Nordic funding aimed at mitigating or adapting to climate change in developing countries needs to be upgraded in such a way that good pilot projects can be upscaled and replicated. Moreover, additional private finance is needed to ensure sufficient funding of climate projects in low-income countries. These are the main findings of a new report financed by the Nordic Council of Ministers.
The study named “Nordic Climate Finance Opportunities – The NCF Case Study” has been written by Dennis Hamro-Drotz and Kristian Brüning.
Nordic institutions provide a wide range of support for climate activities. Much of the support is, however, still built around thematic silos for development funding, export support and climate or carbon finance for specific mitigation activities. Climate finance could provide a theme that could act as a focus to further integrate these on-going activities in a co-ordinated way.
The study takes a close look at Nordic Climate Facility’s (NCF) activities. It concludes that NCF is an enabler of projects, mobilising private finance, reducing financial risk and helping to test project viability. A key challenge is, however, determining how to upscale and replicate good climate projects. There is a clear need to create ‘bridges’ between bottom-up, smaller scale projects on the one hand, and large-scale international top-down programmes on the other. Addressing this issue could become a central theme for Nordic climate finance institutions, the study emphasises. Private finance also plays a crucial role in ensuring sufficient funding for mitigation and adaptation, and will likely be one of the topics in the upcoming UN climate negotiations in Paris at the end of this year.
The case studies analysed also have a strong development agenda with co-benefits. It is therefore suggested to integrate development and climate financing. Many Nordic institutions have also built up vast knowledge in emission reductions monitoring and reporting, knowledge that should be integrated into future Nordic climate finance. This is especially important as results-based finance is increasingly required by international policy frameworks.