The Asian Development Bank (ADB) has announced a new financing program for the Asia Pacific (APAC), which will significantly help the region accelerate actions required to combat climate change.

The program – Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP) will initially include Denmark, Japan, South Korea, Sweden, the United Kingdom, and the United States as partner nations.

IF-CAP financing will contribute to ADB’s ambition for $100 billion from its resources for combating climate change for 2019–2030.

The partner countries are now in discussions with ADB to extend a range of grants for project preparation along with an initial ambition of $3 billion in guarantees for parts of the latter’s sovereign loan portfolio.

The guarantees will limit the risk exposure, allowing ADB to free up capital that would, in turn, accelerate new loans required for climate action by encouraging the adoption of renewable energy.

The guarantee mechanism is said to be the first of its kind adopted by a multilateral development bank for climate finance.

ADB said that with a model of ‘$1 in, $5 out,’ the initial ambition of $3 billion in guarantees could create up to $15 billion in new loans for much-needed climate projects across the APAC region.

ADB President Masatsugu Asakawa said, “Climate change is the critical issue of our lifetime, and here in Asia and the Pacific, we are on the frontlines of that battle. The climate events we have experienced over the past 12 months will only increase in intensity and frequency, so we must take bold action now. IF-CAP is an exciting, innovative program that will have a real impact. And it is another example of how ADB serves as the climate bank for Asia and the Pacific.”

ADB is now negotiating terms with potential partners, such as bilateral and multilateral sources, the private sector, and philanthropies, to further catalyze climate investments.

Earlier this year, Indian solar and agricultural waste-to-energy company SAEL Industries inked a loan agreement with ADB for up to ₹7.5 billion (~$91.16 million) to promote biomass energy generation using agriculture residue.

Last November, ADB signed a $40 million financing package with shared electric mobility company GreenCell Express to develop 255 battery-powered electric buses.