There is consensus within the discourse on climate finance that there is a key role for the public sector (and donor funds more specifically) in mobilising private investment in climate-compatible development (CCD). However, there has been limited analysis about what specific role the public sector and public resources should play, particularly in light of recent findings on 1) the importance of domestic private investment, and 2) the current domination of public investment in international finance for CCD.
This paper describes a new methodology to support governments and development partners that wish to mobilise private finance for CCD.
The first aim of this methodology is to fill these key information gaps about incentives and investment at country level in climate-relevant sectors, in order to support governments in their efforts to shift or direct additional private resources to CCD.
The second is to enhance understanding of the links between public support (both domestic and international) through regulatory, economic, and information instruments, and through private investment in CCD.
Applying this methodology involves completing three frameworks for any given country and sector (and sub-sectors) on: 1) relevant incentives, 2) sources of capital (current), and 3) investment trends (historic).
We have completed a first pilot application of this methodology in the energy sector in Uganda. The full results from this pilot application can be found in Whitley and Tumushabe (2014). The aim is to refine this methodology and these frameworks through the application of the approach across multiple countries and sectors.
An updated version of this methodology was published in April 2015 and is listed under the related resources list to the right of this page.