The Green Climate Fund (GCF) has joined forces with Pegasus Capital Advisors and the International Union for Conservation of Nature (IUCN) in an innovative bundling of public-private financing to plug a funding gap for sub-national climate initiatives.
GCF announced it has signed funding agreements with both organisations during a virtual briefing session for UN representatives in New York about the Global Subnational Climate Fund (SnCF Global), created to address a major deficit in climate finance.
The signing of funding agreements follows the approval of this initiative by the GCF Board just three months ago. This reflects GCF’s increasingly rapid ability to progress funding approval to implementation.
SnCF Global is designed to mobilise finance at scale to make blended finance work for the most vulnerable. GCF has provided USD 150 million in the equity component of the initiative with Pegasus Capital Advisors and USD 18.5 million for the technical assistance part with IUCN.
Tony Clamp, Director a.i. of GCF’s Private Sector Facility, said SnCF Global is truly transformative in the way it crowds in public and private finance for sub-national climate projects which would otherwise not receive support.
“GCF’s anchor funding and first-loss coverage will unlock both public investors and private institutional investors, ensuring climate support gets where it is most needed,” he said. “Nearly half of the 42 countries covered are Small Island Developing States and Least Developed Countries.”
About 70 percent of known climate solutions are located within the boundaries of sub-national authorities, covering a range of governing bodies below the national level. Projects in the range of USD 5 million to 75 million often struggle to attract commercial financing as they are perceived as too risky.
GCF has marshalled together a novel mix of different funding sources in creating SnCF Global to generate climate solutions by overcoming limitations currently deterring private investment in sub-national climate projects. SnCF Global allows sub-national governments to introduce a range of climate solutions including those that improve water, sanitation and waste management; energy generation; and energy efficiency.
The briefing session was organised by the New York-based UN permanent representatives of Rwanda, Fiji and Jamaica – included among SnCF Global’s coverage of three geographic regions.
Selwin Hart, UN Assistant Secretary General and Special Advisor to the Secretary General on Climate is due to address the briefing. He will be joined by Craig Cogut, CEO of Pegasus; Stewart Maginnis, Global Director, Nature-based Solutions Group of IUCN; and Babita Bisht, GCF’s Deputy Director of Division of External Affairs.