Programmatic Approach Increases Impacts of Climate Finance, Says New Study

6th November 2018 by Emma Goring

A first-of-its-kind model for climate finance, pioneered by the $8 billion Climate Investment Funds (CIF), is a proven tool for amplifying the impact of sustainable investments and enabling large-scale change, according to a new study released today.

The study, an independent evaluation from global consulting firm ICF, finds that CIF’s business model – a unique channel for urgently needed investments – successfully brings projects and sectors together into one clear-eyed strategic vision for climate-smart interventions.

Known as CIF’s programmatic approach, this model delivers a far greater collective impact by supporting the development and implementation of country-led investment plans and thematic programs.

In contrast, the traditional, project-by-project model of climate finance generally supports individual clean and resilient solutions in individual sectors. This does bring benefits but limits investment potential and expected transformative outcomes.

New ways of doing business are increasingly urgent. The Intergovernmental Panel on Climate Change (IPCC) has recently warned of a rapidly narrowing window of opportunity for fighting climate change.

“The world’s leading climate scientists are clear: we have 11 years to transition our economies onto a sustainable pathway,” said Mafalda Duarte, head of CIF. “Meeting this deadline requires embracing innovative and relevant ways of maximizing finite public resources to change behaviors, redirect markets and kickstart systemic change across sectors.”

CIF, now marking ten years of climate action, is the only major international climate fund to date to adopt a programmatic approach as its primary model of delivery.

CIF has financed 300-plus projects across 72 developing countries. CIF support will lead to at least 25,000 MW in clean power capacity installed worldwide, one quarter of the world’s geothermal energy output (3,500 MW), one quarter of global concentrated solar power capabilities (1,200 MW), and over 28 million hectares of more sustainable forests. CIF projects will save at least an estimated 60 million tons of CO2 annually, which is equivalent to taking 12.8 million cars off the road for a year.

How the programmatic approach has benefited countries

CIF investment plans are created through coordination between country government leaders, multilateral development banks, and key players from multiple sectors, such as private sector, civil society and indigenous people and local communities. Critically, these plans are supported by a scaled up, predictable, and flexible resource envelope, and encourage readiness, learning and review activities. This leads to the development of innovative programs and projects that require substantial preparation, something that is difficult to support through a competitive project-by-project approach.

For example, in Zambia the approach helped to mainstream climate change into national development plans and sector strategies and contributed to increased climate resilient budgetary allocations – with the country’s climate change secretariat managing more than $200 million in development partner climate finance in addition to the funding from CIF.

In Rwanda, meanwhile, the programmatic planning process rallied government, private sector, and development partners behind key policies for rural electrification, culminating in the government’s new private sector-supported Rural Electrification Strategy. With CIF’s support, provided through the World Bank’s Rwanda Renewable Energy Fund, the strategy is working to provide 445,500 new off-grid connections and provide electricity access for around 1.8 million people.

Increasing the impact of the approach

The human factor is also critical, the report found, as leadership and capacity among government and multilateral development bank partners impact the effectiveness of the approach. Across the programs surveyed, the study identified strong champions who helped maintain the programmatic vision, as well as those who were less able to do so.

The study recommended that the programmatic approach continue, while identifying ways to improve its impact, such as more clearly communicating roles and responsibilities from the outset, establishing specific mechanisms to sustain the programmatic approach in the implementation phase, and building stronger capacities in governments to lead and coordinate a program strategically.

The scale of the climate crisis demands bigger, bolder, and better solutions. CIF’s programmatic approach, as this report makes clear, is one proven pathway to the climate-smarter world that the most vulnerable need, and that future generations deserve.

To find out more, read the full report here or a shorter summary brief here.