Menu
FR
search
Events

Financial Instruments to promote public-private investment in low-carbon, climate- resilient development

CO2L

Financial Instruments to promote public-private investment in low-carbon, climate- resilient development – I4CE and AFD Joint side event

There are great opportunities to use financial instruments, such as green bonds, credit lines, ‘blended’ finance, to support low-carbon, climate-resilient development around the world – and particularly in Africa. This event fostered a discussion on how to overcome the challenges faced and finance mitigation and adaptation on the ground.

Detailed Program:

Moderator: Ian Cochran – I4CE

Panel :

  • Béryl Bouteille, Project manager, Financial Institutions and Private Sector Support , AFD
  • Paul Horrocks, Lead Manager – Private Investment, OECD
  • Boutania Benchekroun, Senior Structuring Officer – Moroccan Solar Energy Agency (MASEN)
  • Coşkun Kanberoğlu, Head Engineering Analysis Department – TSKB (Industrial Development Bank of Turkey)

 Background information

Financing the transition to a low-carbon, climate-resilient economy often requires overcoming difficulties encountered by actors on the supply-side and demand-side of capital. Project developers have identified limited access to credit – while capital providers have expressed concerns on a lack of pipeline of bankable green projects. On one hand, insufficient financial performance of green projects – especially given in-country economic incentives – may limit the development of projects. On the other hand, a mismatch between project characteristics and investors’ needs may limit the flow of finance, even when a project is economically viable. This mismatch between investors’ needs and the green project market is one of the main barriers to address in order to support financial flows at scale going from where the capital is to where it is needed – project developers.

This event aimed to present and discuss the potential of specific financial instruments and approaches increasingly used to address this mismatch: ‘blended’ climate finance, green bonds and credit lines. Discussions will focus on the steps needed by public and private stakeholders to ensure both the financial and environmental impact of such instruments, and their role in domestic implementation of NDCs to achieve international long-term climate objectives. Particular attention was given to the African context and experience.

I4CE - FIC side event - Instruments financiers 1   I4CE - FIC side event - Instruments financiers 4

Key takeaways of this event

1.No one size of instruments fits all needs – green bonds, green credit lines, blended finance and other instruments can fill different financial niches and roles depending on:  who are the project developers; the sectors; the size of projects;  the needs of those institutions providing capital; the depth of domestic capital markets; and the technical capacity of the financial institutions involved.

2.When instruments are selected for use, two key areas must receive careful attention to ensure a tangible and robust contribution to supporting the low-carbon, resilient transition:

  • Financial Additionality: or the ability to leverage new resources or better terms for project developers;
  • Environmental Integrity: end-uses have positive and aligned environmental and financial outcomes

See Introduction PPT below

Cases presented in the event

a.AFD’s work in extending green credits lines to commercial local banks in developing countries to facilitate both access to capital for EE and RE projects, as well as technical capacity building to support lasting in-country market development. See here an example of AFD’s intermediation activity in South Africa.

b.The Moroccan Renewable Energy Agency (MASEN) has adopted international standards in ensuring the quality of their first green bond issuance – Morocco’s first – for MAD1.5 billion.

c.TSKB has been active in Turkey in getting technical assistance from DFIs to train both operational teams to extend green credit lines for energy efficiency and renewables – as well as issuing green bonds to finance projects in those sectors of activities not currently supported by DFI funds. (see PPT below)

d.OECD’s work on blended finance demonstrated many possible combinations of the use of public and private, concessional and market-term funds to support climate-related investment. The ReDesigning Development Finance Initiative (RDFI) hosted jointly by the World Economic Forum (WEF) was launched to identify best practice for blended finance – both for environmental and other development objectives. (see PPT below)

15 Nov 2016

Financial Instruments to promote public-private investment in low-carbon, climate- resilient development

To learn more
  • 07/02/2024
    Social and Climate Budget Tagging: Insights from Indonesia

    Attention is growing to the need to tackle climate and social issues jointly. Indeed, both climate change and climate policies affect social issues such as poverty, inequality, or access to healthcare. A well-known example is that of carbon pricing, a climate policy which can have regressive effects in some contexts. As another example, climate change induced heatwaves are disproportionately likely to impact poorer individuals who typically have more constrained access to healthcare, physical jobs in outdoor conditions, and through indirectly driving up food prices. To foster an effective and sustainable transition to low-carbon and resilient economies, policymakers need to ensure individuals do not lose more from climate policies than they already lose from the effects of climate change, but instead benefit from them.

  • 07/02/2024
    Approaches to meeting the Paris Agreement goals: options for Public Development Banks

    Options for Public Development Banks. Since the adoption of the Paris Agreement in 2015, several public development banks (PDBs) have responded with structured approaches to align their operations with the Agreement’s expectations (as described in Section 1). However, many PDBs, particularly those in emerging markets and developing economies, are yet to adopt an approach to align with the Paris Agreement (i.e., Paris alignment). As entities whose investment mandates are established by the Parties to the Paris Agreement (i.e., national governments), PDBs have specific obligations derived directly from these Parties’ commitments to act across all policy and regulatory frameworks under their jurisdictions, including for state-owned or state-mandated institutions and agencies. Accordingly, PDBs are expected to operate in a manner that supports the achievement of the Paris goals. More specifically, they are obligated to integrate their activities within the Agreement’s implementation mechanism by providing financial, technical, and capacity building support that is entirely consistent with national low-emission climate-resilient development pathways.

  • 07/02/2024
    State of EU progress to climate neutrality

    Assessing the state of progress to inform next steps in policy-making. The European Union (EU) is on its journey to become climate neutral by 2050. This multigenerational project holds many societal, economic, and environmental opportunities. At the same time, it is of unprecedented scale and implies considerable changes to the current systems, which need to be anticipated and addressed for the transition to be fair and acceptable to all. Regular progress checking is the key to understanding where the EU stands on the journey. It allows to identify challenges and opportunities and take targeted policy action guiding investment, supply, consumption, and societal development. There is still no official, comprehensive, and regular EU-wide progress monitoring to achieve this. This second ECNO progress check aims to close the current information gap. It provides a comprehensive view on the state of EU progress towards climate neutrality and identifies key areas of action for the next policy cycle.

See all publications
Press contact Amélie FRITZ Head of Communication and press relations Email
Subscribe to our mailing list :
I register !
Subscribe to our newsletter
Once a week, receive all the information on climate economics
I register !
Fermer