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The Lab: 2017-2018 Cycle Instrument Analysis

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Published: October, 2018

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 US$ 1.28 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.

Selected for development from among hundreds of ideas submitted, the Lab’s investors prioritized ideas from sectors that remain critical for climate change action. The 2018 Lab instruments include:

CLEAN ENERGY ACCESS

  • Distributed Energy for Social Housing is a fund that will support distributed solar energy for low-income tenants in Brazil. In the next twelve years, DESH has the potential to reach nearly 700,000 households, enabling 1,125 MW of energy and mobilizing US$1.1 bn.
  • Green Aggregation Tech Enterprise (GATE) is the first ever guarantee mechanism to increase clean energy access through mini-grids in Sub-Saharan Africa. The GATE instrument will enable 60,000 minigrid electricity connections over the next five years in Kenya, Nigeria and Zambia, with potential to scale up rapidly to over 27 million households as it proves the model.
  • The Residential Rooftop Solar Accelerator will accelerate mass adoption of residential rooftop solar to households in India through a standardized product offering and easy financing. At scale, the instrument has the potential to install 5 KW projects for 20,000 households, abating 130,000 tons of carbon emissions by 2022.

SUSTAINABLE LAND USE

  • The Smallholder Forestry Vehicle will be the first and only investment mechanism to scale up forestry by smallholder farmers in Africa. By 2030, the Smallholder Forestry Vehicle has the potential to restore more than 40,000 hectares of degraded land, and increase the incomes of 50,000 farming households by up to 30%. More than 50% of the targeted farmer beneficiaries will be women.
  • The Responsible Commodities Facility will promote the responsible production of commodities, particularly soy, in the Brazilian Cerrado biome, through incentives to plant in already cleared and degraded lands. It aims to channel low cost loans to 600 farms, for cumulative lending of more than US$ 3 bn over 10 years. This has the potential to originate over US$ 20 bn worth of deforestation-free soy and corn while restoring 1.2 mn hectares of degraded lands, which would contribute to 55 mn tonnes of carbon emissions abated.
  • The Socio-Climate Benefits Fund is a new enterprise that will create a blueprint business model to restore Amazon forests by investing in agroforestry systems for smallholders. The initial program will reach 500 farmers, increasing smallholder incomes by up to 234% while creating lasting tree cover.

LOW-CARBON TRANSIT

  • Financing for Low-Carbon Auto Rickshaws is a facility to deploy more electric auto-rickshaws in Indian cities and provide better livelihoods for auto-rickshaw drivers, through a model that provides up to 100% debt financing at competitive rates, and opportunities for driver ownership. The instrument aims to reach 9,000 auto-rickshaw drivers, mobilizing US$ 33 mn of investment and avoiding 330,000 tons of carbon emissions over 10 years.
  • The Battery Subscription Facility is an electric bus battery financing mechanism that reduces the ownership cost of electric buses to compete with CNG and diesel buses. The Facility is currently working with corporate bus clients in India. If it captures just 4% of the corporate bus market in India, it will reduce electric bus ownership costs to 16% cheaper levels than diesel bus costs while avoiding 250,000 tons of carbon emissions over 10 years.
  • Pay-As-You-Save for Clean Transport reduces the upfront cost of electric vehicles, starting with transit buses, by harnessing a utility’s capacity to invest in on-board batteries and recover its cost as a service charge. In the cities that implement it, the mechanism can lower costs of rapid transit, while completely eliminating tailpipe emissions from transit buses.

More information on each instruments, including short videos and fact sheets, are available at www.ClimateFinanceLab.org.