Finance
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Mobilizing climate finance and developing a pipeline of bankable projects is the basis for effective climate action. Public and private finance flows can be directed towards building low-emission and resilient economies. Governments and development banks should green their spending and set the right conditions for the private sector to choose climate-friendly business models. The instruments range from setting incentives through subsidies to carbon markets to green financial products. The LEDS GP features a Working Group on Finance and has supported various activities across this thematic area.
The LEDS GPs Finance Working Group (FWG) Strategy and the Private Sector Engagement (PSE) Strategy are closely interlinked and were developed throughout 2021 and 2022, in a co-creative and inclusive process with members and partners. Its main objectives are to enable stakeholder dialogues, foster deal flows, support country ambitions that translate into transactions (FWG Strategy), and support members and countries in developing sectoral transformation pathways that mobilize private/public partnerships for achieving resilient, net-zero development (PSE Strategy).
One of the core features of the LEDS GP is its focus on accelerating early action. One example of this is our Regional Accelerator for Agriculture, Climate, and Energy – the RAACE initiative – through which we bring project information notes into existence so additional support for project pipeline preparation can be leveraged. The GP is collaborating with the NDC Partnership on its Project Information Note initiative to provide this support.
Implementing NDCs requires actively engaging the finance sector. A key part of expanding climate finance is a robust methodology to identify eligible activities and assess their environmental and climate benefits. The Asia LEDS Partnership assisted the Trade and Development Bank of Mongolia in developing a tool to estimate GHG emission impacts of the projects applying for loan approval. This support by the LEDS GP helps to identify whether projects can potentially reduce emissions by at least 20%.
Interested stakeholders can find further information about the Climate Helpdesk here – including how to request support. Additional technical assistance highlights can be found in the Climate Helpdesk Impact Stories brochure.
Establishing renewable mini-grids – one of the priorities of the Africa Platform – requires a significant inflow of private sector finance. To help governments obtain this, the Africa LEDS Partnership developed a handbook on smart incentives for mini-grids. The guide contains a list of available tools and publications for a deeper dive into the topic.
The Asia LEDS Partnership worked together with the GIZ – Global Carbon Markets – GCM Program to replicate a training on Carbon Pricing developed by the GCM Program for the Asia membership. The training had more than 400 participants and discussed topics like the use of market-based approaches to achieve NDC targets and increase the involvement of private sector actors. Find out more about the three-day training here.
Green bonds are an important way of unlocking finance to decarbonize economies and increase resilience. The LEDS GP helps to mobilize institutional capital through green bonds in Asia. The Green Bond Roadmap explains how green bonds work and provides orientation on the current market. In 2019, we partnered with the Climate Bonds Initiative (CBI) on a webinar, elaborating on the use of the roadmap and in 2022 there was a south-south exchange peer learning session between Africa and Asia on experiences on Green Bonds. Making knowledge products more accessible, by providing spaces for personal exchange, aligns with the LEDS GP´s understanding of peer-learning and capacity development. Thereby contributing to sustainable and integrated solutions.
To learn more about the LEDS GP’s approach to promoting climate-friendly finance flows, please visit the Finance Working Group page on the LEDS GP website.