Climate finance
Working with public, private and philanthropic partners internationally to mobilise finance for effective climate action.
Global climate finance flows were almost $1.3 trillion in 2021/22 but must increase by at least five-fold annually to 2030 to avoid the worst impacts of climate change. In addition, climate finance flows are still uneven, and not reaching all countries and sectors where action is crucial.
How we can help
We work with multi-lateral development banks, development finance institutions, governments and philanthropy on the:
- Strategic planning and design of solutions to mobilise public and private investment into high-impact programmes.
- Design of national-level green and sustainable taxonomies and carbon pricing mechanisms.
Throughout this, we closely work with our Sustainable Finance team, who support financial institutions to drive capital towards projects and activities that will deliver sustainable outcomes and impact.
Strategic planning
At the strategic level, we can:
- Produce comprehensive market assessments, including a barriers and needs analysis.
- Identify and prioritise solutions, mapped against market barriers and needs to ensure best-fit options.
- Set high-level sectoral investment strategies, considering public and private sources, coupled with resilient market roadmaps.
- Develop city-level green investment pipelines, matching green projects to financing mechanisms and grouping them into a strategic financing plan.
Solution design
To support across the life cycle of climate finance mobilisation we can:
- Conduct opportunity assessments, including sector and policy analysis, barriers analysis, solution analysis, market sizing and forecasting.
- Design Technical Assistance programmes. As part of this, we define the transaction enablers and pipeline generation activities to accelerate the uptake of climate finance.
- Design financial mechanisms for the delivery of effective climate finance. This ranges from financing structures, governance, monitoring and reporting (MRV) to financial modelling and laying out implementation plans.
- Strengthen capacities and awareness across public and private financial institutions and other key implementors, e.g. on energy project risks.
- Collaborate with stakeholders to identify donors and support the development of applications to secure funding.
- Support project origination by identifying, outlining and quantifying potential investment opportunities for donor funding agencies and other financiers.
National-level green and sustainable finance taxonomies
A green finance taxonomy helps financial players to identify, track and demonstrate the credentials of their ‘green activities’. It offers a set of standards that support the move to a low carbon economy and can help minimise the risk of greenwashing. We support with:
- Research on global trends in taxonomy development to select the most appropriate taxonomy strategy for a country.
- Analysis to align the taxonomy guidance with domestic policies, regulations and practices.
- Piloting green finance taxonomies with financial institutions to test and build capacity in its practical application.
Carbon pricing and markets
Putting a price on carbon can spur both Net Zero action and investment. Carbon markets not only serve as mitigation policy mechanisms, but they can also raise revenue, channel climate finance, drive innovation, and help governments progress on their sustainability and development goals.
We have significant skills and expertise in supporting national and state governments to design and implement effective carbon pricing instruments. By taking a holistic approach, we help you:
- Model designs for national and state-level carbon pricing instruments, including emissions trading systems (ETS) and carbon taxes.
- Assess how carbon pricing instruments can sit alongside national decarbonisation and sustainability policies.
- Assess and develop strategies and raise understanding about how both businesses and governments can interact with the global carbon market and engage in the emerging mechanisms for Article 6 of the Paris Agreement.
- Support the implementation of internal carbon pricing across businesses, as a tool to drive Net Zero action.
- Design and deliver capacity building and knowledge products for helping the public and private sectors on various topics related to carbon markets, including MRV, economic analyses and emissions trading.
Why the Carbon Trust
Climate action requires a holistic approach. We combine our experience of policy, finance, emissions measurement and low carbon solutions to increase the flow of sustainable finance to projects that have a genuine positive climate impact.
We work extensively across both the private and public sector internationally and have a track record of leading collaboration across these. Our focus on our mission gives us the independence and the drive to find the most effective and impactful solutions.
The Carbon Trust has helped us strengthen our long-term relationship with Mexico’s agricultural development bank. The team was very constructive in applying the international funding requirements we need to abide by as funders to Mexico’s agricultural context and FIRA’s operations as a second-tier financial institution.
The Carbon Trust were a trusted partner to understand the latest international taxonomy trends and design a solution for the South African market. They provided valuable guidance and a high standard of technical work that responded to the South African policy, regulatory, and private sector contexts with a view to attracting international investors. Working seamlessly with the National Business Initiative, the Carbon Trust engaged key stakeholders and developed practical tools to help the ultimate users of the taxonomy support a sustainable, inclusive, and low carbon economy.
The Carbon Trust has been a trusted technical partner throughout the ASEAN Low Carbon Energy Programme. This was a great example of how initiatives from LCEP responded to the needs of our partner governments. Guarantees are a crucial way in which governments, development banks, and other financial institutions can work together to mobilise capital. By supporting energy efficiency in industrial SMEs, this scheme could deliver climate and equitable economic benefits hand in hand.
