What are the other sources of climate finance?
Bilateral climate finance
Public climate finance is also provided bilaterally and is administered through either established development agencies or special bilateral climate funds. Some of the largest contributors of bilateral public climate finance include:
- Germany’s International Climate Initiative (IKI) has provided USD 2.6 billion for more than 500 mitigation, adaptation, REDD+ projects since 2008. Germany, the UK and Denmark also support the Global Climate Partnership Fund (GCPF), managed by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) and KfW.
- The UK government has committed USD 12.7 billion to its International Climate Fund (ICF) through 2021. Together with Germany, Denmark and the EC, the UK also contributes to the nationally appropriate mitigation actions (NAMA) Facility that supports NAMAs in developing countries and emerging economies which implement mitigation projects.
- Norway’s International Forest Climate Initiative has pledged USD 350 million each year since 2008 through bilateral partnerships, multilateral channels and civil society. (Global Climate Finance Architecture, 2019).
Private sources of climate finance
Over 70 per cent climate finance as defined by the UNFCCCs Standing Committee on Finance is provided by private sector actors, mainly as private investment in renewable energy and energy efficiency. In this context, ‘classic’ private intermediaries such as commercial financial institutions, venture capital, private equity and infrastructure funds play a major role. In the context of international climate finance’, however, the main way of private involvement is through public resources being used for ‘mobilising’ private resources by climate funds, MDBs, public financial institutions such as DFIs. This takes form of ‘blended’ facilities such as subsidized loans, guarantees etc.
As there is no coordinated approach to reporting the mobilisation of private resources so far, data is very inconsistent. Currently, the OECD is working, under a mandate from its Development Assistance Committee, to ‘establish a standard for measuring the volume of private finance mobilised by development finance interventions’. The data gathered through this process serves as the main data source for assessing private climate finance mobilised by developed countries.