CASE STUDY

The Lab: Driving Private Sector Financing for Clean Energy Projects


The Lab gathers new ideas to encourage more private sector investment for environment-friendly projects in developing countries.

Overview

Climate change and its adverse effects are caused by the continued use of carbon-based fuels that harm the environment. This calls for a worldwide transition into more environmentally friendly or renewable "clean"  energy sources such as solar or wind power.

This transition, however, is hampered by lack of investment, particularly coming from the private sector. Government funding alone will not cover the huge financing requirement, especially in developing countries. While the total funding for clean energy projects may have increased over the previous years, amounting to $391 billion in 2014, there is still a gap of $5 trillion to $6 trillion in required investments through 2020.

At the Asia Clean Energy Forum (ACEF) sponsored by the Asian Development Bank (ADB) in June 2016, Randy Rakhmadi, analyst for Climate Policy Initiative (CPI) Indonesia presented the work of the the Global Innovation Lab for Climate Finance, or "the Lab". Along with its local counterpart in India—the India Innovation Lab for Green Finance—these organizations have established a system to attract more private sector financing into the clean energy sector. To date, the Lab has raised over $500 million in initial funding for pilot projects.


Project snapshot

  • April 2013: The Lab was established in a meeting of various countries hosted by the United States.
  • May 2014: The first international "call for ideas" was made.
  • November 2015: The Lab's local counterpart in India was established.
  • US$ 500 million: Initial funding for pilot projects
  • Others
    • Governments, pension funds, investment banks, project developers and development finance institutions
  • Financing
    • UK Department of Energy and Climate Change (DECC)
    • German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety
    • U.S. Department of State
    • The Netherlands Ministry for Foreign Affairs
    • Bloomberg Philanthropies
    • The Rockefeller Foundation

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Meet the expert

  • Randy Rakhmadi    
    Analyst, Climate Policy Initiative (CPI)

    Randy Rakhmadi is an analyst at Climate Policy Initiative (CPI) Indonesia office and his works focus on climate finance in energy and land use. He specializes in corporate finance, and prior to joining CPI, had spent his career in the private sector, mostly in the investment banking business where he assisted and advised corporations in raising capital in the financial markets. He also worked at an energy company, where he was responsible for evaluating mergers and acquisitions activities across the company.

   Climate change, Energy, Finance sector development, Private sector development
   Last updated: October 2016

 




Disclaimer

The views expressed in these articles are those of the authors and do not necessarily reflect the views of the Asian Development Bank, its management, its Board of Directors, or its members.




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