Climate Finance | March 5, 2019

The Lab: A half-dozen ways to accelerate capital for climate action

David Bank
ImpactAlpha Editor

David Bank

ImpactAlpha, March 5 – Ideas for climate-financing structures selected by the Global Innovation Lab for Climate Finance in San Francisco need not be altogether new, just good.

The Lab wants to “move the needle on climate change and shift global investment trends,” program manager Ben Broche told ImpactAlpha. “Whether that happens through a complex wonky project or something that just hasn’t been tried before in a given sector or region, that’s the goal.”

The Lab’s selections for 2019:

  • Sustainable cities. Credit enhancement from the International Finance Corp. would help cities in southeast Asia float Breathe Better Bonds to pay for air-pollution reducing projects…. To help cities replace air-conditioning cooling technologies that use climate-busting HFC gases, the Basel Agency for Sustainable Energy and the Kigali Cooling Efficiency Program would offer “Cooling as a Service” in which customers can pay per unit of cooling.
  • Blue Carbon. Conservation International’s Restoration Insurance Service Company for Coastal Risk Reduction, or RISCO, would help coastal property owners in the Philippines finance mangrove restoration through insurance-premium savings generated by reduced property risk. The idea borrows from a reef restoration project on the Mexican Riviera (see,A reef off of Mexico is getting its own insurance policy).
  • Energy access. About $2 billion in U.S. solar project receivables were securitized last year, freeing up capital for further deployment. The Development Bank of Rwanda is developing Solar Securitization for Rwanda to advance the country’s goal of 100% energy access by 2024.
  • Smallholder resilience. Farmers in west Africa would get automatic payouts when extreme weather events damage crops, through smart contracts developed by Blockchain Climate Risk Crop Insurance… Other west African farmers would get technical assistance and subsidized loans and guarantees under the The West African Initiative for Climate Smart Agriculture.

Since 2015, the 35 projects nurtured by The Lab have mobilized $1.4 billion in additional capital. This year’s call attracted more than 250 proposals, double last year’s response. The projects will be marched through a six-month process of analysis, stress-testing and development in order to launch later this year.

“We want to know how they will take concessional capital, phase it out, bring in commercial capital and reach scale,” Broche said.