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
4.2 International climate finance
The global climate finance architecture is complex and evolving. Funds flow through multilateral channels—both within and outside of UNFCCC financing mechanisms—and increasingly through bilateral as well as through regional and national climate change channels and funds. A major new fund, the Green Climate Fund, has joined this landscape, and a growing range of financial instruments are being used to deliver finance. Limited coordination among these many funds and channels makes this landscape difficult to navigate, but as volumes of finance grow, and as developing countries need increasing amounts of financial support to implement their NDCs, there is a real need for all involved to understand the climate finance landscape. The resources in this section provide overviews and introductory information about the landscape of climate finance and about specific aspects and funds. (Adapted from The Global Climate Finance Architecture, ODI/Heinrich Boll Stiftung, 2016.)
Climate Policy Initiative’s Gobal Landscape of Climate Finance publications track global flows of climate finance. In addition to commentary about the nature of recent flows, the summary graphic presented in Annex B of this update report clearly shows relative size of the main types of finance (balance sheet financing, market rate debt, low cost project debt, equity) that make up climate finance flows in recent years, as well as what kinds of institutions these flows come from.
This brief from the Climate Finance Fundamentals series (see below) provides an introduction to climate finance and explains the different channels through which climate finance flows. It briefly describes the main multilateral and bilateral channels and funds, and summarizes the current climate finance architecture in a useful diagram.
This report from the World Resources Institute looks in detail at the global climate finance architecture and makes recommendations for improving the effectiveness of global climate finance. Part 1 introduces the global context and provides a snapshot of the finance landscape. Part 2 then explores in more detail seven of the main multilateral climate funds and compares their performance across a number of dimensions. Further useful information about the funds can be found in the Appendix.
This is an independent website providing information on the growing number of international climate finance initiatives designed to help developing countries address the challenges of climate change. The site details: where and by whom climate change funds are being developed; the scale of proposed and actual financing; and what the funds support in terms of focus, regions, and particular projects.
Climate Policy Initiative produces the most comprehensive inventories of climate change investment available and is committed to improving understanding of climate finance flows at the global, national, and local levels. This site presents the key findings from their latest Gobal Landscape of Climate Finance reports, showing where the money is being spent and how much comes from public versus private sources.
This series of short introductory briefings on various aspects of international climate finance are designed for readers new to this critical area. The briefs outline the principles of public climate finance and the emerging global climate finance architecture, and address the instruments, needs, and actual funding amounts in the action areas of adaptation, mitigation, and forest protection (REDD+). Several briefs look at the climate funding situation for specific regions of the world. Also available in Spanish and French.
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.