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Mitigation Finance

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Ambitious mitigation actions are critical to avoid dangerous climate change. Mitigation finance represents more than half of the public climate finance flowing through dedicated climate funds monitored by Climate Funds Update.

Between 2004 and 2014, mitigation finance from climate funds approved US$6.63 billion. The top five recipient countries (Morocco, India, Mexico, South Africa and Indonesia) will receive almost half of this. The direction of mitigation finance has been towards high-emitting and growing middle income economies in Asia Pacific, Latin America and Europe and Central Asia. In 2014, solar, energy efficiency and geothermal sector activities received the largest volume of mitigation funding with largest sources being the World Bank administered Clean Technology Fund (CTF) and the Global Environment Facility (GEF).

Mitigation activities are needed in all countries at all scales, however, and climate funds have worked to finance both large scale mitigation opportunities in fewer countries as well as smaller scale solutions. The GEF and the Scaling Renewable Energy Program (SREP) under the Climate Investment Funds are improving energy access for the poor by supporting rural electrification using renewable energy technologies, for example.

Private finance for mitigation is a much larger pot than for the money which flows through the climate funds. While difficulties exist in defining and getting data on this spend, the scale is substantial. In 2013, for example, private actors invested USD 193 billion in renewable energies. The Clean Development Mechanism (CDM) is a form of mitigation funding that has arisen under the UNFCCC. It allows a country with an emission reduction commitment under the Kyoto Protocol to implement an emission-reduction project in developing countries that earn certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets. The carbon prices drops in recent years have made this source of funding less significant than expected.

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