Climate finance : mobilizing private investment to transform development

Climate finance is a key issue at the heart of the international climate negotiations. While progress was made in Cancun, important questions remain to be resolved. These include how much additional finance is needed for mitigation and adaptation, how will the money be raised to meet these needs, how will resources be transferred to diverse recipients in developing countries and how will progress and outcomes - reducing emissions of greenhouse gases (GHGs) and adapting to the impacts of climate change - be monitored? Climate finance can be a catalyst to leverage private and public resources, open new economic opportunities, promote technology deployment and transform development pathways. But the need for climate finance comes on top of existing gaps in "baseline" development finance. While climate finance will come from both public and private sources, a critical goal of the design of any climate finance architecture will be to ensure that scarce public funds are used to leverage and mobilize private finance. In particular, given the enormous volume of investable funds in institutional investment pools, public finance should aim to promote investment opportunities that can attract funding from these sources. This note suggests some ideas for using public climate finance to mobilize substantial private financing to allow developing countries to move to low carbon and climate resilient development paths.