World Bank announce creation of two international climate investment funds
May 23, 2008 – Representatives of 40 developing and industrialized countries have reached an agreement to create two international investment funds that will provide innovative financing for developing countries to pursue cleaner development paths and protect themselves from the impacts of climate change.
The agreement came Thursday after a two-day meeting in Potsdam, Germany, where the two proposed Climate Investment Funds (CIF) were discussed with donor and developing countries.
Donor contributions to the Climate Investment Funds will be new and additional to existing aid commitments. The overall CIF is a framework that consists of two separate funds. One is the Clean Technology Fund, designed to accelerate investments in state-of-the-art technological solutions to help developing countries mitigate the rise in greenhouse gas emissions in developing countries.
A second fund, the Strategic Climate Fund, will help more vulnerable countries adapt their development programs to the impacts of climate change while also addressing issues of forest management and access to green energy.
The Strategic Climate Fund would provide significant resources to build adaptative capacity in the form of grants - with the option of additional highly concessional loans where countries want them.
A critical breakthrough was agreement on how multilateral development bank assistance for strengthening the climate resilience of poverty reduction efforts can most effectively support the recently established Adaptation Fund of the Kyoto Protocol.
The Potsdam meeting also included representatives from the multilateral development banks, the United Nations, and civil society organizations. The next step is for the CIF to be considered by the World Bank Board for approval so that the funds may be launched in the next few months.
“We are delighted at this agreement,” said Katherine Sierra, World Bank Vice President for Sustainable Development. “We have worked closely with client countries and donor partners, the Global Environment Facility, and other UN and multilateral financing agencies to develop an innovative source of financing to help developing countries in their strategies to fight climate change between now and 2012. Today’s result is a giant step forward.”
The World Bank, along with the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank, will help their client countries to access the funds.
(Source: World Bank)
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