In 2009, as part of the Copenhagen Accord, developed countries committed to “a goal of mobilizing jointly USD 100 billion dollars a year by 2020 to address the needs of developing countries”. In subsequent decisions, the Parties to the United Nations Framework Convention on Climate Change have said this includes from both public and private funds. Yet precisely which kinds of private finance might be counted still remains vague.
At least part of the challenge is that even delineating climaterelevant private finance can be difficult, since private investments are rarely, if ever, tagged as “adaptation” or “mitigation”. This is especially challenging for adaptation, as gauging the contribution of specific activities to adaptation requires a deep understanding of the local context. While renewable energy investments might be generalizable as consistent with mitigation objectives, making similar generalizations is not possible for adaptation.
This discussion brief, an output of the SEI Initiative on Climate Finance, examines different types of international private finance and asks questions about their suitability for being counted towards the Copenhagen commitment. It is important to stress that decisions about the inclusion of private finance as part of that commitment, as well as what kinds of private finance should count towards it, are political rather than technical. However, there is a clear need to better define the questions and understand the implications of different options, to inform decisions by the Parties.
This brief analyses different types of private financial flows for climate-related activities, using accountability chains to examine two issues: (i) the degree to which different actors in the finance chain share similar “end goals” for the funds; and (ii) the degree to which the final expenditure contributes to climate-related outcomes beyond a single private entity, which is of particular relevance for adaptation objectives. Different types of private finance can then be compared with the features of public finance, as a reference point.
Download the discussion brief (PDF, 2.6MB)