About

Short-lived climate pollutant (SLCP) emission reductions can play an instrumental role in curbing climate change while also realizing co-benefits for air quality, health and agricultural productivity. Yet despite these multiple benefits, SLCP mitigation projects have not been financed to their full potential.

Encouragingly, several existing funds are in a position to finance projects, technologies, and policies that cut SLCP emissions. The private finance sector – hedge funds, banks and insurance companies – is also increasingly aware of climate change risks and the economic benefits of mitigation activities. The challenge is to create an environment where these sources of finance can be channeled to SLCP projects at a larger scale.

Recognizing the need to accelerate and scale up SLCP mitigation, the Coalition established the Finance initiative to catalyze investment for this purpose while maximizing near-term climate and health benefits. The initiative provides training and technical assistance to financiers and key stakeholders to make investment in SLCP activities more straightforward, reliable, and attractive to the finance sector.

Finance for SLCP reductions is a diverse activity that will require solutions customized to each sector, type of purchase and investment being made. Mitigation projects span multiple sectors, including fossil fuels, agriculture, household energy, and industrial processes; and require financing activities that range from long-term public sector infrastructure investments and public procurement, to corporate investments and individual purchase decisions.

Since many of the institutions engaged in SLCP finance have largely focused on financing carbon dioxide abatement, the initiative is specifically working with partner financial institutions to develop tools that will allow them to assess and prioritize investments based on their contributions to SLCP reductions.

Top facts

World Bank has invested $543 million in carbon finance projects, reducing methane emissions by 375 mt and preventing crop losses with a market value of $5.8 million.
Worldwide, an estimated $12.1 trillion in investment is needed over the next 25 years to keep global temperature rise below 2 degrees Celsius.
The first Pilot Auction Facility attracted 28 bidders from 17 countries. It created a carbon price of $2.40 and sold 8.7 million tCO2e.

Control measures

The initiative’s work is focused on:

   

  • Convening high-level expert groups to design approaches for catalyzing investment in SLCP abatement
  • Outreach and engagement with large players in private business and within development banks and agencies
  • Developing the Finance Innovation Facility intended to provide technical assistance and capacity building for private commercial banks and microfinance institutions in developing countries to leverage finance for SLCPs mitigation
  • Building the Coalition’s finance knowledge and capacity by providing support to design and implement tailored finance strategies for the Coalition’s sector initiatives.

Objectives

The initiative aims to unlock financial resources to support transformational actions that reduce SLCP emissions at scale. It does this by engaging key stakeholders and mobilizing public support to attract private sector investment. The initiative also seeks to increase engagement of the financial sector to take on more systematic considerations of financing dimensions in each of the Coalition’s sectoral initiatives.

In particular, the Financing initiative aims to:

  

  • Create enabling conditions for financing national and sub-national SLCP actions and the integration of SLCPs into development plans
  • Promote more systematic considerations of financing dimensions in all Coalition sector initiatives
  • Engage national and multi-lateral development banks and bi-lateral development agencies to mainstream SLCPs into their portfolios
  • Incentivize and leverage private financial flows for SLCP mitigation 

Activities

Location of activities

  • Africa
    • Nigeria
  • Asia and the Pacific
    • Bangladesh
    • India
      • Pune
    • Mongolia
      • Ulaanbaatar

Description of activities

Activity | Finance, Household Energy
Nigeria | Ongoing
Nigeria is severely constrained by an insufficient supply of reliable electricity. Most villages are off-grid, and those who do have access to electricity, are subject to daily blackouts. As a result...
End-user finance for clean energy in Adamawa state, Nigeria
Activity | Bricks, Finance
Bangladesh | Ongoing
Brick manufacturing is an important business sector in Bangladesh. There are an estimated 7,000 brick kilns throughout the country, which contribute 1% of the gross domestic product (GDP) and provide...
Brick kiln in Bangladesh
Activity | Finance, HFC
India | Ongoing
Hot climatic conditions, a growing construction sector, and increasing per capita income are expected to drive unprecedented demand for air conditioning in India. Over the coming decade living...

Progress

Recognizing that landfill emissions are expected to rise in the foreseeable future, the World Bank and the CCAC commissioned a report describing how local authorities, private landfill owners, and project developers can finance systems that mitigate these emissions. The report used insights from existing projects, including key enabling conditions and risk mitigation strategies.

The Coalition established a Finance Task Team to build on partner contributions and ensure our financing matches the ambition of our political commitment. 

5-year milestones:

  

  • 5 Global and Regional Development banks become CCAC partners 
  • Finance institutions supported in 4 countries (Bangladesh, India, Mongolia and Nigeria) to tackle barriers to SLCP finance in the bricks, cooling and household energy sectors 
  • Pilot Auction Facility launched by World Bank Group as innovative, pay-for-performance mechanism for reducing methane emissions, raised $53 million from donor countries

Initiative contacts

Yekbun Gurgoz,
Finance & Household Energy Initiative Coordinator
Yekbun.Gurgoz [at] un.org

Partners

Lead Partner: A Coalition partner with an active role in coordinating, monitoring and guiding the work of an initiative.

Implementer: A Coalition partner or actor receiving Coalition funds to implement an activity or initiative.

Partners (8)

FAQ

What are the financing needs for climate change?

It is estimated that to mitigate climate change, and to decorbonize the economies of the world, will require channelling financing of over 1 trillion USD per year until 2050 to green the two most GHG emitting sectors: energy and land-use.

What is the USD 100 dollars a year goal?

At COP15 in Copenhagen in 2009, developed countries committed to a goal of jointly mobilising USD 100 dollars a year by 2020 from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance.

What does results-based finance mean?

Results-based programs disburse funds in relation to outputs or outcomes rather than inputs and activities. For an example of successful RBF program, please see webinar on developing clean stove technologies.

Where do I find information on where to access the funds available from multilateral and bilateral institutions, as well as public and private sources?

From fund governance and eligibility to sharing experiences on on-going projects, the Climate Finance Options platform enables users to get an informed perspective.

Climate Funds Update is an independent website that provides information on the growing number of international climate finance initiatives designed to help developing countries address the challenges of climate change.
 

Resources

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