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FEATURE: 8. Improving the Effectiveness of Climate Finance: A Survey of Leveraging Methodologies

CFAS summary: Public climate finance investments are often analysed regarding their potential to which extent other public and private investments have been ‘leveraged/mobilized/catalysed‘ as a result of the intervention. The paper provides a narrow and broad definition of leveraging and an overview of general leverage ratio methodologies that have been used by various investment institutions and for different types of finance. The paper includes a study of financial initiatives and instruments which apply leverage ratios: Carbon finance, Global Environmental Facility (GEF), Clean Technology Fund (CTF), Multilateral Investment Guarantee Agency (MIGA), World Bank Group Infrastructure Financing and Feed-in Tariffs. The paper concludes that leverage often simply equals co-financing and that it is to be clear about the leveraging terminology and methodology used.

Authors: Jessica Brown (Overseas Development Institute), Gernot Wagner (Environmental Defense Fund), Barbara Buchner, (Climate Policy Initiative), Katherine Sierra (Brookings), Date: December 2011

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