The Asian Development Bank (ADB) has unveiled a financing programme to ramp up support for the region in the battle against climate change.
Called the Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP), the programme was announced today (May 2) by ADB president Masatsugu Asakawa at the opening of the bank’s 56th annual meeting in Incheon, South Korea.
“Climate change is the critical issue of our lifetime and here in Asia and the Pacific we are on the frontlines of that battle,” says Asakawa. “The climate events we have experienced over the past 12 months will only increase in intensity and frequency, so we must take bold action now. IF-CAP is an exciting, innovative programme that will have a real impact. And it is another example of how ADB serves as the climate bank for Asia and the Pacific.”
IF-CAP's initial partners are Denmark, Japan, South Korea, Sweden, the United Kingdom, and the United States. These partners are in discussions with ADB about providing a range of grants for project preparation along with guarantees for parts of ADB’s sovereign loan portfolios.
The reduced risk exposure created by the guarantees will allow ADB to free up capital to accelerate new loans for climate projects. With a model of “$1 in, $5 out”, the initial ambition of US$3 billion in guarantees could create up to US$15 billion in new loans for much-needed climate projects across the region, ADB says, adding that a leveraged guarantee mechanism for climate finance has never before been adopted by a multilateral development bank.
IF-CAP financing seeks to contribute to ADB’s raised ambition for US$100 billion from its own resources for climate change for 2019–2030. The bank is in discussions with potential partners – such as bilateral and multilateral sources, the private sector, and philanthropies, including the Global Energy Alliance for People and Planet – to catalyze climate investments.