Publications

2025 is a pivotal year for the interlocking global agendas of climate and sustainable development, highlighted by major convenings such as the 5th Finance in Common Summit (FiCS), the 4th International Conference on Financing for Development (FfD4), the G20 Summit under South Africa’s presidency, and the UNFCCC COP30. Public development banks (PDBs) will feature prominently across these events, given their integral role in implementing these critical agendas through financial support and stakeholder mobilization.

Frequently asked questions on the development and implementation of carbon pricing policies. This work aims to provide a carefully curated companion tool for jurisdictions considering or developing a carbon pricing instrument, with questions and answers (Q&A) focused on opportunities they can bring, specific challenges and policy choices pertaining to the design and implementation of carbon taxation and emission trading systems in emerging markets and developing economies (EMDES).

The urgency of climate action is becoming ever more apparent, yet we remain far from securing the level of financing required for meaningful progress. The first Global Stocktake underscored a widening gap between the needs of developing countries and the support they receive, while advanced economies also struggle to finance their own ambitious climate targets.

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.

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.

Carbon pricing policies and their revenues are part of the tools available that can help fill the climate finance gap. With raising revenues from carbon taxes and emission trading systems (ETSs) that have tripled since the Paris Agreement, and an upward trend that could continue in the medium-term, ‘how to use carbon revenues’ has become a crucial question. This report, prepared as an activity of the EU-funded European Union Climate Dialogues (EUCDs) project, aims to inform policymakers and practitioners on lessons learned and ways forward on the use of carbon revenues, with a comprehensive approach based on a review of international experiences.

At the Spring Meetings, during an event with senior climate representatives from Multilateral Development Banks, I4CE, E3G, Germanwatch and NewClimate Institute officially launched a common position paper on what ambitous Paris alignment means for public development banks. This paper summarises years of research on Paris alignment to shed light on best practice and hopefully support decision makers in taking and implementing credible climate commitments. 

Public development banks have the potential to facilitate the transition from coal to renewable alternatives in developing and emerging countries by fostering conditions conducive to the early retirement and repurposing of coal plants. Co-written with NewClimate Institute, this report highlights the challenges associated with the early retirement of coal plants and examines public development banks' role in collaborating with national governments and power producers to support coal phase-out. 

With their historical role in funding coal capacity and public mandate, public development banks have a crucial role in enabling coal phase-out. Co-written with NewClimate Institute, this short paper explores many of the risks associated with proposals for abatement technologies and carbon credits as an input to current discussions on early coal retirement. 

France should publish mid-year its first multi-annual strategy for financing the ecological transition. This is a long way from the first 2015 climate strategy, which barely touched funding aspects. And it is good news. We at I4CE believe that such plans are essential tools to support the transition to low-emission, climate-resilient economies. Credible, multi-year public spending targets help to embark the private sector and the funders of public action (debt holders, international donors) in the transition, and redirect financial flows as demanded by the Paris Agreement. Comprehensive financing plans also avoid simplistic approaches based on case-by-case project appraisal on the basis of limited cost-benefit considerations, which can ultimately result in significant additional costs.

What are the carbon taxes and markets around the world, the range of carbon prices, the revenues generated, the emissions covered by these mechanisms? Find the answers to these questions, and many more, in the new edition of the Global Carbon Accounts from I4CE.

National budgets, as the main driver of public action, need to be ‘greened’ by governments to achieve the transition to low-carbon, climate-resilient, and sustainable economies. That is, budgeting processes need to ensure sufficient funds are directed towards green activities and are directed away from environmentally harmful ones.

This report co-written with NewClimate provides practical guidance for international financial institutions to support financial institutions’ alignment with the Paris Agreement goals, and to more broadly contribute to transforming local financial systems. This guidance is developed around three pillars: a harmonised alignment assessment; the alignment of financial intermediaries; and the alignment of financial systems at the national level.

Long term national climate strategies, such as Long-Term Strategies (LTS) published to the UNFCCC, are key documents developed by governments to envision the transition to a low-carbon and climate resilient economy at the 2050 (or later) time-horizon. As of the beginning of COP 27 in Sharm-el-Sheikh, Egypt, on November 2022, 55 countries had submitted an LTS to the UNFCCC, answering renewed calls for countries to develop such strategies at COP 26. It is expected that additional LTS will be published shortly. 

Carbon revenues were nearly USD 100 billion in 2021. This represents a more than 80% increase year-on-year (USD 53.1 billion in 2020, USD 97.7 billion in 2021). This increase is largely driven by the rise in allowance prices on the European carbon market, which exceeded the symbolic threshold of EUR 100/tCO2 for the first time in the summer of 2022.

This I4CE report focuses on the role of countries’ Long-Term Strategies (LTSs) in the Paris alignment approaches of Development Finance Institutions (DFIs). It explores the possible roles of both the LTS development process and the resulting LTS document in providing insights on the Paris alignment of investments within investment decision-making processes. The findings are relevant for a broader range of financial institutions.

The restructuring of the economy towards a low-carbon system will lead to develop activities that are aligned with the needs of a net zero economy, to restructure others in order to make them compatible with these needs and to stop harmful activities. The financial sector needs to anticipate these dynamics to address strategic risks and […]

This study takes stock on the experience of some twenty countries and several international development institutions in Environmental Budget Tagging. It identifies the expected benefits and the conditions to achieve them : take into account the measures that are unfavorable to the environment, consider the outcomes of assessed measures and not only their intention, repeat the exercise over time and fit it into the existing administrative culture and processes…

In 2017, the International Development Finance Club (IDFC) together with the group of Multilateral Development Banks (MDBs) made a joint commitment to “align financial flows with the Paris Agreement”. Since its commitment, the IDFC had focused its efforts on identifying what alignment means and implies.

I4CE’s 2019 Global Carbon Accounts present the main trends in the implementation of global carbon pricing policies in 2019.   5 key trends in 2019   As of May 1, 2019, 25 carbon taxes and 26 Emissions Trading Schemes (ETS) were operating worldwide. The jurisdictions covered by one or more explicit carbon price account for […]