The CIF's Technical Assistance Facility (TAF) aims to support and empower developing countries to create the enabling conditions that will help them move towards a green future. It helps mobilize resources and de-risks the sustainable energy sector by funding early-stage activities to create a strong foundation for renewable energy and energy efficient solutions. This will also incentivize long term investors from the public and private sectors to invest in clean energy in developing regions.
The scope of activities under TAF are tailored to the specific technical needs of the partner country and are designed to attract and accelerate clean energy investments. They include critical developmental tasks such as strengthening of a country’s regulatory and policy frameworks, building local institutional and human capacities, and designing innovative financing instruments and business models to optimize the investment environment.
Developing economies no longer have the option to mirror the development pathway undertaken by the world’s richest countries – which is, to first develop with a highly carbon-intensive route, and then decarbonize later. To meet global climate and sustainable development goals, these regions require efficient and effective solutions to scale up finance, technologies, and the capacities needed to reduce barriers, and leapfrog to a low carbon and sustainable future.
A feature of the 2015 Paris Agreement is that developed economies are committed to provide financial resources to assist developing regions in their climate ambitions – a crucial intervention. Although low- and middle-income countries have contributed the least to climate change, their collective emissions are projected to rise significantly in the coming years, by as much as 84 percent in 2025 compared to 2000 levels, according to the World Resources Institute (WRI).
Developing economies clearly need support now to make investments that will leverage the massive emissions reductions potential, and equally huge economic opportunities, represented by clean energy. TAF is a launchpad for these ambitions.
TAF focuses on several areas including power generation, systems integration, and energy efficiency (in industry and buildings) in countries with the most significant mitigation potential.
Non-lending activities are also supported, such as building technical and institutional capacities to help countries develop their climate resilient pathways, alongside lending activities which invest in project preparation activities or project specific assessments that are critical to getting clean energy projects off the ground, e.g., green jobs assessments, planning for just transitions, climate-risk vulnerability, adaptation, mitigation analyses, etc.
Following the Covid pandemic, a special second track for funding was developed focused on mobilizing funds to support developing countries make a green and resilient recovery. This led to the development of a portfolio of 40 projects to be implemented in over 50 countries across the globe. These projects straddled multiple areas ranging from climate adaptation efforts, to incorporating just energy transitions, creation of green jobs and markets, clean cooking, green hydrogen, power system resilience, e-mobility, among others.
TAF deploys a partnership-based delivery model. This Partner Network approach pools valuable and extensive practitioner knowledge and experience from a range of influential partners and allies to overcome barriers in the preliminary stages for clean energy transitions. The International Energy Agency (IEA), Green Climate Fund (GCF), the Organization for Economic Cooperation & Development (OECD), Bloomberg NEF, Climate Policy Initiative (CPI), and The Energy & Resources Institute (TERI) are amongst the active partners in TAF.
This wide range of expertise enables TAF to ensure efficient use of resources, avoid duplication, enhance the delivery of grassroot in-country activities, and proliferate collaborative opportunities to enhance the mitigation ambitions of beneficiaries. Its effectiveness is further amplified by the strong participation and leveraging of private sector actors such as investors, developers, corporations, and financial institutes, at early stages.
A major barrier to success is that developing economies have limited ability to attract investment for their clean energy ambitions. Large investments are required to help countries move away from fossil fuel dependence onto sustainable pathways. There are various reasons for this, which include poor credit history and low access to reasonably priced credit. However, the perceptions of risk wrapped up in the governance and institutional capacities of developing countries can be the most difficult hurdle for potential investors to overcome.
TAF seeks to navigate these perceptions, to de-risk investment and attract investors by funding the groundwork, and first stage building blocks needed to create a frictionless transfer to clean energy inside a host economy.