Selecting effective financial instruments to support action on climate change
This low emission development strategies (LEDS) Finance Resource Guide presents a curated selection of resources on a range of topics around finance for LEDS and Nationally Determined Contributions (NDCs). It is designed to help LEDS practitioners find high-quality resources that meet their specific needs, avoiding time-consuming searches on the internet. It will be useful to individuals working on, or interested in, LEDS and NDC finance in both developed and developing countries.
- 1. Understanding the situation
- 1.1 Understanding current flows
- 1.2 Assessing financing needs
- 1.3 Assessing capacity
- 1.4 Identifying and overcoming barriers
- 2. Planning and coordinating
- 2.1 Institutions and governance
- 2.2 National finance strategies
- 2.3 Investment plans
- 2.4 National climate funds
- 2.5 Green investment banks
- 4. Using public finance
- 4.1 Managing national finance
- 4.2 International climate finance
- 4.3 Climate finance readiness
- 4.4 The Green Climate Fund
- 4.5 Direct access
- 5. Designing financial instruments
- 5.1 General resources
- 5.2 Sources of private finance
- 5.3 Risk mitigation
- 5.4 Guarantees
- 5.5 Feed-in tariffs and auctions
- 5.6 Taxes and tax incentives
- 5.7 Carbon pricing
1.1 Understanding current flows
An important part of the evidence base for developing a robust approach to financing LEDS and NDCs is an assessment of current flows of finance into mitigation and adaptation activities. Accurate monitoring of climate finance flows will allow recipient countries to make more informed decisions about planning, prioritization, and allocation of resources for climate change, and to measure and evaluate progress. There is a growing body of work developing methods for countries to track the flows of (mainly public) climate finance within their financial systems and to document the lessons learned. The resources here provide an introduction to these approaches and guidance on how to get started.
This paper describes the opportunities and costs associated with developing monitoring approaches for national climate change public finance. It explores the rationale for monitoring climate finance, describes a leading example of climate change budget tracking, presents lessons learned, and summarizes five tools that can support climate change financial monitoring, identifying possible advantages and disadvantages of their use.
This paper explores how international finance, including official development assistance, for climate change is currently monitored in several developing countries. It also seeks to understand some of the challenges and capacity gaps in monitoring climate finance. Drawing on the experiences of developing countries that participated in the study, the paper presents insights about what countries can do to improve the monitoring of climate finance at the national level.
This guidebook seeks to equip relevant stakeholders (governments, donors, CPEIR practitioners) with information on methodologies and tools to conduct a CPEIR, the objectives of which include tracking of climate finance and quantification of climate related expenditures in the budgetary system. The publication was developed based on experiences and lessons learned from existing CPEIRs. It provides readers with background on context, purpose, process, and tools in implementing a CPEIR, together with an overview of the key challenges typically faced during CPEIR implementation. Section 6.3 of the guidebook provides guidance on tracking public climate expenditure.
This study by CPI and Impactum was carried out in collaboration with, and to support, the Ministry of the Environment and Sustainable Development’s Permanent REDD+ Executive Secretariat in its work to develop Côte d’Ivoire’s National REDD+ Strategy and Investment Plan. The study identifies the nature and volume of domestic and international public finance that was contributing to limiting deforestation and encouraging sustainable land use in the country in 2015. It contains a detailed overview of the methodology followed. A webinar is also available in French and English.
The Landscape of public climate finance in Indonesia study was conducted by the Indonesian Ministry of Finance’s Fiscal Policy Agency and Climate Policy Initiative (CPI) in 2013–14. This paper gives an overview of public climate flows in Indonesia and an insight into the significant methodological challenges in tracking and collecting this information.
This website presents CPEIR reports from over 10 Asian countries that have conducted CPEIRs, including Bangladesh, Indonesia, Nepal and Thailand.