Meet the woman who oversees one of the world's largest climate funds

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Katie FehrenbacherThe Climate Investment Funds hopes to stimulate clean energy projects in the developing world.

For a woman that manages an $8.3 billion fund that supports 140 clean energy projects around the world, Mafalda Duarte is rather under-the-radar.

Duarte is the manager of The Climate Investment Funds(CIF), a financial mechanism that was created in 2008 and has amassed billion-dollar pledges from developed countries — like the U.S., the U.K., Japan, and Germany — for a variety of projects that can lower carbon emissions. The funds are also used to kickstart new markets in developing countries like, for instance, a large solar thermal farm in Morocco, a geothermal plant in Indonesia and energy efficiency upgrades for buildings in Turkey.

The CIF isn’t a fund in the traditional private sector sort of way. The money is dispersed by development banks (like the World Bank and the Asian and African development banks) that work with local governments, regional developers and private investors. A big chunk of the funds that are allocated to these projects are in the form of low-cost loans, but some are also given as grants depending on the particular project and the economic health of the country.

Mafalda Duarte, Program Manager of the CIF funds, at an event in April 2015,courtesy of CIF.

What success looks like

I caught up with Duarte — who took over as head of the CIF last summer after working as a coordinator for the African Development Bank — on the phone last week between speaking gigs and her naturally busy schedule. She has a full time staff of about 30 people working for her.

When I asked her about what success looks like for the CIF she said it was “when we’re not needed anymore,” explaining that when CIF can stimulate a market that can later develop enough to operate on its own, then it’s reached success. The Department of Energy Secretary Ernest Moniz gave me a similar answer when I asked him the same question last year in reference to the DOE’s loan program.

One of the major goals for CIF is to use its billions of dollars to attract additional private investments. According to the agency, 30 percent of total funds are expected to stimulate private sector participation and the group says it is anticipating $23 billion in co-financing across its clean energy projects (though, these figures are a little controversial).

A solar thermal plant in India, backed by CIF funds. Courtesy ofCIF.

The idea is that together CIF funds and private sector funding can kick start local markets in developing countries that are on the edge of being economically sustainable. For example, the CIF’s contribution to solar thermal technology, which is a type of solar power that uses mirrors and lenses to heat the sun ray’s to make electricity (in contrast to solar panels that convert sun light directly into electricity). Currently solar thermal technology is usually significantly more expensive to deploy than solar panel tech, which means far fewer solar thermal power plants have been built across the globe compared to solar panel farms.

But CIF investments, through low-cost loans for solar thermal projects, could help set up about “one third of the current global installed capacity,” of solar thermal power plants and thus could help lower the overall global cost of solar thermal tech. If solar thermal tech becomes less expensive, the private sector could take over more of future funding for these projects, like the private sector currently does for solar panel farms; at least that’s the goal.

It’s complicated

But some of the funding isn’t about market creation, it’s about aid. About 60 percent of the fund is focused on getting clean energy projects (like solar and geothermal) developed, but there’s also $1.2 billion being allocated for helping communities adapt to climate change (infrastructure for rising seas and extreme weather), and $785 million for helping countries reduce deforestation and forest degradation (a core way to curtail carbon emissions).

Because there’s so much going on, and it’s such a unique entity, a lot of it can be experimental, really. Over the last seven years the group — which calls itself a “living laboratory for climate finance” — has learned a great deal as arguably the biggest experiment of this kind.

A man cuts wood in Burkina Faso. Much of the wood in the region is cut illegally from forests, which contributes to carbon emissions.Courtesy of CIF.

Duarte says one of the most important lessons she’s learned is to “be mindful that there are no blue prints.” Each country is in a different phase of development and each country has different challenges. “You have to tailor the investments,” she says, there’s no one-size-fits-all.

Another important lesson she says is that when entering a brand new country with new project ideas, you could be in for a “bumpy” ride. Often times in a developing country, if there aren’t regulations supporting clean energy and energy efficiency projects, the infrastructure could take a long time to get the go ahead. About a third of the 140 clean energy projects in the CIF’s pipeline are moving substantially forward toward deployment.

That number illuminates one of the biggest unknowns, and controversies, with the CIF funds: they’ve only been around for seven years, so many of the clean energy projects — which can take years to move from idea, to approved, to funded, to constructed and later operation — have yet to come to fruition. The funds have also been criticized for being unaccountable and undemocratic, and an evaluationconducted about the fund found it lacked transparency in some instances.

The CIF funds are also controversial because CIF is not overseen by the United Nations Framework Convention on Climate Change. In 2010, the UNFCCC created another fund, the Green Climate Fund, to finance lowering climate emissions in a similar manner. The future of the CIF funds are now uncertain in that they have a “sunset clause,” where they could transform, be phased out, or even incorporated into the GCF.

But in the countries where the CIF funds have delivered results and even created new markets, there’s been high demand, says Duarte. She says “countries want to do more,” and there’s a pipeline of projects that won’t actually get done unless the CIF gets more funding (more pledges from developed governments).

With the United Nations talks coming up in Paris in December, attention is once again returning to how to address climate change globally. And likely it’ll be through the discussions that occur around that meeting that we’ll find out what happens with the CIF in the long run.