The main objective of the Accelerator is to support the development and financing of projects that contribute to meeting a country’s Nationally Determined Contribution (NDC). The Accelerator process connects climate project developers with expert financial institutions that can help to make their projects more bankable and leverage blended finance opportunities that would otherwise be difficult to reach.
Colombia’s NDC commits to reducing GHG emissions 20% below business-as-usual levels by 2030. Through the Climate Finance Accelerator, which culminated in a three-day workshop in Bogota earlier this year, representatives from the public and private sector worked with financial and philanthropic institutions to develop realistic projects that will support the country in achieving its targets while being attractive to external financing.
The Climate Finance Accelerator
The green finance sector, which includes financial investments relating to projects, policies or products that encourage the development of more sustainable economies, is growing. It is particularly important at the state and regional level, where governments may lack the financial resources to deliver ambitious projects. In 2019, for example, Under2 Coalition members reported taking 203 actions to increase and facilitate financing of climate mitigation projects.
As the world struggles with the impacts of the COVID-19 pandemic, governments will need to step forward with economic relief. For those with limited budgets, blended finance, such as the finance mechanisms highlighted in the Climate Finance Accelerator, offer a tool for leveraging small budgets to stimulate private investment.
The Climate Finance Accelerator brings together policymakers, project sponsors and financial experts to evaluate financially viable climate projects that will contribute to climate mitigation at national and local levels.
After an open call for proposals, ten projects were selected to receive coaching from international and local financial experts on blended finance and what financiers look for in project proposals. These project developers attended a workshop where they presented their proposals to representatives from financial institutions in confidential sessions and received individualised feedback and direct connections to potential funders.
This process lays the foundation for a pipeline of climate projects and highlights the gaps in the enabling environment where the government can take action to improve access to financing options for climate project developers.
Uniting governments and businesses
Unique in its approach to developing public-private financing solutions for projects on climate change mitigation, the Climate Finance Accelerator has helped to improve dialogue between the public and private sectors. In particular, it has built up a widespread understanding of what makes projects ‘bankable’ and so made discussions between government and businesses both clearer and faster.
Earlier this year, representatives from the Colombian national government convened in Bogota for the interactive workshop where participants took part in deep-dive sessions on their climate projects. The projects included activities such as: expanding sustainable livestock grazing programs, replacing conventional public buses with electric models, and diverting food waste to a plant that produces biogas to substitute for diesel fuel.
For Colombia, the selected projects focused on the energy, transport and agriculture, forestry and other land use (AFOLU) sectors. This is particularly important for a country where the energy and AFOLU sectors represent 44% and 43% of the country’s emissions respectively – the highest emitting by far.
Sharing outcomes and next steps
This project has demonstrated on a practical level the value of having a diverse set of perspectives at the table when developing innovative climate projects. As well as improving a project’s chances of securing funding, this collaboration provides insights on potential partners, sources of revenue and possible challenges.
Following the Bogota workshop, lessons and key outcomes have been shared with state and regional government members of the Under2 Coalition via a series of webinars and calls, and the Colombian national government is working to create spaces and processes that foster co-creation between project developers and financiers with their support.
The UK’s Department for Business, Energy & Industrial Strategy has also announced its plans to launch a multi-year global Climate Finance Accelerator in 2020 to support emerging economies in translating their NDCs into ‘climate investment plans’.
Notes to Editors:
The Climate Finance Accelerator is funded by the UK’s Department for Business, Energy & Industrial Strategy (BEIS) and UK PACT, and delivered by the Climate Group, PWC, Ricardo Energy & Environment and E3 Asesorias.