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. Using public finance
The finance needed to achieve LEDS and NDC goals in both mitigation and adaptation will need to come from both public and private sources. It is widely accepted now that the private sector will provide the vast majority of this investment, but public finance has a key role to play in stimulating and leveraging private investment. The specific instruments that are needed to address private finance’s risk and return requirements are covered in section 5, while this section presents resources on where public finance might come from and how it can be accessed and managed, including the roles of both national budgets and international public climate finance.
This reference manual and its accompanying quick start guide were produced to support developing countries in implementing their NDCs. It is aimed at national and subnational policymakers, development partners, and practitioners. The reference manual sets out specific activities that countries can undertake in five key areas of NDC implementation, of which one is finance. The finance chapter outlines 10 key activities as a comprehensive basis for an approach to mobilize finance for NDC implementation, and includes several relevant case studies. The activities covered are well aligned with the different sections of this resource guide. The Quick start guide and reference manual is also available as an online tool, enabling users to link finance to mitigation; adaptation; governance; and measuring, reporting, and verification.
Making sense of climate finance: Linking public finance and national climate change policy in the Asia-Pacific region
This paper provides central policy decision makers and donors with accessible guidance on how governments can make use of their national budget systems to prioritize a response to climate change. It also explores how governments can make complementary use of domestic and international sources of public finance to resource a climate change response. Targeted principally at central policy decision makers, the paper may also be of interest to researchers and those working with donors who are involved in financing public interventions on climate change in developing countries. Chapters 3 and 4 provide an introduction to national budgeting processes and how international climate finance can support and complement these.