FOR IMMEDIATE RELEASE (Washington, DC – 12 November 2024)
The Bretton Woods Committee’s Climate and Energy Transition Finance (CETF) team is today releasing the publication “Mobilizing Private Finance for Climate Action and Energy Transition,” which gives six actionable recommendations that multilateral development banks and other national and international institutions can undertake to push private finance away from brown investment and pull it towards projects that fight climate change.
Emerging markets and developing countries will need to spend an additional $1 trillion per year on climate-related goals by 2025 and around $2.4 trillion per year by 2030. The new climate financing target expected to be announced at the upcoming COP29 will help, but it will not be enough. Public money is scarce and so needs to be used as e ectively as possible including in leverage the private finance necessary to close this gap.
“It is critical for the international policy community to push private finance away from hydrocarbon intensive investment and pull it towards green investment by using public capital to facilitate genuine private finance leverage” said Creon Butler, co-lead of the CETF and principal author of the report.
To pull investment towards climate action, there needs to be a new approach to blended finance that delivers genuine leverage with risk borne by the private sector. The report recommends the MDBs implement two new types of climate finance window. The first would be focused on multilateral lending for climate finance and the second on insurance, guarantees or equity investment.
These windows would focus solely on climate action, require high governance standards, but a lower rate of return than private banks and focus on rapidly growing countries. Crucially, by limiting the exposure of public sector providers of capital to their initial stakes, the windows would give more scope for risk taking than in conventional MDB operations.
These two new window types are among six recommendations that all aim to steer private sector resources towards climate-friendly investments. Afsaneh Beschloss, co-lead of the CETF says, “A new funding goal at COP29 will give the international community a mandate to make public finance more effective. This report contains actionable and practical recommendations to make those public resources more effective at leveraging private finance.” The group has released one previous report, on The Role of Multilateral Development Banks in Closing the Climate and Energy Transition Finance Gap.
About the Bretton Woods Committee: The Bretton Woods Committee (BWC) is the preeminent non-profit organization dedicated to effective global economic and financial cooperation. BWC demonstrates the value of multilateralism and enhances the performance of international financial institutions (IFIs) through public dialogue, advocacy, and policy analysis.
About the Bretton Woods Committee
The Bretton Woods Committee is the preeminent non-profit organization dedicated to effective international economic and financial cooperation.