CDKN's Director of Policy and Programmes, Ari Huhtala, reports back from the latest global discussions about the Climate Investment Funds (CIF) and reflects on the past, present and future of the CIF.

The history of Climate Investment Funds

At the time of lofty pledges and high expectations for climate finance, and before there was an agreement of a global mechanism, a number of developed countries took the initiative and established a series of Funds that would scale up climate-smart investments, test the ground and learn by doing.

The Climate Investment Funds (CIF) were born in 2008.  The CIF is made up of four funding windows to help developing countries pilot low-emissions and climate-resilient development.  Thanks to support from CIF, 48 developing countries are currently piloting transformations in clean technology, sustainable management of forests, increased energy access through renewable energy, and climate-resilient development.

The CIF succeeded in attracting $6.5 billion pledges as soon as it was launched. By far the largest share ($5 billion) went to the Clean Technology Fund (CTF) which focuses on mitigation in middle-income countries. The Pilot Programme for Climate Resilience (PPCR) received $1 billion, the Forest Investment Programme (FIP) over $500 million and the Scaling-up Renewable Energy Programme (SREP) for low-income countries over $400 million.

There are many innovative features associated with the operationalizing of the CIF aside from the scale of the funds raised. The pledges were finite and had built-in sunset clauses, to allow the development of a longer-term solution (e.g. the Green Climate Fund - now officially established and being capitalised). The funds were not programmed universally, but were used in pilot countries. And each of the 48 pilot countries has created an investment plan in which the CIF resources catalyse funds from international and national development budgets as well as (in the case of the CTF) some financing leveraged from the private sector and the (now fledgling) carbon market. Such volumes provide potential for transformational change.

The CIF were never presented as the donor countries’ response to developing countries’ calls for increasing direct access. They are programmed and delivered through the World Bank and four Regional Development Banks. But the decision-making process for programming and fund management was a novelty, being based on an equal representation of developed and developing countries, decision making by consensus, and a degree of openness in allowing civil society, indigenous groups and the private sector to engage in the discussions.

The 2012 CIF meeting, Istanbul

One of the vehicles for these discussions is the mass gathering, every 18 months or so, of individuals and organizations associated with the CIF. I had the honour to attend the most recent of these, which took place in Istanbul from 30 October to 7 November 2012, hosted by the European Bank for Reconstruction and Development (EBRD).

The nine-day meeting was packed full of events including the CIF Pilot Country and Trust Fund Committee Meeting, a master class on wind and biodiversity issues, a Civil Society Forum, a Private Sector Forum, a meeting on the FIP Dedicated Grant Mechanism for Indigenous Peoples and Local Communities, and the Partnership Forum.

The Partnership Forum on 6-7 November was attended by some 400 representatives from 80 countries and included sessions on engendering climate finance, sustainable energy for all, enabling private sector investment, sustainable cities, civil society participation in the CIF, and addressing adaptation, mitigation and poverty reduction.

In his opening address the Turkish Minister of Development, Dr. Cevdet Yilmaz, noted that “the CIF can play an exemplary role for future funds at much larger scale”, posing a challenge to the Boards of the various CIFs and the newly established Green Climate Fund for determining a relationship between the two instruments that will meet the needs of developing countries without wasteful duplication.

The CIF were operationalized quickly and the governments in the pilot countries have engaged actively in programming the national investment plans. However, the real success of these transformational funds will be measured in the coming years when actual implementation can be monitored and outcomes measured.

Key questions at that time will include: Has the price of renewable energy per kWh gone down sufficiently significantly to make it economically competitive? Has the poorest part of the population become less vulnerable? Have the interventions benefitted the population in a way that meets their priorities? Has increased energy supply ensured a major increase in energy access?

What next for the CIF?

Many developing country representatives lamented the fact that not all interested countries have been able to access the funds, and spoke of the laborious processes in applying for them. There were also calls for new funds and funding mechanisms while countries wait for progress in global climate negotiations.

Wilbur Ottichik, an MP from Kenya, insisted that developing countries must themselves be committed to climate compatible development and use their own budgetary processes to direct funds to meet climate challenges. International climate funds should provide additional support to such commitments.

Another message that came through strongly was the importance of listening to the communities that are most affected by climate change and the project catalysed by the CIF.

At the Speaker’s Corner of the CIF Knowledge Bazaar I was invited to moderate a panel on Capturing good practices for stakeholder engagement: Learning from the CIF and other initiatives.  The speakers included representatives from a climate consultancy for Africa, an NGO in Cameroon promoting REDD+, and an umbrella organisation for indigenous communities in Indonesia. While the FIP was commended for being more open and inclusive than most other development funds, the CIF (and the Green Climate Fund, CDKN and any other instrument) will need to pay serious attention to transparency, importance of local knowledge, and use of participatory processes in designing new programmes at international, national and local levels.

Without the integration of the civil society, indigenous communities and the private sector (large and small) in the development process, climate funds will not be able to deliver the desired long-term impacts.

Photo of Istanbul courtesy of Flickr/GreenwichPhotography