Financial Instruments in a 2015 Context, by C. Clapp, CICERO

1. Climate Change Expert Group www.oecd.org/env/cc/ccxg.htm
Financial Instruments in a 2015 Context
Christa Clapp
CICERO
16 September 2014
Based on the discussion paper “the role of the 2015 agreement in mobilising climate finance” by Takayoshi Kato, Jane Ellis and Christa Clapp

2. 2 Climate Change Expert Group
Aims of mobilising climate finance in a 2015 agreement
•
Targeting the adaptation of the most vulnerable countries
•
Enhancing climate-resilient development
•
Encouraging private finance flows
•
Shifting of investments from ‘brown’ to ‘green’

3. Range of Financial Instruments & Tools
Other
Grants
De-risking
Debt
Loans
Bonds
Equity
Stocks
Equity provisions
Market maturity
Institutional capacity
Technological maturity

4. 4 Climate Change Expert Group
Other Financial Tools
•
May be more critical for adaptation projects with low revenue streams
•
Can improve readiness for private sector investment (e.g. through capacity building) in early market phases
•
Critical for least developed and most vulnerable countries
•
Difficult to track leveraging of private sector finance
Other
Grants
De-risking

5. 5 Climate Change Expert Group
Debt Instruments
•
Many debt securities offer fixed returns over time, attracting institutional investors
•
Bonds can be applied to a programme of approaches (scaled-up)
•
Non-concessional loans and bonds useful for targeting more mature markets and technologies
•
Can raise up-front capital for infrastructure projects
Debt
Loans
Bonds

6. 6 Climate Change Expert Group
Equity Instruments
•
Higher investor risk than other instruments
•
Can be more complicated to track impacts
•
Useful for larger project portfolios with higher risk/return profiles
Equity
Stocks
Equity provisions

7. Targeting Different Climate Activities

8. Green Bond Focus: Applications
Source: CICERO; CBI, 2014

9. Green Bond Focus: Opportunities & Challenges
Opportunities
Challenges

10. 10 Climate Change Expert Group
How Can a 2015 Agreement Encourage Full Use of Tools?
•
Explicitly encourage use of full range of relevant financial instruments, tools and vehicles
•
Provide opportunities for information-exchange on the use of financial instruments and tools (especially newer or innovative ones)
•
Encourage further involvement of multiple financial instruments/tools and actors
Source: Kato, Ellis & Clapp (forthcoming)

11. 11 Climate Change Expert Group
Contact
Christa Clapp CICERO christa.clapp@cicero.oslo.no www.cicero.oslo.no/greenbonds