The Asian Development Bank (ADB) is planning to channel around $700 million from two new investment funds to its developing member countries as part of a broad global initiative to help developing countries meet the cost of actions needed to combat climate change.
Donor countries had pledged over $6.1 billion in 2008 for the Clean Technology Fund and Strategic Climate Fund, said ADB press release received here on Saturday adding that the climate investment funds (CIF) are being made available to multilateral development banks, including ADB, for climate change-related investments.
The Clean Technology Fund will support the deployment of low carbon energy technologies, such as wind, solar, hydro and geothermal power, as well as energy efficiency measures for industry, commercial buildings and municipalities.
Activities supported by this fund will get co-financing from ADB's regular operations, and this is expected to mobilize additional financing from both the state and private sectors.
The Strategic Climate Fund will support pilot programs on climate resilience, forest investment and scaling up renewable energy use for low-income countries, with the end goal of demonstrating effective climate mitigation and adaptation interventions that can be expanded and replicated in future.
The two funds are designed to be interim financing tools and will be discontinued once the United Nations Framework Convention on Climate Change completes deliberations on a new global program for addressing climate change, and the new financial mechanisms needed to support it.
Money released by the Strategic Climate Fund will be in the form of grants, the press release added.
The Clean Technology Fund will issue concessional loans with interest on the loans as low at 0.25% for up to 40 years, it said adding that risk mitigation instruments such as guarantees and equity will also be available. The money can be tapped for both public and private sector initiatives.