IFC and Denmark join GCPF as investors
2011-05-27
The International Finance Corporation (IFC) and the Government of Denmark join BMU, KfW and Deutsche Bank, as investors of the Global Climate Partnership Fund
The Government of Denmark will invest $7 million in the equity tranche and the IFC $75m in the mezzanine and senior tranche of the Global Climate Partnership Fund (GCPF). The Fund constitutes a decisive part of the German Government’s efforts to support climate change mitigation in emerging and developing countries by increasing energy efficiency and reducing greenhouse gas emissions in emerging and developing markets. In order to leverage impact of public resources, the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) and KfW Entwicklungsbank (The German Development Bank) have set up the Fund as a ”Public Private Partnership” model, in which the Ministry provides equity capital to partly assume the economic risk associated with the Fund’s investments. Österreichische Entwicklungsbank belongs to key contributors of the Technical Assistance Facility attached to the Fund. Using its innovative structure, transparent governance and the benefits of a private fund manager, GCPF targets to increase its volume from currently US$200 million to a volume of US$500 million – mainly with private funding sources.
Dr. Norbert Röttgen, Federal Environment Minister, comments: “The Global Climate Partnership Funds is a prime example of intelligent deployment of limited public funds to achieve a catalyzing effect. We need more of these innovative financing mechanisms for climate protection, and we must take further action swiftly. In spite of more difficult framework conditions due to the global financial and economic crisis, one thing must be clear: climate protection cannot wait any longer.”
“The German initiative is very pertinent. The Global Climate Partnership Fund is an excellent example of an essential tool to leverage much needed private capital with public funds towards climate investments in developing countries. The Fund can be an important contribution to the reduction of green house gas emissions”, adds the Danish Minister for Development Cooperation, Søren Pind.
Investments by the Global Climate Partnership Fund aim to reduce energy consumption and greenhouse emissions by at least 20 percent compared to current levels. Initial focus countries are Brazil, Chile, China, India, Indonesia, Mexico, Morocco, South Africa, The Philippines, Tunisia, Turkey, Ukraine and Vietnam. The fund is a critical piece of the German government’s efforts to support climate-change mitigation in developing countries. Deutsche Bank also invested in the fund and acts as its investment manager.
“IFC’s investment in GCPF will have a considerable development impact and will significantly add to our growing engagement in the clean-energy sector in emerging and developing countries,” said Jyrki Koskelo, IFC Vice President, Global Industries. “The fund targets sectors and regions with significant unlocked economic and environmental potential. By investing in it, IFC is following its objective to enhance sustainable economic growth in frontier countries and address market failures.”
Lykke Friis, the Danish Minister for Climate and Energy comments: “In my view this initiative is pioneering! The fund uses public finance to leverage private finance to provide loans to households and local firms in developing countries to investments in renewable energy and energy efficiency. But the real genius lies in the fact that the fund differentiates between the risk for public money and the risk for private money thereby creating a strong incentive for private investors to pay into the Global Climate Partnership Fund.”
“By 2020, emerging and developing countries will need at least $100 billion annually to grow their economies, while ensuring energy security and climate resilience,” said Caio Koch-Weser, Vice Chairman of Deutsche Bank. “Innovative public private partnerships such as GCPF are critical in order to raise the funds needed to accelerate climate change mitigation in emerging and developing countries. The additional commitments by IFC and Denmark are clear evidence that GCPF is the right approach at the right time.”
Dr. Norbert Kloppenburg, Member of the Managing Board of KfW Bankengruppe: "The reliability of energy supplies and global climate protection are two of the key challenges for the 21st century. Correspondingly, it is a central issue for the future for KfW Entwicklungsbank to promote wide-ranging investment in climate protection in developing countries and threshold countries. The public-private partnership concept on which this global climate protection fund is based, i.e. the cooperation between private and public investors, plays an important role in financing these investments.”
