Climate Finance Partnership Raises US$250 Million at First Close to Invest in Emerging Market Climate Infrastructure
published on 08 July 2021
BlackRock has secured more than US$250 million in commitments from a consortium of global institutional investors, governments and philanthropies for the Climate Finance Partnership (CFP), a flagship blended finance vehicle focused on investing in climate infrastructure across emerging markets in order to accelerate the global transition to a low carbon economy. Conceived at the One Planet Summit in September 2018 under the leadership of French President Emmanuel Macron, CFP showcases the potential for the public, philanthropic and private sectors to work together to mobilize significant investment into climate infrastructure that can deliver positive environmental and social impact and allow for attractive risk-adjusted returns.
The Governments of France, through Agence Française de Développement (AFD); Germany, through KfW Development Bank (KfW); and Japan, through Japan Bank for International Cooperation (JBIC); together with the Grantham Environmental Trust, the Quadrivium Foundation, and another private foundation committed a combined US$112.5 million in catalytic capital. This catalytic capital is being used to mobilize a broader institutional capital raise, starting with commitments from Dai-ichi Life Insurance, a leading European pension fund, and a key strategic banking partner, Standard Chartered Bank, as well as MUFG Bank, which together are the first institutional investors in CFP.
With energy demand in emerging markets poised to double by 2050, there is significant capital required for climate infrastructure, such as renewable power, in these regions to help reduce carbon emissions. Approximately US$9 trillion is needed for emerging markets to derive two-thirds of their energy from renewable power by 20501. The global energy transition toward net zero by 2050 can only be achieved with more institutional capital flows into less developed regions, where there are acute challenges from population growth, rising energy demand and climate disruption. CFP’s unique structure is designed to invest in new solutions that can help communities in developing countries that are most vulnerable to the impacts of climate change.
It is the shared belief of all CFP parties that aggressive action is necessary in order to limit the global temperature increase to 1.5°C, in a manner that harnesses the economic opportunities embedded in the transition to a global low-carbon economy.
“We are honored to collaborate with this group of likeminded organizations from the public and private sectors to raise initial capital that will be used to help unlock the energy transition in emerging markets through the Climate Finance Partnership,” said Edwin Conway, Global Head of BlackRock Alternative Investors.
CFP will target investments in select countries in Asia, Latin America, and Africa. The fund’s focus on the climate infrastructure sector include:
- grid connected and/or distributed renewable power generation; energy efficiency in residential,
- commercial and/or industrial sectors;
- transmission or energy storage solutions;
- and ultra-low emission or electrified transportation and mobility services.
The Partnership is targeting at least US$500 million and is delighted to have secured half of its target at first close.
