renewable energy and energy efficiency projects. Proposed by Albion Capital and Get2C, the instrument is considering two initial pilots – energy efficient street lighting in Rio de Janeiro and a 90 MW solar PV project in the state of Ceará.
- The Renewable Energy Scale up Facility, which will use an innovative options mechanism to drive long-term, low-risk private finance into earlier stages of renewable energy projects in emerging markets. Proposed by Baker & McKenzie and Get2C, as it scales, the facility is expected to mobilize around $25 of commercial investment for every $1 of concessional investment, while significantly contributing to countries’ climate and energy goals.
- Solar Investment Trusts (SEITs): An investment trust for small-scale rooftop solar developers in India, which can raise capital at a lower cost of financing. Proposed by Cleanmax Solar, SEITs can mobilize capital worth USD 1 billion within the next five years in key Indian markets.
- Sustainable Energy Bonds (SEBs): Debt instruments that aim to drive impact investment to sustainable energy in India by offering debt exposure, sufficient returns, and standardized impact measures for impact investors. Proposed by cKers Finance, SEBs will create credible benchmarks for impact evaluation, lower transaction costs, and de-risk small-scale lending.
More information on each instruments, including short videos and fact sheets, are available at www.ClimateFinanceLab.org.
Global Lab Instrument Analysis – Cloud Forest(1.7 MB)
Global Lab Instrument Analysis – CRAFT(2.5 MB)
Global Lab Instrument Analysis – RESF(1.7 MB)
Brasil Lab Instrument Analysis – Climate Smart Cattle Ranching(816.1 kb)
Brasil Lab Instrument Analysis – DG for Cooperatives(937.7 kb)
Brasil Lab Instrument Analysis – Green FIDC(932.0 kb)
India Lab Instrument Analysis – Solar Investment Trusts (SEITs)(2.1 MB)
India Lab Instrument Analysis – Sustainable Energy Bonds (SEBs)(1.3 MB)
- adaptation finance
- climate finance
- climate investment
- climate resilience
- developing economies
- energy efficiency
- energy finance
- financial innovation
- financial modelling
- low carbon economy