The Climate Finance Accelerator: Adding financial tools for innovative climate projects

The Climate Finance Accelerator (CFA) closed 5 months of support to proponents of climate projects in Colombia, proving that is possible to promote blended finance to help climate projects find the financial closure and contribute to the country’s commitments in the Paris Agreement.

The CFA, funded by the UK Pact of the Department of Business Energy and Industrial Strategy (BEIS), is a practical, transaction-based process in which relevant policymakers, project developers, and financial experts collaborate to identify, prioritize, and create potential structures for viable commercial projects.

The inaugural session of the final workshop took place between the 4th and 6th of march. Mark Menzies, the United Kingdom special envoy of the Commerce and member of the British Parliament, commented the importance that his country gives to climate finance, given the big opportunity it offers to support the achievement of the global climate goals. Then, Cesar Arias, director of public credit of the Ministry of Finance and Public Credit, assured that the Ministry acknowledge the increasing importance to environmental and climate financial and economic mechanisms and celebrates the relevance of blended finance. In addition, the Director of Climate Change at the Environmental and Sustainable Development Minsitry, José Francisco Charry, presented the framework of the climate finance strategy, where the role of the private sector is essential. The vice-president of Colombia Productiva, María del Pilar Granados, showed the importance of having companies capable of leading climate and environmental projects.

Ian Milborrow, partner of the PricewaterhouseCoopers Uk, presented the concept of blended finance, explaining how to lower the risks that are typically assumed by commercial investors. Later, in the panel moderated by Claudia Martinez, Director of E3 – Economy, Ecology and Ethics, participated financial entities associated to the initiative: Bancolombia, BNP Paribas, Bancoldex and the Interamerican Development Bank. In this table, they discussed the options available to generate blended finance and the challenges and opportunities to make them more practical.

The workshop had closed sessions hosted by the CFA’s allied banks. Here finance experts helped to improve the financial and overall presentation structure of the projects. It should be noted that 60 projects were received in the CFA from the energy, transport and agriculture, land use change and forestry (AFOLU) sectors, which 10 of them were selected to receive a two month coaching. After 4 webinars with these proponents, the closed sessions were dedicated to analyze in depth each one of the project. Under the eyes of financial experts, the strengths and possible schemes of blended financing were found to achieve bankable proposals to potential funders.

 

In the final session, the selected projects had the opportunity to present their restructured projects based on the recommendations of the CFA process. The 10 projects that include Corporación Colombia Internacional, Efigen, Mejor en Bici, ValueSkies, Prodesa, Ecologic SAS, Fedegan, Finagro, Neco Power y C40, made their final presentations showing ambitious climate projects with innovative financial possibilities.

As a result of this exercise, the proponents highlighted how the initiative let them understand how to be more ambitious in terms of the scale of the project, clearly indicate its climate impact, and to optimize the financial structure in the different stages of the project with much more clarity. In the case of the financial institutions, -which in addition to those named included Investment Banks such as Acumen, MGM Innova, Terra Global, Mirova Natural Capital, Fondo Impacta and Banco Agrario- defined the experience as enlightening. They found the opportunity to learn from the proponents and their projects, and managed to add schemes between diverse funders. They proposed ideas to make the CFA a permanent scheme for Colombia.

Santiago Aparicio, director of Environment and Sustainable Development of the National Planning Department commented on the opportunity to continue adding to the CFA experience, generating constant spaces to achieve an interesting portfolio of projects that can be supported by the different funders.

Finally, Sian Evans from the UK Pact of BEIS, closed the day, with the announcement that the United Kingdom will distribute resources to continue advancing with the Climate Finance Accelerator in a more permanent way. Evans also celebrated the great success of the experience in Colombia.

The representatives of the coordinating entities of the CFA, The Climate Group, PricewaterhouseCoopers UK and E3 – Ecology, Economy and Ethics, Ian Callahan y Associates and Ricardo Energy and Environment, greatly thanked all those involved in the CFA and encouraged them to continue the dialogue and hopefully achieve financial closure of projects with the support of the financial institutions involved.

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