- Selected ideas will tackle investment barriers in key sectors across Africa, Asia and Latin America
- Since 2014, the Lab has incubated 49 ideas that have mobilized USD 2.4 billion to date
LONDON – The Global Innovation Lab for Climate Finance (the Lab) has selected six new climate finance ideas for its 2021 acceleration program. In the 7th year of its annual competition, this Lab class of instruments will address barriers that can unlock investment to sustainable development challenges and opportunities for a post-COVID, green economic recovery. For 2021, the Lab chose one idea for each of its thematic streams: food systems, energy access and cities, two for its Brazil program and one for its Southern Africa program.
This year’s six selected ideas will now undergo a 7-month period of analysis, stress-testing, development, and preparation for launch later this year. Winning ideas will receive guidance and support from high-level leaders from the public and private sectors, who contribute their expertise, political capital, and financial capital to the instruments.
The Lab is an investor-led initiative that identifies, develops, and launches promising solutions to drive critical public and private investment to action on climate change in developing economies. Each year, the Lab competition selects promising, early-stage ideas for sustainable investment and rapidly develops these ideas into fundable, scalable investments and business models.
Since its inception in 2014, the Lab has become a leader in accelerating investment where it is needed most, having launched 49 finance instruments that have already mobilized USD 2.4 billion for concrete projects in emerging economies. This includes USD 370 million invested by Lab members—who include over 70 institutions in government, development finance, philanthropy, and the private sector—as well as USD 2 billion from additional investors.
Lab members chose the 2021 class of ideas out of a highly competitive shortlist of 13 finalists, narrowed from a field of more than 160 initial proposals submitted by leading development finance institutions, global NGOs, prominent project developers, asset managers and financial services firms, and entrepreneurs.
Sustainable Food Systems
The Smallholder Resilience Fund (SRF) deploys ‘synchronized investments’ to SMEs across entire value chains of high-value, climate-friendly crops allowing them to manage larger volumes. This equips smallholders to achieve higher incomes, greater climate resilience, and carbon sequestration. Investments will be de-risked and accelerated via support and capacity-building from the One Acre Fund. SRF will initially target Kenya and Rwanda to prove the concept.
Sustainable Energy Access
Data-Driven Energy Access for Africa expands lending for renewable energy while reducing lending portfolio risk by using data-driven technology to better assess end-user credit risk. The technology allows for segmented pooling of loans to better match lender risk appetite and replace physical assets with cash flow as collateral. The proponent, Nithio, is looking to pilot the instrument in several African economies, with potential to scale the model in other regions.
Sustainable Urbanization for West Africa aims to scale up climate infrastructure investment in West African cities. The instrument is a unique blended-currency fund vehicle with credit enhancements and will refinance initial USD equity with local-currency debt after projects are operational to offer stable long-term returns to institutional investors, recycling the equity into new project development. The proponent ARM Harith has a USD 100 million pilot is planned for Nigeria.
Amazonia Sustainable Supply Chainsprovides upfront finance for input providers in sustainable value chains in the Brazilian Amazon, based on offtake agreements. The idea was submitted by Maua Capital.
Guarantee Fund for Biogas Projects is a fund to provide financial guarantees required by private and public banks for biogas projects. It’s the first guarantee mechanism to support investments needed to expand biogas projects in Brazil. The idea was submitted by the Brazilian Biogas Association (ABiogás).
Southern African Program
P-REC Aggregation Fund will aggregate Peace Renewable Energy Credits (P-RECs) and sell them to investors to provide equity capital for renewable energy projects in conflict-affected regions. The idea was submitted by Energy Peace Partners (EPP).
Lab Member Gustavo Fontenele of Brazil’s Ministry of Economy said: “The Lab, as we see it, is a crucial institution for developing new financial instruments that address climate and sustainability challenges in the country. The Ministry of the Economy of Brazil expects the instruments selected today to contribute to attracting private resources to foster a green sustainable economic recovery after the COVID-19 pandemic. The exceptional work the Lab performs helps expand Brazil’s engagement of stakeholders towards achieving our NDCs.”
Lab Member Kerstin Jonsson Cissé of the Swedish International Development Cooperation Agency (Sida) said: “As the newest member of the Lab, we are inspired by how much it’s already accomplished. The Lab is an ideal partnership for Sida in our strategic objective to create opportunities for better living conditions for people living in poverty. Especially, those to tackle the disruption of food systems due to extreme weather events, one of the climate change outcomes that hit vulnerable communities the hardest.”
Lab Member Kome Johnson-Azuara of the African Finance Corporation said: “The Lab program has been a powerful catalyst for entrepreneurs to provide sustainable finance solutions to help address Africa’s infrastructure deficit and challenging operating environment. Four out of the six new projects to come out of the Lab are anchored by pilots planned in Sub-Saharan African countries. It shows that entrepreneurs and investors are ready to pursue low-carbon and climate-resilient opportunities on the continent. AFC is delighted to be collaborating with the Lab on initiatives to support Africa’s sustainable development.”
Lab Member Marnix Segers of the Dutch Ministry of Foreign Affairs noted: “The first Lab class selected under COVID-19 presents an innovative set of solutions to address not only climate change but the economic effects of the pandemic. Now in its seventh year, the Lab once again shows creativity to adapt to new circumstances, thus tackling two simultaneous global emergencies still far from being solved.”
Lab Member Susan Krohn of the German Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) remarked: “The Lab is an ambitious, collaborative group of organizations making measurable impact and mobilizing the private sector to engage in climate change action. Successfully combating climate change requires powerful alliances between the public and private sector that foster ambitious and innovative ideas. In this light, we are excited to support the Lab’s latest round of promising financial instruments.”
Stefanie Fairholme of the Rockefeller Foundation stated: “The Rockefeller Foundation is committed to supporting sustainable, equitable development where it is needed most by unlocking private capital for impact at scale, especially in the area of reliable, renewable energy access for all. The Lab’s track record of bridging this investment gap is impressive, and its contribution to closing the global energy access gap through innovative approaches is more critical now than ever. We are eager to see this work continue and for this year’s selected ideas to come to fruition.”
Dr. Barbara Buchner, Global Managing Director of Climate Policy Initiative, the Lab’s secretariat, said: “The 2021 class put the Lab over the 50th instrument mark and closer to mobilizing USD 3 billion in sustainable finance in emerging markets. We’re proud to look back at what we’ve accomplished but our drive is looking forward to enabling a true transition as the world recovers from the pandemic. The new Lab class presents a set of innovative instruments capable of driving private resources to rebuild an inclusive, sustainable, and resilient economy.”
Seven additional ideas made it to the finalist stage of the Lab. They are:
- Africa Conservancies Fund – Conservation International
- Asia Aquaculture Facility (AAF) – ADM Capital, IDH & Alune Aquaculture
- Blended Finance Solutions for Effective Conservation of Marine Biodiversity – Blue Finance
- Latin American Low-Emission Mass Transit Finance Facility – iGravity
- Lease-to-own Solar for Health Clinics – Differ Community Power
- Marajó Bio-Factories Fund and Regenerative Ag Facilities – Awí Superfoods
- Regea – Strategic Optimised Restoration at Scale – Regea, Lanx Capital & Positive Ventures
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. The Lab is funded by the Bloomberg Philanthropies, the German Federal Ministry for the Environment, Nature Conservation, and Nuclear Safety (BMU), the Netherlands Ministry for Foreign Affairs, The Rockefeller Foundation, The Swedish International Development Cooperation Agency (SIDA), and the UK Department for Business, Energy & Industrial Strategy. Climate Policy Initiative serves as Secretariat.
Rob Kahn, Communications Manager, the Global Innovation Lab for Climate Finance
Climate Policy Initiative
Júlio Lubianco, Communications Associate, the Global Innovation Lab for Climate Finance
Climate Policy Initiative
+55 21 96463-7061