ADB Announces Climate Finance Facility for Asia and Pacific

The Asian Development Bank (ADB) has announced the Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP), a groundbreaking program that could significantly boost support for the region in its fight against climate change. ADB President Masatsugu Asakawa revealed the initiative at ADB's 56th Annual Meeting in Incheon, South Korea.

Asakawa emphasized the urgent need to tackle climate change, stating, "The climate events we have experienced over the past 12 months will only increase in intensity and frequency, so we must take bold action now. IF-CAP is an exciting, innovative program that will have a real impact. And it is another example of how ADB serves as the climate bank for Asia and the Pacific."

Asia and the Pacific are particularly vulnerable to the impacts of climate change, such as hurricanes, droughts, heatwaves, floods, and rising sea levels. A significant climate financing gap must be bridged to effectively combat climate change. As the region's climate bank, ADB is developing innovative financing models, such as IF-CAP, to address this need.

IF-CAP will leverage guarantees from partners to accelerate billions of dollars in essential climate change investment. This is the first time a multilateral development bank has adopted a program of this kind. Initial partners include Denmark, Japan, the Republic of Korea, Sweden, the United Kingdom, and the United States.

These partners are in discussions with ADB about providing grants for project preparation and guarantees for portions of ADB's sovereign loan portfolios. The reduced risk exposure resulting from these guarantees will enable ADB to free up capital for new loans for climate projects. With a "$1 in, $5 out" model, the initial goal of $3 billion in guarantees could generate up to $15 billion in new loans for critical climate projects across Asia and the Pacific.

IF-CAP financing will contribute to ADB's increased ambition to provide $100 billion from its own resources for climate change between 2019 and 2030. ADB is in discussions with potential partners, such as bilateral and multilateral sources, the private sector, and philanthropies, including the Global Energy Alliance for People and Planet, to catalyze climate investments.