Advising on the financing of climate change technologies

THE BACKGROUND

Climate change comes with unprecedented challenges which are transforming and impacting our livelihoods, our health, our food systems, and our behavior. Many countries are currently experiencing physical risks (e.g. water scarcity, rising sea levels, droughts, wildfires, etc.) and transition risks (e.g. changes in policy, regulation, technology, etc.) because of climate change.

The challenge, in broad strokes: Humanity must find affordable, equitable ways to bring every sector of the global economy to net-zero carbon emissions no later than 2050. At the same time, as a species, we must adapt to the effects of climate change we can’t prevent, taking special care for those with the fewest resources, who have contributed least to the problem but are likely to be hurt first and worst.

Decarbonizing the world’s economy in time to avoid the most damaging consequences requires new ideas, transformed into practical solutions, in record time. Speeding the adoption of renewable energy technologies is essential. But the mid-century global goal will be out of reach without workable solutions for massive carbon-intensive sectors, such as heavy transport and the production of cement and steel, and without cost-effective ways to extract large quantities of carbon dioxide from the air.

THE PROJECT

The project aimed to identify innovative financial mechanisms supporting the development and transfer of climate change breakthroughs in science and technology. Not only it is important to massively invest in specific technology but also provide support, e.g. access to finance, to those entrepreneurs who turn these breakthroughs into products and services, and help companies willing to pilot them and scale-up solutions.

Our team reviewed strategies and mechanisms implemented by international financial institutions that influence investment decisions in climate change technology-oriented adaptation and mitigation projects. We assessed selected policies aimed at accelerating the transfer of climate technologies.

THE RESULTS

The team analyzed a portfolio of investments in climate mitigation and adaptation projects in countries such as the Philippines, Indonesia, Cambodia, and Laos. Leveraging the project’s research, we recommended several approaches to favorably shape investment decisions for climate change technologies and increase access to climate financing in developing countries.