An introduction to the CFAS recommended reading guide
Sven Harmeling of Germanwatch introduces the Climate Finance Advisory Service’s ‘Recommended reading guide’ to topical issues in climate finance, and invites readers to contribute their ideas.

Recommended reading on overcoming the finance and readiness gap to fully tap the mitigation potential

1) The landscape of climate finance 2012, CPI
This report helps understand the current landscape of climate finance and can inform the UNFCCC negotiations on where and what the needs are for further climate finance. It will prove useful when discussing pre-2020 mitigation action at the next ADP meetings as it shows where the money is flowing and where it is lacking, and also shows that countries are investing more and more in low-carbon development.

2) Readiness for climate finance. A framework understanding of what it means to be ready to use climate finance, UNDP
The GCF Board is currently discussing options for funding of readiness activities. Hence, a clear understanding of what it actually means to be ready for climate finance is very important. Furthermore, with regard to the scaling up of international climate finance, it is important that recipient countries are able to absorb the increasing amounts of finance and thus are ready for those increasing volumes of international climate finance. Furthermore, due to the large amount of necessary skills/ prerequisites for being ready to access international climate finance, it also becomes evident that financial support for readiness activities is crucial. Therefore this paper, which presents key aspects of what it means to be ready for climate finance can bring valuable input into the negotiations.

3) Plugging the energy efficiency gap with climate finance, OECD/ IEA
The discussions under the Durban Platform in 2013 will focus, inter alia, on how best to mitigate GHG emissions in the short term, without waiting for the next global agreement in 2020. This is a crucial step to stabilizing averaging global warming below 2°C and ensuring global GHG emissions peak as soon as possible. A number of reports in 2012 sent a strong signal to the international community on the high-abating potential in different sectors –and identified energy efficiency as one of them. Also, energy efficiency is considered a key element of alleviating energy poverty in least Developed Countries. In this context, this IEA/OECD report on how to plug the energy efficiency gap is helpful for negotiators to understand how to maximise the energy efficiency potential, including in least Developed Countries, in the interest of improving energy access and reducing global C02 emissions.

4) Financial mechanisms and investment frameworks for renewables in developing countries
This report provides substantial analysis and recommendations in order to design and improve financial frameworks to scale-up renewable energy action. This is important for many Developing Countries to better harness their renewable energy potential and to accelerate a paradigm shift towards low-emission development. Climate finance provided by Developed Countries can further foster this. The report can therefore help inform the UNFCCC negotiations by showing what is already happening in Developing Countries and by helping to understand what critical success factors are. This can provide a basis for identifying how climate finance can best support these initiatives.

Recommended reading on some of the existing and potential financial mechanisms

5) Mobilising climate finance, a paper prepared at the request of G20 finance ministers, World Bank / IMF
The report can help inform negotiations under the UNFCCC on how to scale-up the mobilisation of public funds (incl. from innovative sources) in the context of the 100 billion dollar commitment by 2020, as well as partially triggering additional substantial private finance investments. It is particularly relevant to discussions under the ADP on pre-2020 ambition as most of the instruments proposed in the report help reduce GHG emissions as well as provide options to fund ambitious mitigation action in both developed and Developing Countries.

6) Innovative climate finance: examples from the UNEP bilateral finance institutions climate change working group, UNEP
Interestingly, most reports focus on multilateral funds and flows, even though they only represent a small portion of climate finance flowing to Developing Countries. In 2010, multilateral development banks (MDBs) provided about 13%, while the BFIs provided about 25% of climate finance in Developing Countries. At this stage of the climate finance discussions, it is key to reach a broad understanding of what each institution can deliver in the current landscape and what it would need to deliver more and more effectively in tackling climate change. Also, it helps increase understanding on the range of innovative financial instruments the international community can choose from, particularly for the Green Climate Fund.

Recommended reading on how to effectively leverage private finance for climate investments

7) Public financing instruments to leverage private capital for climate-relevant investment: focus on multilateral agencies.In the coming years, there will be many international discussions on how to mobilize the private sector and private financing sources; hence a clear understanding of what it actually means to understand the role of the public financing institutions to leverage private finance investments is necessary. This includes a broad understanding of the main actors of the international climate finance landscape and public tool available to create attractive low-carbon investments. The paper analyses the GEF, CTF and WB Group and furthermore illustrates the complexity of the individual institutions, the variety of instruments they are offering and the different impact on the private sector. Based on these initial findings regarding the institutional barriers (commonly found in the operations of the multilateral agencies examined in the report), further recommendations should be developed.

8) Improving the effectiveness of climate finance: A survey of leveraging methodologies
This paper demonstrates that there is not one singular definition of financial leverage and methodologies used. Therefore, it is almost impossible to compare different instruments to understand their effectiveness.

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