This Topic Guide reviews emerging approaches to climate finance and aims
to provide DFID’s Climate and Environment Advisors with an up-to-date
understanding of the current national modalities designed to mobilise,
manage and channel climate finance for investment in adaptation and
Investments in adaptation and mitigation by households, governments and
private entities are increasing in response to the challenges and
opportunities provided by a changing climate. Investments in such
activities often come with huge costs and very specific financing needs.
Climate finance is expected to play an important role in financing such
investments. The term broadly refers to international and national,
public and private sources of finance for investment in adaptation and
Governments and private entities at the international, national and
local scales have piloted several approaches to mobilise and channel
climate finance. These provide lessons for policymakers given the
mandate of financing investment in adaptation and mitigation. The guide
focuses on trends in national country systems for policy, planning and
budgeting of climate finance and how they can be strengthened to better
access, govern and deliver climate funds. It guides how decision makers
can identify appropriate financial intermediaries, financial instruments
and financial planning systems to deliver climate finance for investment
in adaptation and mitigation.
The Climate Finance Landscape Framework developed by the Climate Policy
Initiative has been used as a basis for the analysis. This framework
examines the role of financial intermediaries, financial instruments and
financial planning systems in mobilising and channelling climate finance
from its source to its end use.
Decision trees are used to demonstrate how policy actors can choose
context specific financial intermediaries, instruments and planning
systems to mobilise and channel climate finance from its source to its
The guide is substantiated with case studies outlining emerging practice
on approaches to climate finance adopted at international, national and
The guide is structured in 3 sections:
Section 1 highlights key observations in the National Climate Finance
Landscape around the main intermediaries, instruments and modalities
that govern the flow of climate finance within countries. It provides
further guidance on how development advisors can learn from and support
these evolving national arrangements.
Section 2 provides an overview of the International Climate Finance
Landscape. It includes:
- An overview of the available sources of climate finance
- The financial intermediaries used to mobilise and channel finance from
its source to end use
- The economic and financial instruments used to incentivise investment
in low carbon climate resilient development (LCCRD)
- Financial planning systems used to govern the flow of climate finance.
Section 3 - Lessons for an appropriate Climate Finance Landscape at the
national level - shows how an appropriate selection of financial
intermediaries, instruments and financial planning systems can enable
the governance of climate finance.
This peer reviewed Topic Guide has been produced by the International
Institute for Environment and Development (IIED) with the assistance of
the UK Department for International Development (DFID) contracted
through the Climate, Environment, Infrastructure and Livelihoods
Professional Evidence and Applied Knowledge Services (CEIL PEAKS)
programme, jointly managed by DAI (which incorporates HTSPE Limited) and
IMC Worldwide Limited.
Rai, N.; Kaur, N.; Greene, S.; Wang, B.; Steele, P. Topic Guide: A guide to national governance of climate finance. Evidence on Demand, UK (2015) xii + 71 pp. [DOI: 10.12774/eod_tg.march2015.rainetal]