Valuable lessons and practical understanding of the institutional and financial challenges involved in low carbon development are emerging as countries move from designing Low Carbon Development Strategies (LCDS) [1] to their implementation. In particular, the difficulty of translating ‘smooth curve’ decarbonisation roadmaps into real-life investment decisions has generated helpful knowledge for both decision makers and policy experts. Demonstrating that low carbon development is achievable and creates growth is critical to create the political conditions for raising climate ambition for a global legally binding agreement in 2015.

Many countries, particularly those that are collaborating in the Mitigation Action Plans and Scenarios (MAPS) programme [2] have reached the stage where their LCDS are ready for implementation. However, these strategies have weak linkages with the national finance and investment challenges. These governments are therefore identifying the need for integrating LCDS/LEDS into national policy-making and budget processes, and for identifying where and how international sources of climate finance can best compliment and scale up these strategies.

In recognition of these needs, E3G has developed the concept of a National Financing Strategy (NFS) that helps identify the key financing challenges and opportunities for implementation of LCDS. The aim was to develop ideas and support for relevant policy and financing mechanisms for implementation of LCDS and accelerate collective learning of how climate finance can be a catalyst for transformational change. This project focused on identifying opportunities for taking forward the NFS approach in practice in Chile, Colombia and Peru.

More specifically, this project aimed to:

1) Elaborate the concept and building support for a National Financing Strategy approach in partnership with the interested partner Governments and other stakeholders;

2) Scope out stakeholders and opportunities for deepening engagement of the partner countries, to build understanding and support for the approach, including engaging Finance Ministries;

3) Shape the National Financing Strategies work plan of the LEDs Global Partnership, including identifying opportunities for sharing lessons and learning during 2013/14.

Recent update (2013):

To date, the project team has completed the background research on financing of low carbon development and the role of public policy and financing in mobilizing and scaling up private sector investment. An assessment of key barriers and challenges that would need to be addressed through a National Finance Strategy has also been conducted, and lessons from existing good practices in overcoming such barriers have been identified.

Based on this research, a working paper on Financing Pathways for Low Emissions and Climate Resilient Development was published in October 2013.

CDKN Funding: £99,000

[1] Also known as Low Emissions Development Strategies (LEDS).

[2] Brazil, Chile, Colombia, and Peru.