The increases in global investment that are needed to remain below a global temperature rise of 2 °C are estimated to be of the order of several hundred billion United States dollars (USD) annually between 2010 and 2029 for low-emission power generation technologies and energy efficiency in the buildings, transport and industry sectors (IPCC, 2014). A further USD 28–67 billion per annum is estimated to be needed as additional investment to adapt to climate change in developing countries (UNFCCC, 2008). Although the increases in investments needed are manageable, they are far above current levels of investment and would require a 90 per cent reduction in carbon dioxide emissions per unit of electricity by 2050 (IEA, 2014). Such an extensive transformation will require, in addition to reviewing and revising current electricity

production and consumption patterns, a massive deployment of currently available and new technologies, some of which are yet to be developed.

Accordingly, transition to a low-carbon and climate-resilient economy will require the scaling-up and mobilization of a broad range of public, private, international and domestic financial resources. Investment in the development and deployment of climate technologies will absorb a significant share of the scaled-up finance. The scale of investment envisaged is such that constrained public finances can only provide a limited share, with significant sources coming from the private sector, including the capital markets. However, public finance plays a crucial role in catalysing the necessary low-cost and long-term private finance, in addressing the risks that the private sector is unable to take and in investing in the early stages of climate technology development.

The objective of this TEC Brief is to outline the challenges in financing climate technologies faced by developing countries, to review best practices and lessons learned, and to highlight the roles of different stakeholders in facilitating access to climate technology finance.

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Technology Compendium
Cross-sectoral enabler
Economics and financial decision-making
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Financial incentives including taxes and subsidies
Carbon markets and finance
Economics and financial decision-making