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
1.4 Identifying and overcoming barriers
Mobilizing finance for LEDS and NDCs will require a range of barriers to be overcome, barriers that are currently preventing private sector engagement and investment. Identification of these barriers—especially those that relate principally to finance and investment—is therefore an important early step in developing a comprehensive LEDS or NDC finance plan. Many general LEDS planning resources discuss ways to overcome barriers. The resources listed here focus specifically on how to identify and overcome technical and financial barriers.
Derisking renewable energy investment: A framework to support policymakers in selecting public instruments to promote renewable energy investment in developing countries
The DREI framework systematically identifies the barriers and associated risks that can hold back private sector investment in renewable energy. Section 2.1 of this report covers the identification and classification of barriers to investment in renewable energy projects in developing countries. It helps identify barriers according to different stakeholder groups and provides a methodology for quantifying the impact of these barriers on financing costs of the project.
This guidebook is intended as a starting point for developing country governments, planners, and stakeholders who are carrying out technology needs assessments and technology action plans. The aim is to provide practical and operational guidance on how to assess the barriers to adoption of priority technologies, and how to address and overcome these barriers through different types of measures. This resource is designed principally to support the development of technology needs assessments (TNAs), but much of the content is likely to be relevant to a wider audience, and it covers both financial and non-financial barriers and their solutions.
Part B of this report highlights the fact that the effective design and implementation of public interventions needs to be guided by a more nuanced understanding of current barriers to the flows of private finance in developing countries. These barriers, in turn, depend on the type of private finance required, as well as the location of the activity. The report considers three case studies (grid scale renewables; energy efficiency; climate resilient infrastructure) and for each one identifies the major barriers that currently prevent private capital from flowing into these project types, and what interventions can overcome them.
This guide summarizes the barriers to financing mitigation and adaptation activities, as well as discussing factors to consider when selecting and implementing financial instruments. Pages 2–3 provide a general introduction to investment barriers, and pp. 4–5 contain a table detailing different kinds of potential investment barrier. The key financial instruments and modalities considered in the guide are discussed in relation to the Green Climate Fund, but the lessons are applicable to other channels for climate finance.
Waste to energy in Indonesia: Assessing opportunities and barriers using insights from the UK and beyond
This report investigates the potential of waste-to-energy technologies as a solution to Indonesia’s growing waste and energy challenges, and offers recommendations that address barriers to deployment. Three overarching challenges are identified that focus on the economic viability of facilities, the need for local government capacity building and government coordination, and the social dimensions of waste-to-energy. These challenges encapsulate a set of 14 discrete barriers to waste-to-energy deployment, each of which are described and related to Indonesia’s unique context in section 7 of the report. To address the overarching challenges, a set of seven solutions are presented that leverage international examples of best practice.