The video discusses the work of the Climate Investment Funds (CIF) in addressing climate change through innovative financing and partnerships with multilateral development banks. Terea, the leader of the CIF, emphasizes the organization's commitment to pioneering clean technology initiatives, especially through the Clean Technology Fund and the Strategic Climate Fund. These efforts include transforming energy systems, fostering renewable energy projects, and supporting industrial decarbonization.

The CIF faces various challenges, such as facilitating just transitions away from coal and mobilizing funding for energy transitions. With programs targeting coal transition in South Africa and industrial decarbonization in Brazil, the CIF attempts to facilitate significant reductions in emissions. By tapping into capital markets, the CIF aims to frontload funds for critical projects, thus enhancing financial sustainability and impact.

Main takeaways from the video:

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Key Vocabularies and Common Phrases:

1. multilateral [ˌmʌltɪˈlætərəl] - (adjective) - Involving multiple countries or parties, typically in trade, treaties, or agreements. - Synonyms: (international, joint, cooperative)

Terea leads one of the world's largest multilateral funds.

2. mitigate [ˈmɪtɪˌɡeɪt] - (verb) - To make less severe, serious, or painful. - Synonyms: (alleviate, reduce, lessen)

The fund helps low and middle income countries adapt to and mitigate climate change.

3. concessional [kənˈsɛʃənəl] - (adjective) - Relating to a loan or financial assistance that is more generous than market terms. - Synonyms: (subsidized, preferential, subsidized)

So the CIF specializes in high risk concessional funding to drive climate ambition.

4. decarbonization [diːˌkɑːrbənaɪˈzeɪʃən] - (noun) - The reduction or elimination of carbon dioxide emissions. - Synonyms: (emission reduction, carbon elimination, carbon neutrality)

We're actually going into industrial decarbonization.

5. catalytic [ˌkætəˈlɪtɪk] - (adjective) - Causing or accelerating a change or action. - Synonyms: (stimulating, activating, sparking)

And the CIFS funding was put forward as a catalytic concessional base to drive multilateral development bank financing.

6. trajectory [trəˈdʒɛktəri] - (noun) - The path followed by an object, person, or process over time. - Synonyms: (path, route, course)

And then as we went through our 1516 year trajectory, there was a drive for us to do even more.

7. emitters [ɪˈmɪtərz] - (noun) - Sources of emissions, particularly of pollutants or greenhouse gases. - Synonyms: (sources, producers, dischargers)

If coal emissions were taken together, if they were a country, they would be the largest emitter in the world.

8. aspiration [ˌæspəˈreɪʃən] - (noun) - A hope or ambition of achieving something. - Synonyms: (ambition, goal, desire)

So what are your aspirations then, for this mechanism?

9. holistic [həʊˈlɪstɪk] - (adjective) - Characterized by the belief that the parts of something are intimately interconnected and explicable only by reference to the whole. - Synonyms: (comprehensive, integrated, inclusive)

We did a holistic renewable energy program in the Maldives.

10. mobilize [ˈmoʊbəˌlaɪz] - (verb) - To assemble, prepare, or move into action. - Synonyms: (organize, deploy, rally)

For every dollar the CIF puts in, we mobilize another eight to $10.

CIF CEO Gbadegesin on Climate Investing Strategies

Terea leads one of the world's largest multilateral funds. With over $12 billion pledged. The fund helps low and middle income countries adapt to and mitigate climate change. Teriya, can you talk more about what CIF does and also a little bit about your experience leading up to your experience. Sorry, leading up to this role.

Thank you so much for having me. It's great to be here. The climate investment funds is really interesting and exciting organization established in 2008 by the G seven and the G 20, responding to a call for accelerating clean technology, innovative technologies to drive climate ambition. And it was very much designed to work exclusively with the multilateral development banks, driving their activity in clean technology.

And if we can take a step back, 2008, solar projects, wind, these were barely investable, if at all. And the whole idea then was that these are five years out, ten years out. And the CIFS funding was put forward as a catalytic concessional base to drive multilateral development bank financing of advanced technologies, and to do so by also mobilizing additional funds. So the CIF specializes in high risk concessional funding to drive climate ambition.

We are comprised of a couple funds. So we have, like you mentioned, we have $12 billion of commitments. A large part of our business is the Clean Technology Fund, which is about $6 billion, and that is dedicated to energy system transformation work. So clean technologies, battery storage, renewable energy integration, accelerating coal transition, and we're actually going into industrial decarbonization. The other side of our business, the strategic Climate fund, does more around forestry resilience and hard to finance areas. All in all, it's really about pioneering, about innovation, and sort of driving the advancement of new ideas, new technologies for climate action today.

Are there specific climate challenges that you address your funding? And what sorts of challenges do you face when you help countries transition?

Sure. You know, I like to sort of double click into the clean technology fund business, which is very much the largest of our operations. Historically, we had been investing in renewable energy, and then as we went through our 1516 year trajectory, there was a drive for us to do even more. And we launched the Accelerating coal transition program, a $2.2 billion intervention in supporting countries to accelerate their move away and their close down of coal. Many of you are probably aware of the south african just transition, just energy transition plan.

Well, part of the funding from this program, about 500 million, is one of the pieces that goes into that ambitious program. We're very grateful to the government of Canada as well, for being one of the major contributors into that particular program, not only with a $1 billion contribution, but also with a dedicated allocation to women led coal transitions. And why we talk about transition is that while the accelerating coal transition is very exciting, it's critical.

I mean, at the end of the day, if coal emissions were taken together, if they were a country, they would be the largest emitter in the world. And so solving the coal challenge is very central to us halving emissions by 2030 and reaching net zero by 2050. But what stands in the way, the just transition, I mean, without, you know, considering the jobs, but not only the jobs in the plants, but the entire economies that surround these systems, you actually aren't going to get there. So that's one of our sort of big interventions.

And if you look forward, we're also looking at industrial decarbonization. Last week in Brazil, we launched a billion dollar industrial decarbonization program, which is really about those hardest to abate areas. Industry counts for about 25% of emissions. We need to pretty much reduce them by 93%. And so we're looking at supporting green steel, green cement, green hydrogen and the like. So we're always at the cutting edge, really kind of exciting activities. But again, driven through the multilateral development banks, we know that ZIF is planning to launch a capital market mechanism, the first of its kind. How does it work?

Sure. You know, it's again, very exciting times for the climate investment funds. We are one of the multilateral climate funds, also called MCfs. So there's more Alphabet soup coming your way. We have the multilateral development banks and the MCFs. We are really thrilled that we will be the first multilateral climate fund to tap the capital markets.

And why are we able to do this? Because we have a 16 year track record and we have an operational portfolio that is generating reflows. We will be issuing from the Clean Technology fund asset base because that is the fund that has, you know, the loan portfolio to large scale projects. A lot of the countries that are recipients are middle income countries. Again, it's a strong contributor base from the g seven. I think even up to. We actually have ten very high quality contributors that have issued funding into that vehicle.

Now, it's important that I highlight what is the objective of the mechanism. First of all, you know, you're all aware of these large numbers, $2.4 trillion per year that is required for the energy transition. And these, the numbers just keep getting larger and larger and larger. And the summary of it all is we need a lot of money now and we need it every year. We all need to get smarter about how we find new sources of funding, make our balance sheets more efficient. There's been a call to the multilateral development banks to do more with their existing portfolios, do more with their balance sheets.

We're getting the same. And so we currently have a loan portfolio that is generating reflows. It is actually reflowing funds, and we are using the capital markets to front load those reflows so that we can get that funding into projects today when it's needed most. Really, this is before 2030. And so we are going to be going through an issuance program where we will be sort of raising funds on a regular basis in the capital markets as a way for us to deploy that funding alongside mdbs to accelerate investments in these sort of challenging areas.

So as you mentioned, there's a massive need for funding for energy transition. But what's the investor appetite like for this kind of funding?

No, it's been very interesting. We've had some really great outings in that, you know, you know, this is, if I can go back to the point that we have six dedicated implementing agencies, which are the multilateral development banks, the World bank, the IFC, the EBRD. Isabel Lahrome is here. Good to see you. And the Inter American Development bank. We also have the AfDB and the Asia Development bank. So these are triple A rated mdbs.

And so since we fund effectively alongside them, the quality of the book is in line with their standards. We leverage on their systems, their processes, their credit methodologies. It gives us the span and the distribution that is very difficult to replicate. So we're sort of leveraging on that experience. What this means is that we are bringing to market an issuer that is integrating triple A rated mdbs alongside a coalition of donors, the ten donors that have particular interests in driving transition.

A lot of the market are very excited about bringing a new issuer in this category to the space because we are going to be in this sort of high quality issuing category. And it's, you know, it's not usual, it's not typical that new issuers come to the market in this space. So there's great reception. The other benefit is that it's a pure play clean technology fund in that all it does is emissions reductive allocation.

And so therefore, there is also a lot of excitement that we're having not only a sustainability development focused issuer with the AAA rated banks as part of our implementation framework, but also the fact that it is going to be, you know, clean technology and, you know, sitting squarely within sort of like a pure clean play. So what are your aspirations then, for this mechanism?

Well, you know, if you, what's been very interesting for me with this role is that, you know, I sort of built my career working on multilateral private sector interventions. And so I've been investing in private equity, working in capital markets, and really looking at how do we solve capital allocation challenges with innovative financial instruments. And this is, it's a very interesting time in the climate finance and the development finance space because you have countries influential, both recipient countries, donor countries, that are saying we need to do more with what we have there are reducing ODA envelopes.

We have to figure out how we can address the capital stack for climate investment and development investing. So what I'm very excited about is by having a capital market mechanism that can effectively answer a lot of the challenges, which is that we need more private funding going into climate, and this is actually going to be a way that private capital can be allocated into a multilateral climate fund and becomes part of the solution.

You'd be interested to hear that this year the G 20 has dedicated a piece of their work to multilateral climate fund coherence funding. It's not separate from the fact that there are going to be new quantified goals toward funding that will come from the developed countries to developing countries. So if the SIF is doing its bit to bring in funding through the capital market, leveraging on its sort of its profile, then we're very much answering that call to introduce private funding, to introduce new mechanisms to enhance our, to leverage our balance sheet more.

And we need to see a lot more of this. And I expect the other multilateral climate funds to leverage on our experience to do similar. So since CIF has been around since 2008, and you've done work in over 80 countries, can you talk a bit about some of the projects that you funded?

Sure. And I think that's what's really special about our work, is that we're sort of operating at all layers. We're operating at the sort of government's contribution, from the government contribution perspective, recipient country perspectives. We're now going to the capital markets and we're allocating this funding into real projects, real technologies, and really affecting people and their livelihoods.

One of the things that makes the SIF different from a lot of the other multilateral climate funds or even the other organizations is that we invest programmatically. This means that we don't invest sector by sector or even project by project. We want to make sure that the investments we make are going to address both the regulatory environment, policy enhancements that need to be made, project development so that pipeline will be generated, and we fund the assets, and so some of our exciting projects.

So, for example, I speak about Turkey. This is a project that we invested in alongside the EBRD and the World bank, where the SIF put in about $240 million of concessional funding, mobilized another about, you know, another billion or so dollars from our partners, and we're able to deploy over 800 renewable energy at a time when there was very little investment in renewable energy in Turkey.

Now, what's very different about our work is we don't focus on the dollar for dollar mobilization. Targets have always been part of our DNA. For every dollar the CIF puts in, we mobilize another eight to $10. And so this particular project has been focused on working alongside the mdbs to fund commercial bank activity into renewable energy.

And so what that means is that you are effectively coaching or creating an innovation or learning lab, laboratory for the financial system to be able to fund renewable energy. And that way our catalytic funding can do its work. And when the system is functioning and operating, we can apply our funding elsewhere. And so that's a very successful project.

We love talking about it because it really affected the amount of renewable energy that went into that market and catalyzed commercial banking activity in renewable energy in a high impact country. I also like to speak a bit about another one. It's a little country, but it's one of my favorite, which is the Maldives. We did a holistic renewable energy program in the Maldives, and we were able to take their renewable energy from, when we started the program, from 1% to 24%.

And, you know, a lot of the islands are so reliant on imports for diesel, even coal, to power the countries. And so the idea that our programmatic approach is not only integrating renewable energy, it's also affecting balance of payments. Right. Because you're reducing import bills, you're reducing, you know, a lot of that systemic reliance on an external source of energy. And what's very exciting about this program, we put in the policy frameworks to be able to enhance, you know, we funded a lot of capacity building and policy support.

And even now, the Maldives renewable energy programs are being funded without the zip, and they're bringing in private sector, and it's just sort of scaling, and you can really see sort of the power of catalytic to drive transformational change.

Thank you so much for your time. Oh, thank you. It was really great being here. Take care.

Innovation, Finance, Global, Multilateral Funds, Climate Change, Renewable Energy, Bloomberg Live