The Global Sub-National Climate Fund (SnCF)

About

Overview
The Global Sub-National Climate Fund (SnCF) creates a blended investment vehicle that significantly increases the flow of public and private capital for mid-size (US $5-75M) sustainable urban infrastructure projects. The fund includes a dedicated donor-funded, revolving Technical Assistance (TA) facility to support project preparation and capacity building.

The Problem
Mid-size sustainable urban infrastructure projects, like rapid electric transit, water, and waste treatment, and renewable energy, are a crucial component for developing countries to achieve their climate and sustainable development goals, yet insufficient numbers of bankable projects are reaching investors. Blended finance vehicles have demonstrated success in unleashing capital for large-scale renewable energy projects, but the high cost of developing, launching and managing such funds has made them previously unsuitable for mid-size urban infrastructure projects.

The Solution
The SnCF adopts successful aspects of the Lab’s Climate Investor One project, but adds several new innovations that make it suitable for mid-size infrastructure projects, including (1) establishing a non-profit to rapidly build a pipeline of bankable projects and improve investment process efficiency; (2) using a regulated asset manager to expand the investor base as well as channel profits back into the fund to improve its financial sustainability; and (3) leveraging a consortium of investors and infrastructure project specialists to further accelerate investment and project pipeline, as well as ensure the success of financial vehicles and invested projects.

Target Impact
The fund would create significant sustainable infrastructure development in emerging economies, with related environmental and social benefits. According to the proponent R20 Regions of Climate Action, the first proposed SnCF fund could reduce up to 2 million tCO2e per annum and generate 28,192 new jobs. If the five additional proposed are also implemented, the SnCF could reduce 12 million tCO2e per annum and 180,000 quality jobs. The first proposed fund seeks to raise US $250 million, which could catalyze a 5x multiplier of private co-investment to deliver US $1.25 billion of project investment.