Clean Technology Fund

Clean Technology Fund


The Clean Technology Fund (CTF), one of two multi-donor Trust Funds within the Climate Investment Funds (CIFs), promotes scaled-up financing for demonstration, deployment and transfer of low-carbon technologies with significant potential for long-term greenhouse gas emissions savings. Channelled through the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, and World Bank Group, the CTF finances 12 country programmes and one regional programme.

Basic Description

Name of Fund Clean Technology Fund (CTF)
Official Fund Website
Date Created Date fund proposed: February 2008.
Date fund made operational: 1 July 2008 (approved by the World Bank Board of Directors).
Proposed Life of Fund The design of the CTF includes a “sunset clause” which stipulates that necessary steps to conclude CTF operations shall be taken once a new (UNFCCC) financial architecture takes effect. Any remaining CTF funds may be transferred to another fund with a similar objective. Should UNFCCC negotiations result in a renewed mandate for the CTF, operations may continue with appropriate adjustments.
Administrating Organisation The World Bank is the Trustee and Administrating Unit of the CTF Trust Fund.

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) seeks to promote scaled-up financing for demonstration, deployment and transfer of low-carbon technologies with significant potential for long-term greenhouse gas emissions savings. It aims to:

1.   Provide positive incentives, through public and private sector investments, for the demonstration of low carbon development   and mitigation of greenhouse gas emissions;
2.   Fund low carbon programs and projects that are embedded in national plans and strategies, scaling up development and accelerating the diffusion and transfer of clean technologies;
3.   Realize environmental and social co-benefits, illustrating the potential for low-carbon technologies in contributing to sustainable development and the Millennium Development Goals;
4.   Support international cooperation on climate change;
5.   Utilize skills and capabilities of the MDBs to raise and deliver new and additional resources, including official and concessional funding, at significant scale; and
6.   Share experiences and lessons learned in responding to climate change challenges.

Activities Supported Activities supported by the CTF include programmes within the:

  • Power Sector: renewable energy and highly efficient technologies to reduce carbon intensity;
  • Transport Sector: efficiency and modal shifts; and
  • Energy Efficiency: buildings, industry, and agriculture

Options include programs and large-scale projects at:

  • Sectoral or sub-sectoral levels in a given country;
  • Sub-national levels, focusing activity on particular provinces/states/municipalities; and
  • Regional levels, particularly where regional cooperation is required.

Additionally, there are options for private sector engagement or public-private partnerships.

Conditions and Eligibility Requirements Country access requires:

  • ODA-eligibility (according to OECD/DAC guidelines); and
  • Existence of active multilateral development bank (MDB) country programs.

Project eligibility and level of financing is assessed on potential “transformative” effects as well as project viability in the absence of concessional finance. CTF programs are intended to “stimulate lasting changes in the structure or function of a sector, sub-sector or market” by improving internal rates of return on low GHG emissions investments.

Accessing the Fund Public Sector1.   MDBs jointly assess interested eligible countries’ investment potential to meet CTF investment criteria (above);
2.   Where there is a potential fit, MDBs conduct a joint exercise involving other relevant development partners, to discuss with interested governments, private industries and other stakeholders how CTF may help finance scaled-up low carbon activities;
3.   Under the leadership of the recipient country, an investment plan (essentially the MDBs’ “business plan”) is produced; and
4.   CTF Trust Fund Committee reviews the investment plan with a view to endorsing a resource envelope for programs/projects and authorising designated MDBs to proceed with development and preparation of individual investment operations for CTF co-financing.Private Sector

1)   Private sector proposals are submitted in the form of either

a)     individual large-scale projects (“Projects”); or
b)    program envelopes which aggregate several small and medium sized projects each utilising less than US$50 million of CTF funds and all having a shared focus and objective (“Programs”).

2)   Proposals explain how the Projects and Programs are expected to contribute towards the objective of achieving transformational outcomes in a sector, sub-sector, country, sub-national region, sub-region, or region while demonstrating that these outcomes would not be possible without support from the CTF.

Fund Governance

Decision Making Structure  The CTF is governed by the CTF Trust Fund Committee, MDB Committee, Partnership Forum, Administrative Unit and a Trustee.

CTF Trust Fund Committee

The CTF Trust Fund Committee was established to oversee the operations and activities of the CTF.Committee composition:

  • Eight representatives from donor countries, identified through a consultation with contributors;
  • Eight representatives from eligible recipient countries, identified through consultation with interested and eligible recipient countries;
  • One representative of a recipient country under consideration for a programme, project or investment plan for that period of deliberation;
  • One senior representative of the World Bank; and
  • One representative of the MDBs, to be decided by the MDB committee and rotating across MDBs.

Representatives from donor countries and eligible recipient countries are decision making members, and each serve two year terms. Terms are staggered so that not all Members are replaced every two years. If there are less than eight donor countries contributing to the CTF in any given year, the number of donor country representatives shall be reduced to equal the number of actual donors contributing to the CTF. Representatives may be reappointed.

The CTF Trust Fund Committee invites a number of active observers to attend its meetings, including representatives from

  • Four civil society organisations;
  • Two private sector entities;
  • UNDP;
  • UNEP;
  • Contributor countries other than member countries; and
  • Eligible recipient countries.

These observers have the power to add items to agenda, recommend external experts, and request verbal interventions during discussions.  However, not all sessions of the CTF committee meetings are open to observers. Deliberations over investment plans are at present closed “executive sessions”.

MDB Committee
The MDB Committee facilitates collaboration, coordination and the exchange of information, knowledge, and experience among MDB partners.

Partnership Forum
The Partnership Forum serves as an annual gathering which enables stakeholders to engage in dialogue on the CIF’s strategic directions, results and impacts.  Forum stakeholders include representatives of donor and eligible recipient countries, MDBs, UN and UN agencies, Global Environment Facility (GEF), UN Framework Convention on Climate Change (UNFCCC), the Adaptation Fund, bilateral development agencies, NGOs, Indigenous Peoples, private sector entities, and scientific and technical experts.  The Partnership Forum is co-chaired by the World Bank’s Vice President for Sustainable Development and a country representative elected by countries participating in the Partnership Forum.

Administrative Unit
The Administrative Unit supports the work of the CIF, the Trust Fund Committee and other committees. It is housed in the World Bank Group’s Washington DC offices and is comprised of a small professional and administrative staff.

The World Bank (International Bank for Reconstruction and Development) acts as Trustee for all Climate Investment Funds, including the CTF. It holds in trust, as a legal owner and administrator, the funds, assets and receipts that constitute the Trust Fund, pursuant to the terms entered into with the contributors.

Non-Government Stakeholder Participation 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 organisations, and the private sector. The CIF was created with agreement from some 40 developing and industrialised countries.Stakeholders can participate in the CTF as Observers to Trust Fund Committee meetings, and through the Partnership Forum, Private Sector Forum, and Civil Society Forum.
Information Disclosure Since March 2016  the CTF publishes open results data on its website.Gross fund disbursements are reported in the Trustee Reports on the Financial Status of the CTF, and presented at each CTF Trust Fund Committee meeting.

Disclosure Policy

In May 2009, the Trust Fund Committees approved a disclosure policy supporting in-country disclosure of country-owned investment plans and strategies (developed under the Trust Funds) prior to their submission to a CIF Committee for approval.

Proposed plans are also posted on the CIF website no later than three weeks prior to review of the proposal by a Committee. In the case of proposed programs and projects, an information document describing the proposal is to be made public at least two weeks prior to a decision on the funding of the proposal.

The policy recognises that a country or a project proposer may have justifiable reasons for not publicly disclosing all information in an investment plan or project, and in exceptional cases, subject to Committee approval, certain information may be kept confidential.

Issues Raised Design
The CIFs have been criticised for the speed with which they were designed, promoted and implemented.  Specifically, the Partnership Forums are considered to inadequately include or consult civil-society actors. Recommendations for a more formal role for civil society representatives have been made. The CIFs also create parallel structures for financing climate change adaptation and mitigation activities outside existing multilateral frameworks and within a process dominated by G8 countries.  Furthermore, although the Fund recognises UNFCCC principles, the language of the CIF implies that fund policies are guided but not bound by those principles.Technology
The ‘clean technologies’ supported by the CTF are a primary concern within Congress, prompting questions on whether the CTF should be “technology neutral,” enabling funding for carbon based investments. US lawmakers, including House Speaker Nancy Pelosi (D-Calif.), have opposed the inclusion of efficient coal-fired power plants within the definition of “clean energy”Projects
The Middle East and North Africa plan for concentrated solar power was criticised for:

  • generating energy for export rather than increased access;
  • using water-intensive technology in a water-scarce region; and
  • insufficient engagement with regional civil society actors.

MDBs administrative and overhead charges have been a cause of concern for some governments.

Relationship with Official Development Assistance

Inclusion as Official Development Assistance  Yes.

The application of all CIF finance (concessional loans, grants, and guarantees through the MDBs) can be classed as ODA by MDBs if:

  • It meets the criterion of promoting economic development and welfare;
  • The grant element is at least 25%; and
  • The funds are to be used in a country included in DAC list of ODA eligible countries.
Financial Instrument/ Delivery Mechanism Used (e.g. grant, loan)  The CTF uses a blend of financial instruments, including grants, concessional loans and guarantees to make investing in low carbon technologies more attractive to both public and private sector investors in developing countries. CTF financing provides a grant element tailored to cover the identifiable additional costs necessary to make the project viable, thereby providing the appropriate incentive to facilitate deployment of low carbon technologies at scale.The share of funding allocated to an MDB will be based on country requests, the quality of proposals, the comparative advantage of the MDB and experience in a region/country. The MDBs will rely on individual policies and procedures in developing and managing activities financed by the CTF, but will report directly to the CTF Trust Fund Committee on operational matters.

The terms of CTF financing are:

 Harder concessional Softer concessional
Maturity (years) 20 40
Grace period (years) 10 10
Principal repayments
(Yr 11-20)
10% 2%
Principal repayments
(Yr 20-40)
N/A 4%
MDB Fee 0.18% 0.18%
Service Charge Fiscal Year 09-10 0.75% 0.25%
Grant Element 45% 75%

Source: Climate Investment Funds ‘Clean Technology Fund Financing Products, Terms, and Review Procedures for Public Sector Operations’, November 7th, 2013.

Nature of Recipient Country Involvement CTF investment programs are developed on a country-specific basis to achieve nationally-defined objectives. CTF investment plans build on existing country-owned strategies or action plans and demonstrate complementarity to activities under other available programs, including those that are aimed at enhancing the enabling environment.It is envisaged that governments will play a central role in programming of the CTF’s public sector related projects and in donor coordination.