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Mobilising private climate finance in lower-income countries

Research reports

Written by Shelagh Whitley, Marigold Norman, Nella Canales Trujillo

Although there is increasing information on flows of public climate finance, studies of private climate finance are challenging given the paucity of data at the international level on current flows. Beyond large renewable energy projects, there is very little information available on private investment by climate-relevant sector and sub-sector, and country-level data are very limited beyond those for the Organisation for Economic Co-operation and Development (OECD) countries and the BRICS (Brazil, Russia, India, China, and South Africa).      

With the aim of supporting governments in their efforts to shift or direct additional private resources to climate compatible development (CCD), we have developed a methodology to: i) fill key information gaps about incentives and investment at country level in climate-relevant sectors, and ii) enhance understanding of the links between public incentives and private investment in CCD. Thus far, we have applied this methodology in the energy sector in Uganda, the agriculture sectors in Zambia and Ghana, and the transport sector and water and sanitation sector in Viet Nam.

This report highlights five key recommendations based on the country studies for actors seeking to mobilise private climate finance in lower-income countries:

Recommendation 1: Ensure consistency between climate objectives and national budget priorities.
Recommendation 2: Address existing disincentives for investment in climate-compatible development.
Recommendation 3: Mobilise the full diversity of private investment (including local and smaller-scale investors).
Recommendation 4: Gather information about climate impacts and investment opportunities (not just private finance).
Recommendation 5: Shift existing private investment, while mobilising new flows.

Shelagh Whitley, Marigold Norman, and Nella Canales Trujillo