Critical aspects of climate financing in the post-Paris implementation phase

The project aims to provide academic research in order to create a deeper understanding of the efficient use of climate finance, particularly of private capital. A special focus is made to investigate the concrete applicability in the context of the Green Climate Fund (GCF). The following aspects are examined in particular:

• Focus and strategy on the efficient integration of private capital. We analyse the question of which levels and with which instruments an efficient mobilisation of private capital can succeed. Various sources of private sector financing are presented in a differentiated manner, for example by looking at political, economic and psychological factors. Building on this, a focus on efficiency is used to highlight aspects that are either conducive or detrimental to the integration of private sector financing.
• Future of adaptation financing: Political discussions and international financing for adaptation/risk prevention measures and reconstruction after climate-related disasters are currently very much driven by grant instruments. Financially viable business models that enable private sector investment are often not prioritised. This project analyses this economic inefficiency in the context of the availability of grant-based finance, equity considerations and the need to embed them in strategic decisions regarding public versus private goods. The project will also identify ways to scale up adaptation investments.

Finally, the project supports BMZ with advice on the role and efficiency of the GCF, including its evolving project portfolio and institutional development. Concrete examples of this is the GCF Monitor series. Each edition analyses and briefly describes a unique topic selected due to its high importance at the recent Board meeting or other relevant event.