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
4.5 Direct access
Developing countries need significant amounts of finance to help them adapt to the changing climate and follow a path of low carbon development. The international community has set up multilateral funds to help support climate change mitigation and adaptation in these nations. Two of the largest climate funds, the Adaptation Fund and the Green Climate Fund, have committed to allowing institutions from developing countries ‘direct access’ to finance. Direct access in this context means that national or subnational entities become accredited to receive finance directly from the fund without going through an international intermediary (such as the World Bank or a regional development bank). The goal of such direct access is, among other things, to reduce transaction costs and enhance national ownership over available financing. (Adapted from “Direct access” to climate finance: Lessons learned by national institutions, WRI, 2015.)
This webpage describes the accreditation process for the Green Climate Fund (necessary for direct access). It provides links to key guidance documents and the accreditation self assessment tool, which helps organizations understand whether they might be suitable for accreditation. For further information on the Green Climate Fund see 4.3.
Funds from the Green Climate Fund will flow directly to Accredited Entities for project/program implementation. Accredited Entities may be subnational, national, regional, or international entities that are public, private, or nongovernmental. This guidebook is a simplified version of the Comprehensive guidebook (see following resource). It provides an overview of the key elements of the accreditation process and best practice for completing the process.
Developing countries need large amounts of finance to support ambitious climate actions. This paper highlights lessons for developing country institutions seeking access to funding from the multilateral climate funds. It explores the experiences to date of national institutions that have been accredited by either the Adaptation Fund or the Green Climate Fund. The paper focuses on approaches these institutions have taken to plan for, access, and use finance received through direct access, and early lessons learned in the process. Its primary target audience is other institutions that plan to seek direct access to finance from these two or other relevant funds.
This full version of the Simplified guidebook (see previous resource) covers in more detail the key aspects of direct access accreditation, including accreditation requirements, accreditation stakeholders, the accreditation process, and lessons learned.
The WRI report “Direct access” to climate finance: Lessons learned by national institutions (see key resources in this section) includes interviews with 15 entities with direct access, and presents different aspects of their experiences.