You are here

multilateral development banks

The Private Sector and International Development: A Love Affair, or Cold Feet?

The private sector is a crucial partner in advancing sustainable development, and bilateral aid agencies are grappling with ways to learn from and leverage the activities of companies and markets. As the worlds of business and of aid increasingly intersect—and as development budgets are reined in even as demands on them grow—the pressure is to do more in partnership with the private sector. The real challenge, though, is to do better.

This was the headline message from a recent roundtable discussion with representatives from nine bilateral donor agencies and invitees from the private sector, co-organized by WRI and the International Institute for Environment and Development (IIED) in London (see notes from the roundtable).

Both sides desire a strengthened relationship. Donor agencies see the private sector as an indispensable partner for improving the effectiveness and efficiency of aid. Agencies are looking for important sources of ideas, technology, and financing to scale up development solutions.

One example is the Africa Enterprise Challenge Fund (AECF), which is funded by the Australian, British, Danish, Dutch, and Swedish aid agencies. AECF is improving livelihoods of poor people in rural Africa by supporting innovation and new business models to help small-scale farmers adapt to climate change and promote investment in the generation of low-cost, clean, renewable energy.

Private sector actors seek clearer policy signals and more consistent support from donor agencies, particularly in understanding and navigating local politics. They also seek opportunities to develop new products and new markets, benefiting from the “de-risking” role that the public sector can play.

Farewell, 2012. You Taught Us Much.

This year has been one of those worst-of-years and best-of-years. In its failures, there are signs of hope.

An unprecedented stream of extreme weather events worldwide tragically reminded us that we’re losing the fight against climate change. For the first time since 1988, climate change was totally ignored in the U.S. presidential campaign, even though election month, November, was the 333rd consecutive month with a global temperature higher than the long-term average. A WRI report identified 1,200 coal-fired power plants currently proposed for construction worldwide. The Arctic sea ice reached its lowest-ever area in September, down nearly 20 percent from its previous low in 2007. And disappointing international negotiations in June and December warned us not to rely too much on multilateral government-to-government solutions to global problems.

But 2012 was also a year of potential turning points. A number of new “plurilateral” approaches to problem-solving came to the fore, offering genuine hope. A wave of emerging countries, led by China, embraced market-based green growth strategies. Costs for renewable energy continued their downward path, and are now competitive in a growing number of contexts. Bloomberg New Energy Finance reports that global investment in renewable energy was probably around $250 billion in 2012, down by perhaps 10 percent over the previous year, but not bad given the eliminations of many subsidy programs, economic austerity in the West, and the sharp shale-induced declines in natural gas prices. And the tragedy of Hurricane Sandy, coupled with the ongoing drought covering more than half of the United States (which will turn out to be among the costliest natural disasters in U.S. history) may have opened the door to a change of psychology, in turn potentially enabling the Obama Administration to exhibit the international leadership the world so urgently needs, as many of us have advocated.

Unlocking Climate Finance: How Can Multilateral Agencies Better Leverage the Private Sector?

The Doha negotiations that just concluded earlier this month have again drawn attention to the urgent need for climate adaptation and emissions reductions. Government representatives, civil society stakeholders, development aid organizations, and corporates agree that the world must make big strides—soon—if we are to have any hope of keeping global average temperatures to 2 degrees Celsius above pre-industrial levels.

One problem, though, is how to generate enough finance to fund these activities. A new WRI working paper aims to address this challenge by examining the role multilateral agencies can play in mobilizing private sector finance for climate change adaptation and mitigation.

Leveraging the Private Sector to Bridge the Climate Finance Gap

Developing countries—those most vulnerable to climate change’s impacts—will need $300 billion annually by 2020 and $500 billion annually by 2050 for mitigation activities alone. The newly established Green Climate Fund (GCF), meant to channel $100 billion annually into climate-relevant investments starting in 2020, is a significant first step, but does not fill the gap of what’s needed.

The public sector cannot tackle this challenge alone, and indeed, the GCF already envisions funding from a mix of public and private sources. The key, then, is to mobilize the private sector to create new investment opportunities and new markets.

Public Financing Instruments to Leverage Private Capital for Climate-Relevant Investment

Focus on Multilateral Agencies

This working paper is part of WRI’s Climate Finance Series, which tackles a broad range of issues relevant to public donors, intermediaries, and recipients of climate finance. A subset of this series, including this working paper, examines how public funds can leverage private sector investment...

2012 年绿色气候基金工作重点

绿色气候基金(Green Climate Fund)第一次大会即将召开,而亚太地区以及拉丁美洲和加勒比海地区国家尚未提名其董事会成员。在过去长达两年的谈判中,绿色气候基金被寄予了向发展中国家提供大规模应对气候变化资金的厚望。然而如果不完成提名,董事会就无法启动“全球最主要的气候变化基金”这一重要项目的运作。

Prioridades para el Fondo de Clima Verde 2012

La primera reunión del Fondo de Clima Verde (GCF) se acerca rápidamente y dos de los grupos regionales—Asia-Pacífico y América Latina y el Caribe—todavía no han nominado a sus representantes para la Junta. El GCF fue desarrollado durante los dos últimos años, y ahora se espera que ofrezca financiamiento a gran escala para ayudar a afrontar los efectos del cambio climático en países en vía de desarrollo. Sin terminar las nominaciones, la Junta no puede lanzar “el principal fondo global de finanzas para afrontar cambio climático.”

Priorities for the Green Climate Fund in 2012

With the first meeting of the Green Climate Fund (GCF) fast approaching, two regional groups – Asia-Pacific and Latin America and the Caribbean – have yet to nominate their Board members. Negotiated over the last two years, the GCF is expected to deliver large-scale finance to developing countries to address climate change. Without completing the nominations, though, the Board cannot begin the important task of making the “main global fund for climate change finance” operational.

Earlier this year, WRI and Climate Analytics facilitated a meeting in New York City of representatives from prospective Board member countries and others involved in the Fund’s design (see summary note). Participants exchanged ideas and perspectives on the Board’s program of work for 2012 and priorities for its first meeting. In addition to the basic administrative arrangements – like selecting a host country and establishing a secretariat – the Board needs to do the following in 2012:

Transparency of Climate Finance: Did Durban Show Us the Money?

In the recent UN climate negotiations (COP 17) in Durban, South Africa, the issue of transparency of climate finance appeared in a variety of contexts in the final agreement on long-term cooperative action. From the sections on reporting and review for developed and developing countries, to the Standing Committee, to the registry, and to fast-start finance, making sense of this multitude of provisions on climate finance transparency is a challenge.

However, what's clear is that the moderate progress made in Durban fell short of what is needed to achieve a transparent and effective climate finance regime. This post aims to summarize where we stand on this issue following the Durban COP.

Climate Finance at COP17 Durban

This piece was written with Louise Brown, Research Analyst at WRI.

From November 28 to December 9, negotiators will gather in Durban, South Africa, for the United Nations Framework Convention on Climate Change (UNFCCC) COP17 meeting. An outcome on climate finance – funds to support climate change mitigation and adaptation activities in developing countries – is a key part of the overall Durban agreement. This includes agreeing on how the Green Climate Fund (GCF) will be structured and governed, setting in motion a process to identify how developed countries will meet their long-term finance commitment of $100 billion by 2020, and agreeing on the role, composition and functions of the Standing Committee, a body that will monitor finance flows and enhance overall decision-making on climate finance.

Pages

Stay Connected

Sign up for our newsletters

Get the latest commentary, upcoming events, publications, maps and data. Sign up for the biweekly WRI Digest.