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
1.3 Assessing capacity
In order to finance their LEDS and NDCs, countries will need a range of capacities to enable them to plan, coordinate, access funding, implement, and monitor and report. These capacities will exist to different degrees in different countries, and in many cases will need to be strengthened. An important preparatory task is to assess the level of existing capacity. These resources can help countries think about how to approach that assessment and what sort of capacities they will need.
Readiness for climate finance: A framework for understanding what it means to be ready to use climate finance
The paper presents a framework for understanding what it means to be ‘ready’ to use climate finance in a transformative way at the national level. It identifies four main capacities that countries need: capacity to plan for finance; capacity to access finance; capacity to deliver finance; and capacity to monitor, report, and verify finance. The paper provides a useful framework for countries to consider their own national capacity regarding LEDS finance. The intended audience is policymakers at both international and national levels in developing countries.
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.
See Part II, Phase 2 on financial scans. A financial scan examines the current financial status of a government, its budget, sources of revenues, and spending responsibilities, and evaluates their applicability to LEDS preparation. The structure and policies for financing projects and the outlook for accessing and leveraging funds for future investment projects are also assessed. The example of a local government financial scan in Annex 5 could be readily adapted for the more complex scenario of a regional or national government.