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Clean Technology Fund
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The Clean Technology Fund (CTF) is one of two Climate Investment Funds (CIF) of the World Bank1 ; it was launched on July 1, 2008 and has been pledged roughly $4.9 B by eight countries. The contributing countries are: Australia, France, Germany, Japan, Spain, Sweden, United Kingdom, United States. The pledges amount to approximately twice as much as the World Bank’s other Climate Investment Fund, the Strategic Climate Fund2 .
CTF’s development was prompted by several of UNFCCC’s principles: Principle #1 (Article 3(1)), Article 4(1)(c), and Article 11 (see UNFCCC Background). It represents a multilateral financial solution to supporting the establishment of clean technology worldwide3 . It can be defined as multilateral because of its cross-continental partnerships which include: The World Bank Group, African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, and the Inter-American Development Bank. These collective financial resources are referred to as MDBs (for Multilateral Development Banks)4 .
Proposals for funding will come directly from countries (or consortiums of countries) who have positive status (granted by the Organization for Economic Co-operation and Development, OECD) to receive Official Development Assistance (ODA). Principles that guide funding decisions include:
- the potential of a given plan to significantly reduce GHG emissions over the long term,
- the degree of synergy the plan demonstrates with national strategies,
- the measurable capability of the project to improve regional human conditions (using the Millenium Development Goals (MDGs) as a guide),
- the relative ability of the technology plan to be implemented.
Within this framework, projects are sought on a spectrum from national to regional and are expected to include the power, transportation, and building sectors.
Background
CTF states that it is guided by the belief that energy needs to be spent to combat the reality that climate change will disproportionately effect the poorest people of the world. Thus, MDBs are committed to fostering economic growth that is both sustainable and poverty-mitigating. They propose to do this through a country-led approach which will create a “future financial architecture” that will favor sustainable technology and which will achieve a high level of efficacy through a “learning-by-doing” approach (i.e. non-theoretical projects are preferential) 5 .
CTF considers itself a solution to an immediate need, an interim measure that hopes to jumpstart clean economic solutions. It contains a “sunset clause,” indicating that once country-level financial infrastructure is established, CTF will withdraw. In the meantime, CTF plans to work to expedite the process of Clean Technology development and implementation in the Developing world6 .
UNFCCC Background
Summaries of the UNFCCC's relevant, aforementioned Articles follow:
- In Principle #1, Article 3(1), the COP (Council of the Parties, governing body of the Convention) commit to the goal of working toward an equitable sustainability where the allocation of responsibility for funding climate change solutions rests more with the Developed world.7
- CTF also works toward the achievement of the ethic put forth in UNFCCC’s Article 4(1)(c) which designates the need for the proactive creation of an international, cooperative, and transparent economic climate for renewable/clean energy technology8 .
- Article 11 created the Global Environment Facility (GEF) which is the financial institution to support the initiatives of UNFCCC9 . Under Article 11, there are three scales on which GEF works to pursue its financial instrumentation: bilateral, regional, and multilateral.
Footnotes
1. The Clean Technology Fund (pdf, 53 pgs) The World Bank. June, 2008.
2. Clean Technology Fund, climatefundsupdate.org
3. United Nations Framework Convention of Climate Change (pdf, 25 pgs) United Nations Framework Convention on Climate Change, page 15.
4. The Clean Technology Fund (pdf, 53 pgs) The World Bank. June, 2008.
6. The Clean Technology Fund (pdf, 53 pgs) The World Bank. June, 2008.
7. United Nations Framework Convention on Climate Change (pdf, 25 pgs) United Nations Framework Convention on Climate Change, page 5, paragraph 6.
8. United Nations Framework Convention on Climate Change (pdf, 25 pgs) United Nations Framework Convention on Climate Change, page 6, paragraph 6.
9. United Nations Framework Convention on Climate Change (pdf, 25 pgs) United Nations Framework Convention on Climate Change, page 15.
5. United Nations Framework Convention of Climate Change (pdf, 25 pgs) United Nations Framework Convention on Climate Change.
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