Climate Investment Funds Monitor 13

13 June 2016

Credit: Flickr Lollie-Pop

Read a pdf version of CIFs Monitor 13

The future of the CIFs

The November 2015 joint Clean Technology Fund (CTF) – Strategic Climate Fund (CTF) trust fund committee meeting discussed a late October paper, Climate Investment Funds: an assessment of its accomplishments, transformational impact, and additionality in the climate finance architecture, written in response to a request by the joint committee in the May meeting (see CIFs Monitor 12). It follows the recommendation of the 2014 independent evaluation of the CIFs to consider the CIFs’ ‘sunset clause’, which requires the CIFs to close once a new climate finance architecture is effective (see CIFs Monitor 10), and builds on the discussion in the November 2014 CTF-SCF joint committee meeting on models for the future operations of the CIFs (see CIFs Monitor 11).

In response to the paper, the November joint meeting stated that it recognised “the unique features of the CIF business model to pilot approaches and learn lessons for delivering climate finance at scale in developing countries through the MDBs … to achieve transformative results in developing countries.” It reaffirmed the principles for a guiding framework to discuss the future operations of the CIFs, as agreed in the November 2014 meeting:

  1. “Supporting the continuity of climate finance flows and actions on the ground and reducing funding gaps in the CIF operations in the near term;
  2. Progressively taking measures to strengthen complementarity, coordination and cooperation within the climate finance architecture;
  3. Focusing on knowledge management and sharing of lessons learned;
  4. Enhancing the programmatic approach and leverage of funds; and
  5. Continuing to deliver strong value for money in terms of economy, efficiency and effectiveness of CIF operations and investments on the ground.”

In conclusion, the November meeting called on the CIF Administrative Unit to consult with participating countries and observers, and collaborate with the MDBs to conduct a “more detailed and focused gap analysis”, that takes into account “future opportunities, and also starts to explore roles each CIF programme could play based on its comparative advantage and value added”, to be discussed in the following meeting. It asked for the analysis to draw on “a rigorous assessment of how the CIF programmes have and could continue to deliver wider transformational and systematic change … as well as how the CIF may need to evolve over time to fulfil that role”. It called for the analysis to include:

  • “exploration of new opportunities, in terms of financial instruments and delivery mechanisms, technologies, sectors, and sources of funding; and
  • exploration of institutional and governance reforms necessary for the CIF to realise its potential role in an efficient and effective manner.”

The resulting gap analysis, conducted by US-based think tank the Climate Policy Initiative and released in late May, assessed “if and where the CIF business model adds value in the landscape and whether the CIF holds a comparative advantage in supporting climate-relevant investment needs”. The analysis highlighted the CIF’s model and “distinctive role in the climate finance landscape and in tackling investment barriers”, including the “unique” MDB partnership, the scale of concessional finance provided, the CIFs’ risk appetite, range of financial instruments and push for private sector investment. It concluded that the CIF “is well-suited to support some of the most urgent climate investment needs going forward.” The paper’s recommendations included that the CIFs continue to operate, in order to “maintain momentum on climate action”, and for the CIFs to “pursue concrete opportunities to work in a complementary manner with the GCF [Green Climate Fund].” In light of the CIFs’ resource constraints, it proposed that CIF pilot countries and MDBs could request funds from the GCF for projects and concepts developed under CIF investment plans, creating a “win-win scenario.”

Building on the gap analysis, the paper Strategic directions for the Climate Investment Funds was released in late May for discussion during the joint committee meeting in June. According to the paper, which includes analysis and proposed ways forward for the CIFs, the CIFs have “played a pivotal role in helping to increase the volume of climate investment going to developing and emerging economies, and has been instrumental in financing projects that would not have taken place otherwise.” Moreover, it stated that “the CIF is the largest source of concessional finance approved to date”, and that in the MDBs quest to scale up their own climate finance by 2020 they are likely to 2require a “higher share of external concessional climate finance to total climate finance” due to the anticipated nature of the sectors needing funding, as well as increased demand.

Moreover, the paper compared the CIFs with the GCF, noting structural and temporal differences, with the latter referring to start-up and implementation experiences to date. It raised concerns as to whether the GCF “will be able to deliver the scale and type of support recipient countries need to achieve transformational change in the short to medium terms, a critical temporal juncture for global climate action.” In light of this, the paper recommended that the CIFs continue operations “in order to maintain and scale-up the momentum on climate action, bearing in mind the existing investment needs and the additional gaps that may arise in a ‘no-CIF’ scenario.”

On the Clean Technology Fund (CTF), depending on available funding, it noted an opportunity “to expand investments into frontier areas”, such as energy storage and sustainable transport, to accelerate market development. For the Strategic Climate Fund (SCF) – the Pilot Program for Climate Resilience (PPCR), Forest Investment Program (FIP), and the Scaling Up Renewable Energy in Low Income Countries Program (SREP) – it noted “demand to fund the implementation of programmatic investment plans” of new pilot countries, as well as opportunities to launch new private sector windows, should funding become available.

In conclusion, the paper recommended that the June meeting “agrees on the need to support the continuity of climate finance flows at scale in the near term”, and for the CIFs to continue to monitor the developments in the international finance architecture in order “to make a decision on the sunset clause and, in particular, as to if and when the trustee should stop receiving new contributions”, with a timeline to be agreed in the meeting. It also called on the CIF Administrative Unit to “explore ways to enhance cooperation with the other entities and mechanisms in the climate finance architecture, in particular the Green Climate Fund.”

Commenting on the strategic directions paper, Liane Schalatek of German political foundation Heinrich Böll noted that “the paper seems to look more at the effectiveness of the CIFs in distributing concessional finance via the MDBs than at the effectiveness of the CIFs as climate funds and thus only provides a self-serving financial justification for continued operation by suggestion to further postpone a decision on activating the sunset now. Specifically, the paper (and the CIFs) has not shown that the CIFs have the capacity to fundamentally shift the portfolio approach of the MDBs engaging in the CIFs. If anything, they have served more as green-washing efforts with some ‘clean energy’ add-on for an MDB approach still largely under ‘business-as-usual’ with respect to energy/transport/resource exploitation, etc. Tellingly, the CIF are missing accountability intent and such a mechanism for the transformational shift of the MDBs away from fossil fuels and toward mainstreaming climate into the MDBs development operations. In contrast, in collaborating with the GCF, the MDBs, which are now accredited entities under the GCF, have to show under the monitoring and accountability framework of the GCF that they have succeeded in shifting their portfolio away from climate-damaging activities as a requirement for re-accreditation after five years, with a baseline to be established now against which such progress has to be measured. Moreover, the paper is not honest about the fact that any continued support for the CIF is at the cost of funding support for the GCF and other climate funds under the UNFCCC and as part of the financial mechanism tasked with implementing pre-2020 ambition and then the Paris Agreement. Continued funding for the CIFs is not additional to required financing under the UNFCCC financial mechanism.” Schalatek concluded: “For these, and many more reasons, the sunset clause needs to be activated now by the CIF trust fund committees with a clear and unambiguous message that the CIFs will not seek nor accept any further contributions.”

CIF resource shortfall

The CIFs are facing a resource shortfall, which led the G24 in mid April to call for “the urgent replenishment of the Climate Investments Funds”. Moreover, the addition of 25 new pilot countries in 2015 alone has added to the financial strain, and the new countries have been asked to also seek funding elsewhere. With a final contribution from the US expected in 2016, the CTF anticipates being able to cover projects until September 2016, but with all projects in the pipeline being considered there is an overall shortfall of $357 million. As a result reviews have been conducted to identify projects that can be dropped, and a cancellation policy is due to be discussed. The PPCR also lacks sufficient resources to finance the projects pending approval, with concerns being raised about uncertainty in particular for the 10 new pilot countries approved in May 2015. Nine out of 15 new countries approved under the FIP in May 2015 have not been allocated funding to develop their investment plans, and all countries are expected to also search for funds outside the CIFs. Similarly, the SREP does not have sufficient resources to finance all the new pilot countries’ investment plans. Both FIP and SREP are also strained in terms of finance available for grant resources, with a potential warning also regarding PPCR.

Graph 1: Total CIF funding pledged and allocated per fund (millions)

CIFs Monitor 13 Graph 1

Source: CTF, PPCR, FIP and SREP semi-annual reports, April 2016


Graph 2: Total number of projects and programmes approved per fund

CIFs Monitor 13 Graph 2

Source: CTF, PPCR, FIP and SREP semi-annual reports, April 2016


The portfolios of investment plans and projects approved in 2015 have been reviewed and compared to the baseline of 30 June 2014, to identify progress on gender “quality at entry”, with indicators regarding presence of: (i) sector-specific gender analysis; (ii) gender-disaggregated indicators; and (iii) women-specific activities. The review follows the 2014 approval of the CIF gender action plan, and an initial review for projects approved in 2014 (see CIFs Monitor 12). The plan focuses on mainstreaming gender in CIF policies and programme guidance and on enhancing knowledge, learning and technical support on gender.

According to the review, CTF performance on gender has improved, albeit from a baseline well below the other funds. Sector-specific gender analysis has almost doubled from 21 to 40 per cent. Likewise gender-disaggregated indicators at project level increased from 15 to 30 per cent. CTF projects with women-specific activities had made less progress, with an increase from 17 to 25 per cent. To make further progress, the CIF Gender Program will work to identify sector-specific good practices for CTF type investments, including through a gender and renewable energy study. Moreover, EBRD has analysed gender and energy efficiency, including gender assessments for Turkey, Ukraine and Kazakhstan. A toolkit drawing on the assessments, synthesising best practices and key entry points for gender in energy efficiency is expected to be finished by June 2016. The CIF Administrative Unit is also preparing a note on gender and employment in the renewable energy sector.

While PPCR’s project performance on all gender indicators has improved, its results were around average in comparison to the SCF as a whole. Sector-specific gender analysis was undertaken in 88 per cent of the projects, compared to the SCF average of 85 per cent. Gender-disaggregated indicators were also present in 88 per cent of projects, compared to the average of 71 per cent. At 75 per cent, the women-specific activities were slightly below the SCF average of 77 per cent.

FIP fell below the average SCF performance for all three indicators. Sector-specific gender analysis was only undertaken in 67 per cent of approved projects. Gender-disaggregated indicators at project level were present in no more than 50 per cent of projects and women-specific activities were noted for 67 per cent of projects. To improve progress, the FIP Monitoring and Reporting Toolkit will be revised to include gender-disaggregated results for relevant indicators. Under FIP’s Dedicated Grant Mechanism for Indigenous Peoples and Local Communities (DGM) in Peru, $500,000 of project funds have been set aside for subprojects proposed or managed by women. In Burkina Faso, females represent 40 per cent of targeted beneficiaries and 20 per cent of training for forest users in improved practices will be women.

SREP is the top performer in terms of gender within the CIFs, with all investment plans endorsed in 2015 including sector-specific gender analysis and gender-disaggregated indicators, and all but one including planned women-specific activities. Moreover, all approved projects had undertaken sector-specific gender analysis. Gender-disaggregated indicators were present in 75 per cent of projects and 88 per cent of projects had planned specific activities aimed at women, all above average for the SCF. The April SREP semi-annual operational report noted that SREP includes a range of gender design elements, and that the development of SREP investment plans also benefited from technical support from the CIF Administrative Unit. It concluded that “explicit SREP investment criteria on gender and required gender-sensitive reporting continue to help drive the positive results in quality of SREP project responsiveness to gender considerations.”

The June joint trust fund committee meeting will discuss a document outlining the second phase of the CIF gender action plan. Phase 2 will introduce gender guidance notes on investment plan preparation, and also include targeted technical support and capacity-building. Moreover, analytical work will continue, including a study on gender and renewable energy. According to the FY17 CIF business plan and budget the CIF gender programme will also work with the stakeholder engagement team “to provide guidance on good practice in gender-responsive stakeholder engagement, including good practice for CIF governance.”

Update on the Green Climate Fund (GCF)

The 11th GCF board meeting was held in Zambia in November 2015. Under pressure to demonstrate progress ahead of the December Paris UNFCCC Conference of Parties, this meeting marked the first time that the GCF approved project proposals. Out of 37 funding proposals received from public and private entities, the board approved eight, totalling $168 million. The approved projects include two private sector mitigation projects – one focused on energy access in East Africa and one on energy efficiency green bonds in Latin America and the Caribbean – and six public sector projects, four of which focus on adaptation. Concerns were raised about the attainment of Free, Prior and Informed Consent of Indigenous Peoples for a Peruvian wetlands project. The project’s approval was consequently made conditional on steps to ensure that the project “is only implemented in the territories of the indigenous organisations that have provided their clear consent to the project.”

To help increase capacity of the developing country national institutions, the board initiated a project preparation facility for the development of project pipelines and approved an additional $14 million to help the institutions become ready to access and utilise GCF funding. This followed concerns, expressed especially by developing country board members, about the slow pace of disbursement of readiness funds.

The 12th GCF board meeting took place in mid-March in Songdo, South Korea. With the approval of a strategic plan and basics like a risk register, a comprehensive information disclosure policy and increased funds to help prepare developing countries for work with the GCF, this board meeting aimed to establish the infrastructure for approving funding proposals worth an aspirational $2.5 billion at the three remaining meetings this year.

The board accredited 13 institutions, including HSBC and Crédit Agricole, despite strong objections from civil society. Civil society protested that scarce public resources should be directed toward those most in need, not giant banks, and in particular raised the banks’ records of financial scandal and of financing fossil fuels, as well as projects plagued by serious rights violations. Additionally, with the accreditation of the IFC, EIB, and AfDB, all MDBs are now official partners of the GCF. Consequently, civil society expressed concern that the vast majority of the GCF’s current disbursement potential lies with international entities and reiterated the need for the GCF to prioritise direct access by developing country entities to GCF funds.

Civil society forced a robust debate amongst the board with regard to the ramifications of the accreditation of large international multilateral development and private banks. This ultimately resulted in a decision taken that the GCF must track the shift toward low-carbon, climate resilient development in the overall portfolios of accredited institutions. This will be taken into account when the institutions come up for re-accreditation, a process that civil society will closely monitor to ensure it is carried out in an effective way. The board also approved a significant increase in staffing for the GCF secretariat, which built upon the news that GCF’s executive director will be stepping down at the end of her term.

The 13th meeting of the board will be held in Songdo, 28-30 June 2016. Agenda items will include approval of new funding proposals, moving forward on an accreditation strategy, and the appointments of a new executive director and the heads of the independent accountability units. As countries, including the US and UK, have dropped their objections, real-time webcasting of the board meeting will be available for the first time.

Climate Investment Funds (CIFs) explained

The World Bank-housed Climate Investment Funds (CIFs) are financing instruments designed to pilot low-carbon and climate-resilient development through multilateral development banks (MDBs). They comprise two trust funds – the Clean Technology Fund (CTF) and the Strategic Climate Fund (SCF). The SCF is an overarching fund aimed at piloting new development approaches. It consists of three targeted programmes: Pilot Program for Climate Resilience (PPCR), Forest Investment Program (FIP) and Scaling up Renewable Energy Program in Low Income Countries (SREP).

The CIFs operate in 72 countries worldwide. As of end December 2015, donors had pledged a total of $8.3 billion to the CIFs: $5.6 billion to the CTF and $2.7 billion to the SCF ($1.2 billion for PPCR, $775 million for FIP and $787 million for SREP). Projects are executed by MDBs: the African Development Bank (AfDB); the Asian Development Bank (ADB); the European Bank for Reconstruction and Development (EBRD); the Inter-American Development Bank (IDB); the World Bank’s middle income arm, the International Bank for Reconstruction and Development (IBRD); and the World Bank’s private sector arm, the International Finance Corporation (IFC).

Under the ‘sunset clause’ the CIFs are due to close once a new climate finance architecture is effective under the United Nations Framework Convention on Climate Change (UNFCCC), through a mechanism such as the Green Climate Fund (GCF).