Selected Ideas and Finalists for 2019

The Global Innovation Lab for Climate Finance has selected six innovative sustainable investment ideas to take forward for development in 2019. Lab Members chose the six new ideas out of a highly competitive shortlist of 12 finalists, narrowed from a record high number of 250 proposals submitted by leading development finance institutions, global NGOs, entrepreneurs, and others.

Each year, Lab ideas represent the latest and greatest in sustainable investment. The 35 businesses that have gone through the Lab’s previous cycles have mobilized over $1.4 billion since 2015. The new ideas target four areas where accelerated investment for climate adaptation and mitigation is urgent: sustainable cities, energy access, blue carbon in coastal & marine ecosystems, and sustainable agriculture.

SUSTAINABLE ENERGY ACCESS

Sustainable Development Goal 7 aims to ensure affordable, reliable and modern energy for all by 2030. However, more than 1.2 billion people currently live without access to reliable electricity.

Significant investment is needed in order to close the gap, and achieve universal energy access by 2030, though CPI research has found that there are relatively few blended finance initiatives that focus on distributed and off-grid electricity generation. There is a key need to identify, develop, and scale financial solutions that enable private sector capital to flow into energy access investments, including solutions for distributed generation, off-grid, and “last-mile” grid connection, thereby creating a viable market for generating and delivering energy to the developing world.

With additional support from The Rockefeller Foundation, the Lab’s energy access stream aims to accelerate innovative financial instruments that can address market barriers and support the scale-up of sustainable energy access for both residential and business application. These sustainable finance vehicles will offer returns for investors, while reducing emissions, supporting improved livelihoods and access to education and opportunities, and reducing negative health impacts associated with carbon-intensive forms of energy production.

SUSTAINABLE AGRICULTURE FOR SMALLHOLDERS

With support from the International Fund for Agricultural Development, the Lab is accelerating innovative and transformative financial instruments to mobilize climate investment to benefit smallholders and rural economies in West and Central Africa.

Countries in Sub Saharan Africa remain among the most vulnerable in the world to the impacts of climate change, which are already a major cause of out-migration and poverty across West and Central Africa. Here, climate impacts on agriculture, which employs 60% of the workforce, will increase vulnerability and further threaten rural poverty, which is particularly acute among women and young people.

Key barriers to rural transformation and improved resilience in the region include a lack of land tenure, basic infrastructure, technology and knowledge, as well as insufficient access to well-organized markets and financial services, including credit and insurance.

Overcoming these barriers requires the development of new business models and approaches that are (1) attractive to the financial sector and (2) supportive of a paradigm shift toward low-emission, climate-resilient agriculture in a way that transforms the livelihoods of women and young people, and increases food security and nutrition.

SUSTAINABLE CITIES

Cities are critical players on climate change. More than half of the global population lives in cities, which consume over two-thirds of the world’s energy and account for more than 70 percent of global carbon emissions. And with 90 percent of the world’s urban areas situated on coastlines, cities are at high risk from climate change impacts such as sea level rise and extreme weather events.

For this reason, cities are on the front lines of climate action, making bold commitments around climate-resilient, low-carbon development pathways. To mobilize the finance needed to bring these commitments to fruition, policy-makers, the business community, philanthropic actors, and all classes of investors must work together to pilot, implement, and scale up sustainable investment models.

With the support of Bloomberg Philanthropies and other funders, the Lab aims to accelerate innovative financial instruments to address market barriers and support the deployment of climate solutions in cities in developing countries. The Lab’s cities stream works closely with The Global Covenant of Mayors for Climate & Energy, an international alliance of nearly 10,000 cities and local governments, throughout the Lab process.

BLUE CARBON IN COASTAL & MARINE ECOSYSTEMS

Blue carbon is the carbon stored by the world’s oceans and coastal ecosystems – primarily in mangroves, tidal marshes and seagrasses.  The focus is on the protection and restoration of these coastal ecosystems in recognition of their role in reducing the impacts of global climate change.

Healthy marine ecosystems support coastal water quality, healthy fisheries, secure livelihoods and provide coastal protection against floods and storms. When protected or restored, blue carbon ecosystems sequester and store carbon, contributing to global emissions reduction targets including Nationally Determined Contributions. Conversely, when degraded or lost, coastal blue carbon ecosystems can become significant emissions sources.

Marine coastal ecosystem restoration has to date been funded almost exclusively by limited public or philanthropic investment. New innovative approaches, which catalyze private sector investment in marine ecosystem conservation and restoration, will be crucial in achieving Sustainable Development Goal 14, and creating a viable market for blue carbon investment.

With support from Australia’s Department of Foreign Affairs & Trade and other funders, the Lab aims to accelerate innovative financing solutions to support climate mitigation and adaption in coastal ecosystems.

Winning Ideas

Cooling as a Service (CaaS)

An innovative pay-per-service model to decrease energy consumption and potent greenhouse HFC gas emissions from cooling systems in cities around the world, by increasing competitiveness of state-of-the-art technologies

The Breathe Better Bond

A debt instrument to drive finance at scale for reducing urban air pollution in emerging market cities, by enabling local governments to finance air pollution reduction projects that will result in significant future savings, for example through reduced healthcare costs and higher GDP

Restoration Insurance Service Company for Coastal Risk Reduction (RISCO)

An enterprise that restores and conserves mangrove habitats in vulnerable coastal areas, funded by cost savings from reduced insurance rate premiums for contracted coastal asset owners

Solar Securitization for Rwanda

Solar-asset backed securities to drive needed finance to accelerate Rwanda’s solar sector and make progress towards Rwanda’s goal of 100% energy access by 2024

Blockchain Climate Risk Crop Insurance

An automated weather-indexed crop insurance infrastructure that helps smallholder farmers in sub-Saharan Africa increase resilience to the impacts of climate change, via insurance that is transparent, affordable, and pays out quickly

The West African Initiative for Climate Smart Agriculture

An initiative to promote climate-smart agriculture and resilient supply chains in West Africa through grants for technical assistance and subsidized rate loans or guarantees for smallholder farmers

Finalist Ideas

Capital Markets Solutions for Urban Resiliency

A bond mechanism to drive critical investment to climate resilience infrastructure in cities in Latin America, which pools small cities and municipalities to finance climate resilient projects

Blue Carbon Resilience Credit

A hybrid blue carbon and resilience credit, where corporations seeking to offset their carbon footprint can buy credits to fund coastal restoration and conservation projects

Pact Global Solar Fund

A fund to expand access to energy and accelerate economic development in emerging markets by providing low-cost consumer and small business finance solutions for solar home systems and productive use equipment

MaliBuluu / MaliVerde

A large scale grant fund mechanism for climate adaptation and mitigation projects for smallholder farmers and fishers in African countries, which supports multiple community-managed revolving credit facilities for small-scale producers in land and seascapes

Clean Energy Bank for Smallholder Farmers

A micro-finance bank/facility to offtake smallholder produce in exchange for enhanced energy access via solar irrigation pumps, with additional financial incentives for tree planting

Cocoa Climate Resilience Fund

A fund to accelerate climate adaptation measures for smallholder farmers in the cocoa sector in West Africa, such as shading and crop diversification

Find out more

Read the full announcement

Lab Members, who include over 60 institutions in government, development finance, philanthropy, and the private sector, met to select the winning ideas.

Meet the previous Lab instruments

The Lab has incubated and launched 35 sustainable investment instruments since 2015, which to date have mobilized over $1.4 billion.

Find out how the Lab process works

The six new ideas will now move forward in the Lab’s 2019 cycle for analysis, stress-testing, development, and preparation for launch later this year.