EUR 185 trillion is the financing gap to deliver on Net Zero by 2050, and 70 % of the infrastructure investment needed for the low-carbon transition is to be deployed in emerging markets and developing economies, some experts estimate. This is not least the case for Asia and the Pacific generating around 60% of global CO2 emissions.
As part of the solution, the Danish Investment Fund for Developing Countries (IFU) is issuing a USD 100 million guarantee to the Asian Development Bank’s (ADB) groundbreaking Innovative Finance for Climate in Asia and the Pacific Initiative (IF-CAP). The guarantee is issued on behalf of the Danish State and is expected to mobilize approx. USD 450 million in new climate finance to developing countries as part of the USD 10 billion deal. This scale is likely one of the largest climate finance deals in the world this year.
Launched by the Asian Development Bank, IF-CAP aims to address the urgent climate needs of Asia and the Pacific through innovative financial mechanisms for new investment into climate-related projects. The objective is to provide scalable, replicable financial solutions to help countries achieve their climate goals and drive sustainable economic growth for the benefit of their people.
“IFU is very pleased to issue this guarantee on behalf of Denmark. The collaboration demonstrates IFU’s dedication to partnering with global organizations to tackle the most pressing environmental challenges, and aligns with our strategic objective of mobilising private capital for sustainable economic development in emerging markets and developing economies,” said Søren Peter Andreasen, Deputy CEO, IFU.
IF-CAP is a partnership between ADB and Denmark, Sweden, UK, US, Japan, and South Korea. The total guarantee from the six countries is USD 2.28 billion, which is expected to unlock more than USD 10 billion in new capital for climate finance.