New grant seeks to develop better climate solution for Papua New Guinea & the Pacific


A new opportunity has emerged for private and public organisations in Papua New Guinea and the Pacific seeking funds to develop new projects to mitigate climate change.

The Australian Climate Finance Partnership (ACFP), a joint initiative between Australia’s Department of Foreign Affairs and Trade and the Asian Development Bank, is seeking to create better climate solutions in the Pacific. The emphasis is on being a catalyst for the private sector.

A grant of A$140 million (K366 million) from the Department of Foreign Affairs and Trade (DFAT) and managed by the Asian Development Bank (ADB) will fund the partnership. Financial support will be provided to ‘non-sovereign’ (non-government) entities, especially private or public organisations that operate commercially. They must be in Pacific or South East Asian countries, which encompasses Papua New Guinea.

Eligible projects can involve climate mitigation (reducing emissions, for example ) or climate adaptation (responses to the impact of higher emissions), including renewable energy, sustainable transport, energy efficiency, land-use and agribusiness, water supply and sanitation/wastewater treatment, solid waste management, blue carbon, agriculture and forestry, land use management, resilient infrastructure, marine and coastal ecosystem protection, healthcare, and disaster risk management.

Jamie Isbister, Australia’s Ambassador for the Environment, says the aim is to bring in other investment as well as the ACFP funding. ‘We are looking at how we can use different mechanisms such as blended finance and concessional loans.’

Isbister says governments can be more effective by leveraging and incentivising financing from the private sector. ‘The role of government is [to] partner effectively to deliver a greater effect than if we did it ourselves. The private sector is increasingly seeing opportunities to invest in large clean energy investments such as renewables and pumped hydro, micro grids, battery storage. We see this as a space to use public financing to de-risk some of those challenges.’


David Barton, Fund Manager for the Investment Funds and Special Initiatives Division, Private Sector Operations Department, at the ADB, says the key for applicants is not to look just at the type of projects but rather how these achieve climate mitigation or climate adaptation.

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The ADB needs some basic information to evaluate a project. ‘There is no one-size-fits-all,’ says Barton. Some of the information required is: a summary, a description, background on sponsors, a description of the ownership structure, how implementation will be achieved, the operations and the market’s size and characteristics. ‘Obviously, for the smaller deals there will be less information available,’ he says.

An additional consideration is the need to meet gender equity requirements. Suzanne Gaboury, Director General Private Sector Division at the ADB, says that by 2030 at least 75 per cent of the number of the ADB’s committed operations will promote gender equality. She explains that ‘impactful gender features should be integrated into the design’ of any application. Barton adds that a project should create ‘better economic opportunity for women and girls.’

The ACFP can provide funding in the form of debt, equity, guarantees, blended finance or technical assistance. The project funding size for the Pacific countries will be between A$1-10 million (K2.6-26.2 million) and last for a maximum of 20 years. The projects should aim to be commercially sustainable and ‘efficiently address market failures and minimise the risk of disrupting or unduly distorting markets.’ Barton says that the ACFP is ‘really aiming at bridging gaps and de-risking projects.’

Participation from commercial financiers will be sought, which Barton says may involve a ‘higher degree of concessionality’ (cheaper financing). These can include banks and non-banking financial intermediaries or private equity funds ‘if closely enough aligned’.

The ADB has limits on the amount of financing it can provide for a single project.

‘Typically the ADB would provide up to 25 per cent of the project cost,’ explains Barton. ‘The reason for that is not to try to take up too much space in these deals and leave other segments there for other players to come in.’ Equity investment is also capped at 25 per cent.

To request more information about the project, click here.

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