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Bank of America
today announced a Catalytic Finance Initiative, designed to
stimulate at least $10 billion of new investment into high-impact clean energy
projects. The initiative will focus on developing or advancing innovative
financing structures that reduce investment risk, thereby attracting a broader
range of institutional investors.
“We want to take a leadership role in helping remove barriers to investment in
clean energy projects around the world,” said Brian Moynihan, Bank of America
chief executive officer. “The capital we commit and our strong global client
and institutional investor relationships can lead to considerable additional
investments in a lower carbon future.” Moynihan was the only U.S. CEO who
spoke today at the United Nations Climate Summit Finance Session.
As part of the initiative, Bank of America will commit $1 billion in capital
to investment structures that employ a range of de-risking tools, developed in
conjunction with development finance institutions (DFIs), insurance providers,
foundations and institutional investors. The goal of the initiative is to make
clean energy investments more financeable, particularly in emerging markets
where project impact is often amplified – addressing other large-scale issues
like health, education and job creation.
The Catalytic Finance Initiative will broaden the impact of the bank's work
with partner organizations and ensure that at least $10 billion of incremental
capital is deployed in investments in renewable energy, energy efficiency and
energy access. It will target primarily larger-scale financing opportunities
that use de-risking structures such as first loss and mezzanine tranches, risk
guarantees and new insurance products to crowd-in capital that would not
otherwise be deployed in this sector. The bank will also explore opportunities
to work with foundations and impact-focused clients to support smaller, energy
access opportunities, using innovative catalytic first-loss capital and other
forms of credit support.
“In recent years, there's been increased focus on de-risking tools that can be
used to support clean energy and energy efficiency investment,” said Purna
Saggurti, Bank of America Merrill Lynch chairman of Global Corporate and
Investment Banking. “We look forward to expanding our work with DFIs,
investors and peers to develop approaches to credit enhancement, blended
finance and aggregation structures that will open the door for a rapid rise in
investment in this area.”
“The financing gap is significant, and we really welcome Bank of America's
leadership in this area. We look forward to working with them and other global
banks to accelerate private sector investment into renewable energy, energy
efficiency and energy access,” said Rachel Kyte, group vice president and
special envoy for Climate Change, World Bank Group.
"Bank of America's bold contribution demonstrates the leadership and
public-private partnership required to catalyze action towards a low-carbon
economy. Transformative change will follow many such initiatives,” said Achim
Steiner, UN Under-Secretary-General and executive director of United Nations
Environmental Programme.
"It is essential to bring together both private and public funding if we are
to secure the investment needed to address the problems created by climate
change. The European Investment Bank is committed to supporting clean energy
investment around the world. Initiatives such as Bank of America's for
catalytic finance help to increase the opportunities for institutional
investors. We particularly welcome its clear aim to increase co-operation
between development finance institutions and private capital," said Jonathan
Taylor, European Investment Bank vice president responsible for climate
action.
"Accelerating clean energy investments globally isn't just about needing
stronger government policies that will incentivize low-carbon technologies.
It's also about creating a broader array of financing vehicles that investors
can utilize to stimulate capital flows. Bank of America's new initiative is
hugely important because it acknowledges this financing gap and aims to help
fix it," said Mindy Lubber, president of Ceres and director of the Investor
Network on Climate Risk.
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