Name of Fund

Clean Technology Fund (CTF).

Date created

Date fund proposed: February 2008

Date fund made operational: Approved by the World Bank Board of Directors on July 1, 2008

Administrating organisation

The World Bank is the Trustee of the CTF Trust Fund.  An Administrative Unit for the Climate Investment Funds has been established in the World Bank, in order to (i) manage the meetings of the CIF's Trust Fund Committees and the Strategic Climate Fund (SCF) Sub-Committees, in collaboration with the Multilateral Development Banks; (ii) ensure collaboration and communication among the Multilateral Development Banks and convene meetings of the MDB Committee; and, (iii) promote cooperation with other development partners to advance the objectives of the Climate Investment Funds.

The World Bank Group, the African Development Bank, the Asian Development Bank, the European Development Bank, and the Inter-American Development Bank are the implementing agencies for CTF investments. 

Objectives

The Clean Technology Fund (CTF) is one of the two (along with the Strategic Climate Fund) multi-donor Trust Funds within the Climate Investment Funds (CIF). The CIFs have been designed to support low-carbon and climate-resilient development through scaled-up financing channeled through the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, and World Bank Group. The CTF aims to finance transformational actions by:

(a) Providing positive incentives for the demonstration of low carbon development and mitigation of greenhouse gas emissions through public and private sector investments;
(b) Promoting scaled-up deployment, diffusion and transfer of clean technologies by funding low carbon programs and projects that are embedded in national plans and strategies to accelerate their implementation;
(c) Promoting realization of environmental and social co-benefits thus demonstrating the potential for low-carbon technologies to contribute to sustainable development and the achievement of the Millennium Development Goals;
(d) Promoting international cooperation on climate change and supporting agreement on the future of the climate change regime;
(e) Utilizing skills and capabilities of the MDBs to raise and deliver new and additional resources, including official and concessional funding, at significant scale; and
(f) Providing experience and lessons in responding to the challenge of climate change through learning-by-doing.

Donor contributions

Activities supported

The Clean Technology Fund will invest in projects and programs that contribute to demonstration, deployment and transfer of low carbon technologies with a significant potential for long term greenhouse gas emissions savings. As country circumstances differ, investment programs will be developed on a country-specific basis to achieve nationally-defined objectives. Options include programs and large-scaled projects:

 (a) At the sectoral or sub-sectoral level in a given country;

 (b) Sub-nationally, by focusing activity on a particular province/state/municipality;

 (c) Regionally, particularly where regional cooperation is required;

 (d) Through the private sector, or public-private partnerships.

Potential sectors for CTF investments are in the power sector (renewable energy, as well as increased efficiency in generation, transmission and distribution); transportation (modal shifts to public transportation, improved fuel economy, and fuel switching); and large scale adoption of energy efficient technologies in the industrial, commercial and residential building sectors.

Conditions and eligibility requirements

Country access will be based on:

(a) ODA-eligibility (according to OECD/DAC guidelines); and
(b) an active multilateral development bank (MDB) country program.

The CTF Trust Fund Committee envisages that resources of the fund should not be spread too thinly if the fund is to achieve its objectives.  Therefore, it is expected that fifteen to twenty investment plans for CTF co-financing should be prepared for consideration by the Trust Fund Committee. The investment plan is “business plan” of the multilateral development banks (MDBs), developed under the leadership of the government, to assist a country with CTF co-financing in implementing its national development strategies and programs with low carbon objectives.  The investment plan is agreed among, and owned by, the government and the MDBs. 

Funds disbursed to date

Cumulative disbursements (as of Oct 2009) include USD 5 million for projects and USD 4.3 million for administration (total = 9.3).

Uptake and projects supported

Proposed life of fund

Further information

For general information, meeting documents, governance framework, Trustee reports, investment criteria, operations summaries, and annual reports, visit: http://www.climateinvestmentfunds.org/cif/node/2

Decision-making structure for fund disbursement

Decision-making will be by consensus of the voting members of the Trust Fund Committee. If consensus is not possible, then a proposed decision will be postponed or withdrawn.

The Trust Fund Committee will be responsible for:

• Approving programming and pipeline priorities, operational criteria and financing modalities; 
• Ensuring that the strategic orientation of the CTF is guided by the principles of the UNFCCC; 
• Endorsing further development of activities in investment plans for trust fund financing;
• Approving trust fund financing for programs, projects and administrative budgets.

The Trust Fund Committee will consist of:

(a) Eight representatives from donor countries or groups of such countries to the CTF identified through a consultation among such donors, and eight representatives from eligible recipient countries or groups of such countries identified through a consultation among interested recipient countries; provided; however, (i) if there are less than eight donor countries contributing to the CTF during the first year of the CTF operations, potential donor countries, identified through a consultation among the donor and potential donor countries, may serve as representatives from donor countries, and (ii) if there are less than eight donor countries contributing to the CTF in the subsequent years, the number of donor country representatives and recipient country representatives, respectively, shall be reduced to equal the number of actual donors contributing to the CTF. Representatives will serve for two year terms, except that they may serve for a one year term for the first year of the CTF operations and terms will be staggered so not all representatives are replaced each year. Representatives may be reappointed;

(b) Whenever the Trust Fund Committee considers an investment plan for a country or a program or project to be financed by the fund, the recipient country concerned will be invited to participate in the Trust Fund Committee during its deliberations on the work program, program or project;

(c) A senior representative of the World Bank, recognizing the role of the World Bank as the overall coordinator of the CIF partnership;

(d) A representative of the MDB partners to be identified by the MDB Committee and chosen on the basis of rotation among the MDBs .

Consultations with non-government stakeholders

In designing the Climate Investment Funds, consultations took place with potential donors and recipients, the United Nations family, other multilateral development banks (MDBs), civil society organizations, and the private sector.  At a final design meeting, held in Potsdam, Germany, on May 21-22, 2008, representatives from some 40 developing and industrialized countries agreed to create the CIF.

The Fund includes a Partnership Forum – a broad-based meeting of stakeholders, including donor and eligible recipient countries, MDBs, UN and UN agencies, GEF, UNFCCC, the Adaptation Fund, bilateral development agencies, NGOs, private sector entities, and scientific and technical experts. The group will be convened annually to provide a forum for dialogue on the strategic directions, results and impacts of the CIF. The Partnership Forum will be co-chaired by the World Bank Vice President for the Sustainable Development Network and a country representative elected by countries participating in the Partnership Forum.

The Partnership Forum will be a meeting for dialogue and consultation and will not lead to written outcomes, such as agreed texts or declarations, which could be used as a basis for discussions in the UNFCCC.

The ‘Proposal for inviting representatives of civil society to observe meetings of the CIF Trust Fund Committees’ was presented to the CTF Committee Meeting (29 Jan, 2009). At the January 29, 2009 CTF Committee meeting, it was decided that four civil society positions will be created, and will include local groups, indigenous people, and research/technical NGOs. Two private sector positions will be established as observers.

How fund disbursement is reported

Issues raised by the public

Some believe that the CTF Partnership Forum is an inadequate provision for proper inclusion and consultation of civil-society stakeholders.A more formal role for representatives of civil society in the governance of the fund – perhaps as an independent technical expert –would be valuable. (see: http://www.wri.org/publication/us-contributions-world-bank-clean-technology-fund)

The Trust Fund Committee approved a proposal for Civil Society representatives to observe meetings of the Trust Fund Committee in January 2009.

The World Bank’s CIFs will create parallel structures for financing climate change adaptation and The SCF has been criticised by civil society groups for creating parallel structures for financing climate change adaptation and mitigation outside the ongoing multilateral framework for climate change negotiations and within a process dominated by G8 countries. Developing countries have long argued for greater commitments and increases in financial resources under the UNFCCC to enable them to fulfil their obligations under the Convention but have maintained that such resources should be placed under the guidance of the state parties to the Convention to ensure consistency with internationally agreed priorities and principles (See: Celine Tan, Third World Network, ‘World Bank’s Climate Funds Will Undermine Global Climate Action’ 10 April 2008: www.twnside.org.sg/title2/finance/docs/Climate.Funds-Commentary.Revised.doc).

The CIFs are also criticised for the significant speed at which they have been designed, promoted and implemented without due consultation with wider stakeholders. (See: Celine Tan, Third World Network, ‘No additionality, new conditionality: a critique of the World Bank’s Climate Investment Funds’ Briefing Paper 2, 2008: www.foe.org/pdf/CIF_TWNanalysis.pdf).

The language of the Fund has been criticised for implying recognition of the UNFCCC principles as merely guidance for the Fund’s policies rather than as binding internationally negotiated commitments of state parties which must be respected. They also demonstrate a lack of familiarity with the principles negotiated under the Convention and the legal status of commitments under the UNFCCC (see: http://www.twnside.org.sg/title2/finance/twninfofinance20080510.htm).