Since 2008, the GEF and its Partner Agencies have successfully used a wide array of non-grant instruments such as debt, equity and guarantees to attract private sector investment and deliver global environmental benefits beyond business as usual. In GEF-6, the Non-Grant Instrument Pilot resulted in 11 innovative projects that included USD 99.5 million in GEF funding while attracting USD 1.79 billion in co-financing through a balanced regional distribution addressing fundamental drivers of global environmental degradation.
The pilot demonstrated that the use of non-grant instruments as blended finance can provide high leverage to the GEF investment. Project developers and GEF Partner Agencies are increasingly able to offer innovative financial instruments not only in climate change projects but also in “frontier” areas such as land degradation, biodiversity, chemicals and waste, and international waters where private sector investment is scarce.
The Seventh Replenishment of the GEF Trust Fund includes a Non-Grant Instrument Program (the GEF-7 “NGI Program”) which builds on the lessons learned in GEF-6 and expands the envelope of blended finance to USD 136 million. Under GEF-7, the GEF will accelerate the use of non-grant instruments in support of delivering global environmental benefits and continue to catalyze investments from capital markets at global and national levels aligned with focal area objectives. This is the third time that the GEF invites GEF Partner Agencies to submit proposals and investment opportunities under the GEF-7 NGI Program. The first call for proposals resulted in the approval of three projects by the GEF Council in December 2019 for a total amount of USD 35.4 million. The second call for proposals resulted in the approval of four projects by the June 2020 Council for an amount of USD 59.1 million. The total remaining funds in the GEF-7 blended finance envelope is USD 41.5 million.