By Vanora Bennett
Highlights
- EBRD and Germany's BMWK partner up to expand climate finance
- New initiative aims to mobilise private sector climate co-financing of up to 225 million over the next eight years
- Blended finance applied with 7.5x leverage in an innovative mobilisation structure
The European Bank for Reconstruction and Development (EBRD) and the German Federal Ministry for Economic Affairs and Climate Action (BMWK) are partnering to boost private-sector climate finance via the Climate Syndication Platform (CSP) in eastern Europe, the Caucasus, Türkiye, the southern and eastern Mediterranean and Central Asia.
The CSP is expected to mobilise up to 225 million of climate co-financing from institutional investors over the next eight years, specifically for climate mitigation and adaptation projects that would otherwise not have benefited from private-sector participation.
This initiative is supported with 30 million in first-loss risk cover guarantees and technical assistance by the BMWK through the International Climate Initiative (IKI). Germany is a key donor to EBRD's climate action efforts.
The financing gap for climate investments is in the order of trillions of dollars and can only be filled by the private sector. However, increasing flows of international private capital into many emerging economies presents challenges. The CSP is a direct response and is an example of how blended finance can be used to support private co-financing for transactions at the limit of what the market will accept. The CSP will attract much-needed private investment to challenging markets, create new markets and promote pioneering climate investments that would not happen otherwise.
The cooperation agreement was signed by the EBRD President and the German State Secretary for Economic Affairs and Climate Action at COP28.
EBRD President Odile Renaud-Basso said: "Private climate finance mobilisation is a key focus area for the EBRD and this cooperation with BMWK will help us deliver impactful climate projects in our countries of operation. This innovative programme is a testament to the catalytic use of blended finance, as well as EBRD's drive to innovate."
German Parliamentary State Secretary Stefan Wenzel said: "We know that the necessary funding for international climate action cannot be raised by the public sector alone. However, there also is a great potential to mobilize private finance for climate action in developing and emerging countries. The Climate Syndication Platform is an innovative guarantee instrument that mobilizes private finance up to 225 Mio. EUR for international climate action over the next few years. This shows us what is possible. At the same time, we need to make progress in aligning financial flows with the Paris Agreement goals."
