Climate Finance Broker Facility
Upon enhancing its NDC in 2020, Colombia’s National Planning Department, with support from the NDC Partnership, began working to establish the Climate Finance Broker Facility, a broker-type intermediation system designed to connect climate action market opportunities with sources of financing. As Colombia seeks to identify sectoral and territorial projects and match them with different sources of financing, it is beneficial to have a system for coordinating and prioritizing actions. Therefore, a fundamental part of the Climate Finance Broker Facility is to guarantee and identify market signals as incentives that promote the development of these priorities.
This initiative will contribute to building a market model that provides solutions to promote the mobilization of climate finance resources from the public and private sectors, both domestic and international. Furthermore, this initiative is in line with the provisions of the National Climate Finance Strategy and the measures contained in Colombia’s NDC.
More specifically, the Climate Finance Broker Facility seeks to:
- Orient funding resources for the implementation of Colombia’s climate commitments.
- Provide a flow of information by mapping sectoral needs to build the roadmap for NDC financing.
- Develop an inventory of green financial products: national development banks, commercial banks, investment funds and international cooperation resources.
- Connect programs, projects and initiatives that have technical and financial support needs with potential sources of financing. These should be aligned with Colombia’s NDC priorities and measures.
- Support, when applicable, coordination between proponents of programs, projects and initiatives and funding resources.
To further develop the structure of the Broker Facility, several initiatives have been ongoing to strengthen it. This includes designing a software tool with support from GIZ–a Minimum Viable Product (MVP) –to strengthen the capabilities of project developers (e.g., knowledge about the countries priorities, green taxonomy, project structure, and financial sources). In addition, the United Kingdom’s Climate Finance Accelerator (CFA) has been integrated into the Facility and officially launched a call for projects. Thus far, 7 climate projects are working on their capacity building and requesting resources in excess of US$1 million. The private sector is engaged with the CFA and the governance is made up of different government entities and financial institutions. The Global Green Growth Institute (GGGI) is supporting the development and implementation, of the Broker Facility. Several other partners, such as the United States Agency for International Development (USAID), the United Nations Department of Economic and Social Affairs (UNDESA) and the World Wildlife Fund (WWF) through the green finance Platform of Heritage Colombia (HECO) are heavily involved in various aspects building the Facility, in addition to multiple Colombian line ministries.
Meanwhile the FDN (National Development Financial Corporation), a National Development Bank seeks to attract financing from external institutions, which will help to create and secure attractive financial conditions for developers of electric mobility and renewable energy projects. FDN Blended Finance support seeks to explore expressions of interest from all members of the partnership, as well as information on possible financing opportunities.
It is still early days for the Broker Facility with additional activities currently underway. These include: building a flow of information and a portfolio of projects by mapping sectoral and territorial needs; defining sectoral clusters to improve inter-institutional coordination, defining priorities to obtain international support and allocation of private financing; streamlining the management of climate finance and make it more accessible to all those who have a role in the implementation of Colombia’s climate commitments; structuring sectoral clusters in order to develop a pipeline of projects and a roster of potential companies align to the NDC agenda; and in partnership with CDP to have an Investor’s Temperature Scoreboard that provides recommendations on the performance of companies that will inform investors which companies could potentially impact their investment portfolios.