Global Landscape of Climate Finance.

The Global Landscape of Climate Finance 2013 finds that global climate finance flows have plateaued at USD 359 billion, or around USD 1 billion per day – far below even the most conservative estimates of investment needs. On one hand, there is some cause for optimism: Although private investment has declined in general terms, technology costs for large-scale renewable energy have fallen further, perhaps as economies of scale start to take hold. On the other hand, climate related investments have fallen well short of even the most conservative needs estimates for successive years, making the requirement of ‘catch up’ very real. For policymakers already under pressure to demonstrate value for money, there is renewed urgency to deliver precious public resources in ways that level the carbon playing field and create incentives for private investors to significantly accelerate their investment in low-carbon and climate-resilient growth options. The challenge is that private investors, who can and should provide the lion’s share of global climate finance for good reason — as asset owners (project developers) and end users (households, corporate manufacturers) of renewable technologies — only invest their money when the returns on offer outweigh the costs. Landscape 2013 confirms that public policies, resources, and money are the ‘engine room’ of the climate finance system, and can alter the balance between risk and return in ways that drive the supply and demand for finance. Private capital flows into climate investments when public incentives and money make them commercially attractive by taking-off risk and reducing incremental costs. While many countries have policy frameworks that provide such incentives, significant capacity and incentive gaps remain.