Notice

Climate Finance Accelerator

Updated 16 May 2024

The Climate Finance Accelerator (CFA) is a £12.6 million technical assistance programme funded by International Climate Finance (ICF), through the UK government’s Department for Energy Security and Net Zero (DESNZ).

The CFA is part of the UK’s efforts to support climate action at scale by providing practical ways to help governments in emerging economies finance and deliver their climate commitments under the Paris Agreement, including their national climate plans and Nationally Determined Contributions (NDCs).

By bringing together project developers, finance providers (including experts from the City of London) and policymakers, the CFA seeks to enable a collaborative approach to unlocking a steady flow of funding for climate projects at scale and create a pipeline of ‘investment ready’ low carbon projects, thereby strengthening countries’ ambitions to limit global warming to 1.5°C. Co-benefits from the programme include improved gender equality and social inclusion and building resilience to climate impacts.

Participating countries

The former Department for Business, Energy and Industrial Strategy (BEIS) funded three pilot activities to test the CFA approach, which took place between 2017 and 2020, and involved Nigeria, Colombia, and Mexico. These confirmed demand for the CFA and informed the decision to scale-up the concept into the current £12.6 million ICF programme, being delivered over four-years from 2020-24.

The programme has operated in ten countries:

• Colombia
• Egypt
• Mexico
• Nigeria
• Pakistan
• Peru
• South Africa
• Türkiye
• Uganda
• Vietnam

The programme is being delivered by in-country local delivery partners, part of an alliance led by PwC, with support from Ricardo, and several in-country partners. Delivery is overseen by a Steering Committee, convening external experts from across the global finance community.

At COP28, the UK Government announced an additional £40 million to extend the CFA programme for a five five-years, until 2029. This will support at least 800 low carbon projects in 16 countries across Asia, Latin America, and Africa.

The challenge

Climate mitigation projects in emerging economies face several challenges in accessing funding at scale:

• project proposals may not be ‘investment-ready’
• there is low visibility of available low carbon investment opportunities among the investment community
• there may be policy and regulatory barriers
• an improved understanding of project finance, blended finance opportunities, and low-carbon technologies may also be required

The CFA Process

The CFA in-country process comprises of three phases of activities:

1. Scoping phase

This phase includes stakeholder mapping and mapping of the context, priorities, and climate finance ecosystem in the country to identify the key barriers to a fully functioning climate finance supply chain.

2. Core CFA process

A call for proposals is run to identify low carbon projects that are of interest to investors, and considered financeable. The projects should also deliver co-benefits such as poverty reduction, improved gender equality, and building resilience to climate impacts.

Capacity building is undertaken with these project developers so that they can meaningfully engage with financial experts.

In-country workshops and events connect project developers with potential local investors and policymakers. These activities showcase projects to potential investors and identify measures that could reduce the blockages that prevent the mobilisation of climate finance.

As of March 2024, the current phase of CFA has provided over 180 projects with specific tailored financial, technical, climate and environment, and gender equality and social inclusion support.  The first 30 projects have progressed to close deals with investors, mobilising over $330m in climate finance.

3. Ongoing activities

CFA works to develop an ongoing, locally embedded, CFA process to facilitate the continued identification and development of low carbon projects and bring them forward for consideration by potential finance providers. The process is country-driven, determined by the nature of the climate finance landscape in each country and will take different forms depending on demand. In all cases, a business plan for the ongoing process will be created that will allow it to continue to operate once CFA programme support has ceased.

Regional and global events are being held to give CFA projects access to regional and international investors:

• In March 2023 project developers from Colombia, Mexico, Pakistan, South Africa and Türkiye came to London for a four-day event where they met with finance professionals from the City of London. This enabled project developers to benefit from the world-leading expertise of the City of London and exposed participants to the requirements and priorities of international capital markets. The event also helped London-based institutions to recognise investment opportunities in CFA-participant countries, helping them to better understand those markets.
• In March 2024, the Latin America Investment event showcased some of the most promising CFA projects from Colombia, Mexico and Peru to investors, policy makers, civil society organisations and project developers.

Finally, lessons learned throughout the CFA process are captured and shared with interested stakeholders.

Knowledge products

Knowledge products, including case studies, lessons learnt reports, and policy reports are regularly developed and disseminated. Examples include:

• Gaps in the climate finance investment chain: early findings from the CFA on what climate projects need to progress, and what they are missing, including tangible guidance on where resources should be focused to accelerate financing for climate mitigation over the next decade
• The London event summary report: listing the projects that took part, insights from investors, and lessons learnt
• Climate Finance Landscape summary reports: providing an overview of each country’s climate finance landscape, an analysis of climate finance demand and supply, and recommendations to inform the CFA’s approach
• Climate Finance Accelerator Evaluation Mid-term report: evaluating the performance of the Climate Finance Accelerator programme

Further information

Please see the CFA Dev Tracker page and LinkedIn page.