With the historic Paris Agreement in place, Nationally Determined Contributions (NDCs), together with the availability of new sources of climate finance, including the Green Climate Fund (GCF), lay the groundwork for ambitious, country-driven climate action. Achieving NDC goals will require substantial investments in support of low-carbon, climate-resilient infrastructure and most of those investments will come from the private sector.
The challenge going forward will be to turn NDCs into transformational action on the ground in ways that can catalyze private sector investments. Nationally Appropriate Mitigation Actions (NAMAs) are one concept for implementing NDCs that can be used to leverage domestic or international public support to mobilize private investment at scale. In doing so, NAMAs can help realign global capital flows in support of low-carbon, climate-resilient development in line with the purpose of the Paris Agreement.
Private sector actors will invest in projects to the extent that their anticipated return on investment is commensurate with the perceived risks of the project. In the context of the developing world, because many low-carbon technologies are relatively new market entrants, they may have higher costs, greater real or perceived risks, or face additional barriers relative to the existing technologies. Therefore, to attract investors to these technologies, policymakers must put in place the frameworks that make low-carbon investments competitive with carbon-intensive, business-as-usual alternatives.
This policy brief looks at how to develop NAMAs in the form of policy and financial frameworks that make low-carbon projects bankable. This entails combining policy reforms and targeted interventions that address investment barriers and risks, as well as the development of a pipeline of low-carbon investments.
Frauke Röser, +49 30 208 492 741, email@example.com