The Climate Investment Funds (CIFs)

The Climate Investment Funds (CIFs)

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Updated April 26, 2016
The Climate Investment Funds (CIFs)
International Environmental Assistance
commencement of the Green Climate Fund in the U.N.
Framework Convention on Climate Change [UNFCCC].)
Many governments hold that environmental degradation
and climate change pose international and trans-boundary
The Climate Investment Funds
risks to human populations, economies, and ecosystems. To
confront these challenges, governments have negotiated
Since 2008, the CIFs have provided 72 developing and
various international agreements to protect the
middle-income countries with financial resources to
environment, reduce pollution, conserve natural resources,
mitigate and manage the challenges of climate change and
and promote sustainable growth. While some observers call
reduce their greenhouse gas emissions. The CIFs are
upon industrialized countries to take the lead in addressing
composed of two separate trust funds—the Clean
these issues, many recognize that efforts are unlikely to be
Technology Fund (CTF) and the Strategic Climate Fund
sufficient without similar measures being taken in lower-
(SCF)—each with a specific scope, objective, and
income countries. However, lower-income countries, which
governing body. Overall, 14 contributor countries have
tend to focus on poverty reduction and economic growth,
pledged $8.1 billion to the funds since September 2008.
may not have the financial resources, technological know-
The contributions are expected to leverage an additional
how, and/or institutional capacity to deploy
$57 billion from other sources (e.g., MDBs, financial
environmentally protective measures on their own.
intermediaries, and the private sector).
Therefore, international financial assistance, or foreign aid,
has been a principal method for governments to support
For a full description of purpose and programs, see the CIFs
actions on global environmental problems in lower-income
website at http://www.climateinvestmentfunds.org/cif/.
countries. Often, this assistance can serve as a cost-effective
strategy for donor countries to provide greater market
Organizational Structure
access for domestic goods and services abroad and
The CIFs are implemented through a partnership of the
increased environmental benefits at home.
MDBs and governed by representatives from both the
contributor and recipient countries. The role of governance
The United States and other industrialized countries have
for the CIFs is to approve investment plans, programming,
committed to providing financial assistance for global
and the allocation of financial resources and to provide
environmental initiatives through a variety of multilateral
guidance, performance evaluation, and reporting. It is
agreements, including the Montreal Protocol (1987), the
further tasked with ensuring that the strategic orientation of
U.N. Framework Convention on Climate Change (1992),
the CIFs is guided by the principles of the UNFCCC. The
and the U.N. Convention to Combat Desertification (1994).
organizational structure of the CIFs is balanced between
International financial assistance takes many forms, from
contributor and developing countries. All decisions are
fiscal transfers to market transactions. It may include
made by consensus. Other international organizations, the
grants, loans, loan guarantees, export credits, insurance
private sector, and civil society representatives are included
products, and private sector investment. It may be
as observers. All observer roles are “active,” allowing them
structured as official bilateral development assistance or as
to take the floor, propose agenda items, and recommend
contributions to multilateral development banks (MDBs)
experts but not to vote. The governance structure of the
and other international financial institutions.
CIFs includes a Trust Fund Committee, an MDB
Background
Committee, a Partnership Forum, an Administrative Unit,
and the Trustee (the World Bank).
In February 2008, Japan, the United Kingdom, and the
Funding
United States announced their intention to create a set of
The United States pledged $2 billion to the CIFs in 2008.
funds at the MDBs to help developing countries “bridge the
gap between dirty and clean energy” and “boost the World
All U.S. funding is subject to annual congressional
Bank’s ability to help developing countries tackle climate
appropriations, and payments are made by the Treasury
Department to the World Bank as trustee for the CIFs.
change” (Henry Paulson, et al., “Financial Bridge from
Appropriations have varied widely over the years, largely
Dirty to Clean,” Financial Times, February 7, 2008). The
reflecting budget trends. Appropriations provided for in
World Bank held the first design meeting for the proposed
H.R. 2029, the Continuing Appropriations Act, 2016,
Climate Investment Funds (CIFs) in March 2008 in Paris,
enacted on December 18, 2015, as P.L. 114-113, served to
France. Two subsequent meetings were held in
fulfill the United States’ 2008 pledge. The Administration
Washington, DC, and Potsdam, Germany, and on May 23,
did not request any additional funds for FY2017. See Table
2008, representatives from 40 developing and industrialized
countries reached agreement on the funds’ design and
1 for a summary of U.S. contributions.
duration. (The CIFs were programmed to sunset upon the
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The Climate Investment Funds (CIFs)
Table 1. U.S. Contributions to the CIFs by Fiscal Year
The Strategic Climate Fund
Clean Technology
Strategic Climate
The SCF aims to help developing countries prepare for
Fund
Fund
climate change by promoting low-carbon, climate-resilient
Fiscal Year
(USD millions)
(USD millions)
development. Three targeted programs provide grants and
2010
$300.0
$75.0
concessional loans to pilot new approaches aimed at
specific challenges.
2011
$184.6
$50.0
The Forest Investment Program, approved in May 2009,
2012
$229.6
$74.9
supports developing countries’ efforts to reduce emissions
2013
$196.2
$110.2
from deforestation and forest degradation. It provides
financing for managing forests and for educating
2014
$209.6
$74.9
indigenous and local communities about national forest
2015
$201.2
$63.2
laws.
2016
$170.7
$59.6
The Pilot Program for Climate Resilience, approved in
Total
$1,492.0
$508.0
November 2008, was the first program under the SCF to
become operational. It supports ways to integrate climate
Source: CRS, from the U.S. Department of the Treasury.
risk and resilience into the development strategies of low-
The Clean Technology Fund
income countries. It finances efforts to provide technical
assistance to help with capacity building, policy reform, and
sector investment.
The CTF was established in 2008 to provide scaled-up
financing to middle-income countries to contribute to the
The Program for Scaling-Up Renewable Energy in Low
demonstration, deployment, and transfer of low-carbon
Income Countries, approved in May 2009, supports
technologies with the potential for long-term greenhouse
projects that demonstrate the social, economic, and
gas emissions savings. CTF concessional financing,
environmental viability of low-carbon development
channeled through five partner MDBs, focuses on large-
pathways in the energy sector. It seeks to create new
scale, country-led projects in renewable energy, energy
economic opportunities and increase energy access through
efficiency, and transport.
the production and use of renewable energy.
 Contributor countries have pledged $5.3 billion to the
Issues for Congress
CTF since 2008.

Congressional committees of jurisdiction over the CIFs
To date, the CTF supports 71 projects and programs
include the U.S. House of Representatives Committees on
totaling $3.4 billion and expects co-financing of $32
Foreign Affairs, Financial Services, and Appropriations and
billion from other sources.
the U.S. Senate Committees on Foreign Relations and
 CTF investments are projected to result in
Appropriations. The GEF, as a part of U.S. multilateral
approximately 15 gigawatts of installed electrical
assistance, is managed by the U.S. Department of the
capacity—44.6 million tons of greenhouse gas emission
Treasury and is funded through the Administration’s
reductions—per year at an energy savings of 8,900
International Affairs Function 150 account for State,
gigawatts per year.
Foreign Operations, and Related Programs.
The CTF differs from other mitigation-focused, multilateral
As Congress evaluates U.S. participation in the CIFs, it may
climate instruments by focusing on larger transactions in a
have questions concerning existing bilateral and multilateral
smaller number of countries. The CTF aims to drive down
programs that address international environmental issues.
technology costs, stimulate private sector participation, and
Some concerns may include the cost, purpose, direction,
catalyze transformations that can be replicated elsewhere.
efficiency, and effectiveness of these programs, as well as
the relationship between international development
The CTF is currently operational in 15 countries and one
assistance for the environment and the interests of industry,
region and includes plans in Chile, Colombia, Egypt, India,
investors, humanitarian efforts, national security, and
Indonesia, Kazakhstan, Mexico, Morocco, Nigeria, the
international leadership. For more discussion on the
Philippines, South Africa, Thailand, Turkey, Ukraine, and
benefits and costs of international environmental assistance,
Vietnam and one regional investment plan in the Middle
see CRS In Focus IF10397, The Global Climate Change
East and North Africa covering Algeria, Egypt, Jordan,
Initiative (GCCI): Budget Authority and Request, FY2015 -
Morocco, and Tunisia. Projects include support for wind
FY2017.
energy, urban public transportation systems, solar water
heaters, smart-grid development, and concentrating solar
Richard K. Lattanzio, Specialist in Environmental Policy
thermal power programs, among others.
IF10145

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The Climate Investment Funds (CIFs)

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