Financing of SLCP mitigation Initiative
The scientific and political communities are increasingly recognising the need to address climate change by not only reducing CO2 emissions, but also through near-term actions to reduce short-lived climate pollutants (SLCPs), such as methane, black carbon and HFCs responsible for global warming as well as air pollution and adverse health impacts. The Climate and Clean Air Coalition (CCAC) has a mandate to address SLCPs by raising awareness, developing national and regional policies and actions, promoting best practices, and improving the scientific understanding of SLCP impacts and mitigation strategies. In its effort to promote global action on SLCPs, the CCAC established the CCAC Finance Initiative with an aim to stimulate the financing of SLCP mitigation projects by leveraging expertise, building knowledge and capacity, and engaging stakeholders.
There are many technologies and project types with demonstrable SLCP mitigating potential that are in theory commercially viable. However, even for these cases private financing is not flowing at the required scale. In order to further understand this phenomenon, the CCAC Finance Initiative engaged Frankfurt School to assess the feasibility and potential impact of a SLCP Finance Innovation Facility (SLCP FIF). The purpose of a SLCP FIF would be to ‘unlock’ commercial finance for SLCP mitigation by providing private financial actors with ‘one-off’ support in the form of TA or a small grant for developing relevant financial products and services.
The study established by Frankfurt School assessed the barriers to expediently mobilise private finance towards SLCP mitigating technologies in a number of key sectors and markets namely in brick kiln, diesel vehicle, cook stove, refrigeration & air-conditioning, waste, oil & gas and agriculture and analysed the financial profiles of the technologies offering the highest SLCP mitigation potential. Thereby the study aimed to ascertain the appetite of commercial banks for SLCP technologies and the subsequent demand for a SLCP FIF. The study was carried in close co-ordination with the lead partners of the CCAC Finance Initiative (UNEP-FI, and World Bank), the CCAC Secretariat and other CCAC sector initiative partners.