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Japan’s private climate finance support: mobilising private sector engagement in climate compatible development

Working paper

Written by Shelagh Whitley

Working paper

At the UN Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) in Copenhagen in 2009 (COP15), developed countries committed to mobilise long-term climate finance to address the needs of developing countries until 2020. The Copenhagen Accord suggested that this ‘funding will come from a wide variety of sources, public and private’. The High Level Advisory Group on Climate Change Financing (AGF) to the UNFCCC (among others) has since emphasised the need to mobilise private sector finance – a response, in part, to the scarcity of public resources (UNFCCC, 2010 and AGF, 2010).

This makes it imperative to understand the early efforts of Japan and other donors in mobilising private sector engagement in climate compatible development (CCD), and identify key trends.

In the absence of agreed definitions for private finance activities in the climate finance literature and community of practice, this Background Note proposes a definition for Private Climate Finance Support (PCFS) and reviews interventions by Japanese actors to mobilise private sector activity.

It finds that Japan has a number of channels and instruments through which it supports private sector action on cli­mate change. The country’s private climate finance support (PCFS) is often linked to programmes that are either co-financed by Japanese financial institu­tions, or that use Japanese technology or expertise. It is also tailored to the market conditions of recipi­ent countries, and has an overwhelming focus on climate change mitigation, rather than adaptation.

Shelagh Whitley