WASHINGTON, DC—Today, the Climate Investment Funds (CIF) launched the nearly $2.5 billion Accelerating Coal Transition (ACT) investment program, a first-ever effort to advance a just transition from coal power to clean energy in emerging economies. South Africa, India, Indonesia, and the Philippines, representing over 15% of coal-related emissions globally, have been selected as the first beneficiaries of the initiative.
While industrialized countries have allocated large pools of funding for this purpose domestically, no such facility has existed for developing countries until now. Promoting a shift away from coal power generation is a key priority of the COP26 in Glasgow, and essential to limiting global temperature rise to 1.5°C by 2030, a key target of the Paris Agreement.
The countries were selected on advice from an independent panel of experts, who assessed country candidates based on potential for transformational change and private sector mobilization, among other metrics. In the next phase of the program, ACT aims to support additional countries amid strong demand. Endorsed by the G7 this year, ACT is supported by financial pledges from the United States, United Kingdom, Germany, Canada, and Denmark.
Building on CIF’s unrivaled 12-year track record in climate finance mobilization, ACT will invest to de-risk, pilot, and scale investments across three critical dimensions of the coal transition: governance, people and communities, and infrastructure. This includes efforts to enhance in-country capacity to manage energy transitions, repurpose or decommission coal assets, and create sustainable economic opportunities and social protection programs for coal-dependent communities.
ACT will work through CIF’s six multilateral development bank partners to offer coal-transitioning countries an end-to-end financial toolkit combining significant concessional financing with technical assistance. Such investments will aim to raise national and global ambition by piloting effective strategies for phasing out coal that ignite change through a demonstration effect.
Coal combustion is costly for climate, the economy, and public health. It is the single-largest source of global temperature increase and contributes to air pollution that causes over 4 million deaths every year. Renewable energy is increasingly more economically competitive than coal, with the number of uncompetitive coal plants expected to grow by over two-thirds globally by 2025.
The transition to clean energy represents an enormous economic opportunity for developing countries. Low-cost renewable technologies including solar power, wind power, and energy storage systems give countries the opportunity to retire or re-purpose existing coal assets and re-evaluate plans to develop new ones. This will not only save money, but also create jobs and provide important climate, public health, and environmental benefits.
Minister for Clean Growth, Energy and Climate Change of the United Kingdom, Greg Hands: “As a leading donor of the Climate Investment Funds, I am delighted that the UK is among the first to pledge funding to its new Accelerating Coal Transitions programme. This will support South Africa, India, Indonesia, and the Philippines to tap into the economic opportunities that come with moving to renewable energy. Announced today as part of the UN COP26 climate summit this new $2 billion programme will be invaluable in providing developing countries with the tools and facilities they need to rapidly shift to clean power generation, helping the world to move away from coal and keep the 1.5 degrees target in reach.”
U.S. Treasury Secretary, Janet Yellen: “The CIFs have a proven ability to scale up targeted investments in clean technology and other areas, and the United States welcomes the new Accelerating Coal Transition Investment Program. This program fills an important gap in the existing climate finance architecture. It is an effective way to assist high-emitting middle-income countries, particularly those that are dependent on coal, to transition away from carbon intensive fuels and toward clean energy economies while supporting the most impacted communities.”
Minister of International Development and Minister Responsible for the Pacific Economic Development Agency of Canada, Harjit S. Sajjan: “Canada continues to support the work of the Climate Investment Funds and to work closely with allies in supporting developing countries phase out coal. At COP-26, Canada announced we will provide up to $1 billion to support these efforts. Together, we are building a cleaner world by transitioning away from the most polluting energy sources and investing in technology and infrastructure for the future.”
German Federal Minister for Economic Cooperation and Development, Dr. Gerd Müller: “In order to achieve the 1.5 degree target, the international community needs to radically change its course and massively reduce emissions. A global energy transition is needed, and this includes phasing out coal. In addition to Germany’s contribution of 260 million euros to the CIFs for the ACT Program, Germany is also providing bilateral support to expand renewable energy in South Africa, India and Indonesia.”
Minister for Foreign Affairs of Denmark, Jeppe Kofod: “The Danish Government gives high importance to the phasing out of coal globally in order to reach the goals of the Paris Agreement. I am therefore pleased to announce that we envisage a new Danish contribution to CIF’s Accelerated Coal Transition Programme. This support supplements our bilateral efforts to build up renewable energy and thus eventually reduce dependence on coal.”
Minister of Forestry and Fisheries and Environmental Affairs of South Africa, Barbara Creecy: "South Africa has taken a bold step in adopting ambitious mitigation targets, and is looking forward to a bold outcome from COP 26 with regards to providing the necessary support to developing countries for the implementation of their NDCs. As a country heavily reliant on coal for electricity generation, we need to ensure that the transition towards a low carbon future is a just one. The Accelerated Coal Transition programme of the CIFs provides the foundational support for such a just transition and facilitates the de-risking of investments and creating opportunities for leveraging and catalysing sustainable finance.”
Minister of Energy and Mineral Resources of Indonesia, Arifin Tasrif: "Climate change is a global challenge that needs to be addressed by all parties through leading by example. We should not stop only at making promises, but instead we should devote our joint efforts to implement those commitments. Indonesia, with the support from CIF’s Accelerating Coal Transition (ACT) Investment Program, is committed to reduce and replace our coal power plants with renewables as part of our efforts in energy transition. On this note, I would like to thank the ACT Investment Program for its continuing support for Indonesia towards clean and sustainable future."
CEO of the Climate Investment Funds, Mafalda Duarte: “Coal is a high-emitting power source at odds with a climate-smart future. Markets are starting to trend in the right direction, but the transition is not happening fast enough to respond to the urgency of the climate crisis. This is especially true in developing countries, where the steep political, social, and economic barriers remain. Overcoming these obstacles is what ACT is all about.”
Learn more about ACT Factsheet and ACT Video
About the Climate Investment Funds
The Climate Investment Funds (CIF) was established in 2008 to mobilize resources and trigger investments for low-carbon, climate-resilient development in select low and middle-income countries. 14 contributor countries have pledged up to $10.5 billion to the Funds. To date, committed CIF capital has generated an additional $61 billion in co-financing for mitigation and adaptation interventions at scale in 72 recipient countries. CIF is one of the largest active climate finance mechanisms in the world. https://www.climateinvestmentfunds.org
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Scott Vincent Andrews