Case study

The Climate Investment Funds (CIFs)

How the Climate Investment Funds (CIFs) are providing finance to support developing and emerging economies.

Picture: Rafiqur Rahman Raqu/DFID
Picture: Rafiqur Rahman Raqu/DFID

Background

Established in 2008, the CIFs are a set of World Bank managed trust funds implemented through 5 multilateral development banks and funded by a group of 14 donors - Australia, Canada, Denmark, France, Germany, Japan, Korea, Netherlands, Norway, Spain, Switzerland, Sweden, US, and UK.

They were established to fill a gap in the international climate finance architecture to provide scaled-up finance to support developing and emerging economies in adopting low-carbon and climate resilient development; unlock private investment; pilot approaches and learn lessons for the international community on new approaches and technologies; and achieve transformative results in developing countries.

As of 30 June 2016, the CIFs had received approximately $8.3 billion (more than £6 billion) in pledges and contributions to support large-scale, high impact investments in renewable energy, energy efficiency, sustainable transport, climate resilience, and sustainable forest management in 72 pilot countries.

Theme

The CIFs consist of 4 programmes:

  • The Clean Technology Fund (CTF)
  • The Scaling Up Renewable Energy in Low Income Countries Programme (SREP)
  • Forest Investment Programme (FIP)
  • Pilot Programme for Climate Resilience (PPCR)

The Clean Technology Fund and the Scaling-Up Renewable Energy in Low Income Countries Programme focus on energy access and creating opportunities for economic development through the use of renewable energy. The Pilot Programme for Climate Resilience supports developing countries in improving their ability to adapt to climate change, while the Forests Investment Programme covers mitigation and adaptation activities across its portfolio, through reducing emissions from deforestation and forest degradation and the promotion of sustainable forest management. As a predecessor to the Green Climate Fund, the CIFs also play an important role in developing and disseminating knowledge regarding the experiences of pilot countries in implementing their investment plans.

What is being done?

The UK’s Department for Business, Energy & Industrial Strategy (BEIS) and the Department for International Development (DFID) have contributed over approximately £2 billion since 2008, alongside pledges from other donor countries totalling $8.3bn.

  • The CTF is working in 15 countries and 1 region and has funded a Dedicated Private Sector Programme. It aims to drive down technology costs, stimulate private sector participation, and catalyse transformative change that can be replicated elsewhere. Over 35% of total endorsed funding goes to private sector projects and programmes and over one third of total co-financing is from the private sector.
  • SREP, now working in 27 countries was established to scale up the deployment of renewable energy solutions to increase energy access and economic opportunities in low income countries. SREP financing aims to pilot and demonstrate the economic, social, and environmental viability of low carbon development pathways building on national policies and existing energy initiatives.
  • FIP, now working in 23 countries, has received pledges of $746 million (around £553 million) to support developing countries’ efforts to reduce emissions from deforestation and forest degradation and promote sustainable forest management and enhancement of forest carbon stocks (in furtherance of REDD+). A portion of FIP funding, $80 million (around £54 million), is earmarked for a programme unique to the FIP: the Dedicated Grant Mechanism for Indigenous Peoples and Local Communities (DGM), the largest global REDD+ initiative created solely for and by indigenous peoples and local communities.
  • PPCR, now working in 28 countries and 2 regions, supports countries to strengthen institutional and stakeholder capacity to effectively mainstream climate resilience into development planning. It then provides funding to pilot investments to address pressing climate-related risks, in sectors including agriculture and landscape management, water resources management and infrastructure. The PPCR is the largest adaptation fund in the world, with $1.2 billion (around £863 million) pledged. Expected results for the different CIFs programmes
  • CTF: As of June 2016, $5.8 billion of CTF funding had been allocated to projects and programmes. Over its lifetime, the CTF portfolio is projected to deliver emissions reductions of approximately 1.5 billion tonnes of carbon dioxide equivalent (tCO2e) – the equivalent of taking 315 million cars off the road, $45 billion of co-financing and 22 GW of renewable energy.
  • SREP funding of $ 839 (around £622 million) for 69 projects and programmes expects $6.2 billion (around £4.6 billion) in co-financing. If fully realised, SREP investment plans present substantial gains in renewable energy capacity, with 1.7 Gigawatts (GW) new installed capacity expected through on-grid and off-grid projects. The SREP expected contribution to electrification is also significant, with new or improved access for 17.3 million people. In Liberia, the implementation of the SREP programme will benefit 9% of the population. This will have substantial impact in a country with arguably the world’s lowest rate of access to electricity, at 1.6% nationwide.
  • FIP has endorsed a total of $603 million (£447 million) of project funding covering 51 projects with expected $985 million (£730 million) co-financing from various sources. FIP projects are still at an early stage of implementation, but have already generated results and showing good progress across the portfolio. For example in 2015 actual results were reported on GHG emission reductions from DRC, good progress was shown in Ghana on Climate Smart Agriculture and Mexico reported results on biodiversity achievements – focusing on the reduction of forest loss. In terms of governance, Lao PDR reported progress on forest law enforcement and on strengthening related decision-making processes. Good progress has also been noted on tenure rights and access across several of the countries in the portfolio. In Ghana, FIP promoted an innovative ‘tree tenure’ approach, linked to Climate Smart Agriculture, which especially benefits women . Capacity building and credit provision to Community Forest Enterprises were other areas of good achievements in Mexico in particular. In the global FIP portfolio, about 40% of the livelihood co-beneficiaries reported in 2015 were women.
  • The $1.2 billion Pilot Program for Climate Resilience (PPCR) assists national governments in integrating climate resilience into development planning across sectors and stakeholder groups. Second, it provides additional funding to put the plan into action and pilot innovative public and private sector solutions to pressing climate-related risks. As of 30 Jun 2016, a total of approximately $1.1 billion (£815 million) has been endorsed covering 73 projects and is expected to leverage around $2 billion from different sources. The PPCR is projected to support 39.6 million people to cope with the adverse effects of climate change over the lifetime of the implementation of 44 already approved projects. Of these beneficiaries, an estimated 50.2 percent are women. As of December 2015, more than 2.8 million people (7%) in which almost 1.39 million (49.8%) of them been women, have been directly supported by 22 PPCR projects under implementation. For example:

    • in Zambia, increased floods and droughts make life difficult along the Kafue and Barotse sub basins of the Zambezi River. Rural populations depend on rain-fed agriculture and natural resource based livelihoods. Zambia’s strategic program for climate resilience, allocated PPCR $91 million, aims at reducing the negative impacts of climate and environmental hazards on agriculture. One key way will be to provide reliable and timely weather and climate information to farming communities in local languages.

CIFs home page

Published 4 January 2016