Selecting effective financial instruments to support action on climate change
This guide presents a curated selection of resources on finance for Nationally Determined Contributions (NDCs) and Long-term Strategies (LTS). It is designed to help Global Climate Action Partnership practitioners find high-quality resources that meet their specific needs, avoiding time-consuming searches on the internet. It will be useful to individuals working on, or interested in, NDC and LTS finance in both developed and developing countries.
- 1. Understanding the situation
- 1.1 Understanding current flows
- 1.2 Assessing financing needs
- 1.3 Assessing capacity
- 1.4 Identifying and overcoming barriers
- 2. Planning and coordinating
- 2.1 Institutions and governance
- 2.2 National finance strategies
- 2.3 Investment plans
- 2.4 National climate funds
- 2.5 Green investment banks
- 4. Using public finance
- 4.1 Managing national finance
- 4.2 International climate finance
- 4.3 Climate finance readiness
- 4.4 The Green Climate Fund
- 4.5 Direct access
- 5. Designing financial instruments
- 5.1 General resources
- 5.2 Sources of private finance
- 5.3 Risk mitigation
- 5.4 Guarantees
- 5.5 Feed-in tariffs and auctions
- 5.6 Taxes and tax incentives
- 5.7 Carbon pricing
6.2 Impact and transformational change
Projects are designed to achieve specific outcomes. In the context of LEDS and NDCs, these are often measured in greenhouse gas emissions reduced, or in the increased resilience of people and communities. Many projects will also lead to broader impacts (also known as co-benefits or benefits), such as improvements in air pollution levels, energy security, or employment. The resources in this subsection provide some guidance on how to identify and estimate impact (both greenhouse gas and broader impacts), and on the emerging concept of transformational change. This is now a requirement of several providers of international public climate finance (the Green Climate Fund uses the term ‘paradigm shift’ to refer to this concept), but it is not yet widely understood in a consistent way.
This concept paper proposes an operational definition of what transformational change means in the context of NAMAs, taking into consideration ongoing discussions among NAMA experts. Section 1 of the paper (5 pp) provides a useful exploration of the key aspects of transformational change in the context of NAMAs; the review of theoretical approaches in section 2 may be less relevant for LEDS practitioners and policymakers.
Several funders require evidence of ‘transformational change’ in the projects they fund (the Green Climate Fund refers to this as paradigm shift). Being a rather new concept, this term is often poorly understood. The NAMA Facility was one of the first funders to use the term transformational change, and this factsheet offers insights on its understanding of what constitutes transformational change in the context of sustainable low emission development.
Greenhouse Gas Protocol Policy and Action Standard: An accounting and reporting standard for estimating the greenhouse gas effects of policies and actions
The Policy and Action Standard provides a standardized approach for estimating and reporting the change in greenhouse gas emissions resulting from policies and actions. The primary intended users are analysts and policymakers considering or designing government policies and actions at any level: national, state, provincial, or municipal. The Standard was designed to help users estimate the greenhouse gas effects of planned policies and actions to inform decision making, monitor progress of implemented policies and actions, and retrospectively evaluate greenhouse gas effects to learn from experience.
This paper proposes a framework for measuring the sustainable development impacts of NAMAs. While the framework (see section 4.4 of the paper) is quite conceptual in nature, it provides a useful high-level approach to inform thinking about how broader impacts should be considered in NAMA development. It also offers guidance to specific tools and resources that may help. The template in the Annex provides a useful and comprehensive list of potential broader impacts across four dimensions—environmental, social, economic, and institutional.
This introductory brief describes how mitigation actions can have benefits that go beyond greenhouse gas emissions reduction, and presents some high level estimates of the significance of these benefits. Including information on these broader impacts can make project funding proposals more compelling (some funders may actually require such information).
This publication presents five case studies exploring success factors and indicators of transformational change in low carbon development across countries and sectors. The cases were selected in order to learn from the most successful examples of transformations that have happened, or that are planned, to achieve low carbon development. Two developed country and three developing country examples are explored.
Assessing the missed benefits of countries’ national contributions: Quantifying potential co-benefits
This report assesses the co-benefits that a selection of countries could realize by achieving the emission reduction targets in their INDCs, and the additional co-benefits they could achieve through more ambitious targets. First it provides an overview of the general co-benefits that climate action may have, and how they could be used to incentivize further ambitious greenhouse gas reductions. It then provides illustrative results for the forgone or missed benefits that could have been achieved through action to meet a trajectory towards 100% renewables by 2050, compared with the current policies and INDCs. The countries/regions considered are Canada, Chile, China, EU, India, Japan, South Africa, and USA.