UN Climate Fund may leverage money sevenfold

The United Nations Green Climate Fund (GCF) is likely to use finance instruments like loan guarantees and grants covering initial losses to leverage its ability to fund emissions-cutting projects sevenfold, Bloomberg News reported.

The GCF’s finance instruments would use private sector money to extend its own funding to help make green projects more attainable.

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The fund’s board agreed to allow the loan instruments at a meeting in South Korea last year, Bloomberg said, citing Abyd Karmali, a Bank of America Merrill Lynch official who attended the meeting.

Karmali told Bloomberg that the GCF’s rules are “as friendly to private finance as possible.”

The board is considering using grants to help bundle small emissions-reduction projects together and using first-loss equity stakes and subordinated debt to lower investors’ risks.

The GCF told Bloomberg it will publish its decision on the matter next week.