WASHINGTON, D.C. – Today, the U.S. government announced USD 2 million to support the Global Innovation Lab for Climate Finance in developing new financial instruments and mechanisms to harness private investment in adaptation. The announcement is part of a longer list of new climate commitments and initiatives made public by The White House at COP27.
With the support of the U.S. Department of State, the Lab seeks proposals for innovative financial instruments and solutions that channel investment into building systemic climate resilience and responding to growing climate risk. There is critical to develop and scale a broad array of financial solutions – including project finance, insurance, bonds, and guarantees – that enable capital to flow to adaptation.
While adaptation investment is growing, it is far from what is needed. In 2019-2020, of the total USD 653 billion annually tracked to climate finance, USD 49 billion was committed to climate adaptation, a fraction of what is required to address accelerating climate risk.
“Scaling up investment in climate adaptation is critical to building global resilience to worsening climate impacts, as reflected in the importance of adaptation and resilience at COP27. There is an urgent need to create opportunities in developing economies that will attract public and private investment in adaptation,” said Ben Broché, head of the Lab program. “We are thrilled to see additional U.S. Government support for our work on the climate adaptation front.”
Submissions for the Lab’s 2023 adaptation program should focus on climate-stressed regions in developing countries and should identify how the proposed financing approach would address specific physical climate risks and overcome barriers to mobilizing finance for climate adaptation. Submissions should also include a plan to phase down public financial support while offering attractive risk-adjusted returns to investors, to scale private investment. Lastly, ideas should also demonstrate the potential to avoid maladaptation, support improved livelihoods, and strengthen the broader financial ecosystem in the implementation countries.
The deadline is December 26, 2022. An informational webinar on November 29th will cover the application process, the selection criteria, and the Lab process. Registrations are open here.
Since 2014, the Lab’s developed 11 adaptation instruments, such as the Climate Resilience and Adaptation Finance & Technology Transfer Facility (CRAFT), whose final closing reached USD 186 million of commitments. Renamed Lightsmith Climate Resilience, it is the first private equity fund to have focused on climate resilience and adaptation, investing in growth-stage technology companies that address the effects of climate change.
About the Lab
The Global Innovation Lab for Climate Finance identifies, develops, and launches innovative finance instruments that can drive billions in private investment to action on climate change and sustainable development. Climate Policy Initiative serves as Secretariat.
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