In 2017, the International Development Finance Club (IDFC) together with the group of Multilateral Development Banks (MDBs) made a joint commitment to “align financial flows with the Paris Agreement”. With this framework, NewClimate Institute and I4CE provide IDFC members with clear and practical guidance on how to align their operations with the requirements of the Paris Agreement. Main findings: In 2017, the International Development Finance Club (IDFC) together with the group of Multilateral Development Banks (MDBs) made a joint commitment to “align financial flows with the Paris Agreement”...

The triple COVID-19, economic, and climate crisis poses a growing challenge to debt sustainability and financing for climate action. There are growing calls to look for solutions for the three crisis together, notably through “debt-for-climate” swaps. Though not a general panacea, such proposals may represent an attractive option for both debtors and creditors. As an input into this ongoing discussion, this working paper proposes several potential broad criteria and proxy indicators as a starting point to identify countries where such debt swaps could be piloted, potentially with lessons...

In the coming years, Poland will gain access to unprecedented funds for thermal modernization of buildings. Limited monitoring of financial flows in the area of building renovation creates a risk of only partial and inefficient use of this opportunity. Main Findings: Thermal modernisation of buildings does not only play a key role in reducing greenhouse gas emissions but can also be an important stimulus measure for the recovery of European economies after the crisis caused by the COVID-19 pandemic. It is one of the key investment areas supported not only by the EU’s Multiannual Financial...

Financial institution’s climate-related investment targets have rapidly grown in recent years. In this report, we provide insights into the magnitude and ambition of these targets, and investigate their relationship with GHG emissions in the real economy. Specifically, this report maps out the financial sector’s climate-related investment targets against a range of indicators, such as monetary investments in ‘green’ projects, and required ‘green’ investments and GHG emission reductions. It thereby considers both climate-related investment pledges made by individual financial institutions as...

As the key European public finance institution, including in the EU’s COVID-19 response measures, the EIB can and should play a prominent role in the decarbonisation of the transport sector, especially in its aspiration to be the “EU Climate Bank”. Our analysis of the EIB's transport investment portfolio since 2015, finds that about half of transport-related investments are clearly “aligned” with the Paris Agreement. We propose Paris alignment evaluation criteria, including key factors to take into consideration, and a number of investment priorities for the EIB to not only align all its...

In 2016, multilateral development banks committed to align their development finance activities with the goals of the Paris Agreement. This requires the banks to ensure that all their activities advance low-carbon, climate resilient-development pathways, or at least not undermine these goals. In this series of memos from NewClimate, Germanwatch and WRI, we provide input for a robust alignment process along the six alignment building blocks around which the MDBs have agreed to organise the implementation of their alginment work. Multilateral Development Banks (MDBs) have a critical role to play...

This paper discusses ways to identify investments that can be accounted as low-carbon activities. The focus is on the EU Taxonomy, as in the near future it will have to be assessed to what extent this emerging tool can be useful for implementation of the climate finance landscape methodology. Subsequently, we present the added value of linking countries’ climate strategies with investment landscapes. This study offers further recommendations regarding the solutions that help to reduce the gap between current financial structures and the objectives of the national low-emission transition...

The paper formulates 10 points for mitigation ambition and includes recommendations on ways to support ambition raising through international cooperation. Introduction: All governments have committed to the long-term goal of the Paris Agreement. The findings of IPCC 1.5 Special Report (IPCC 1.5SR) illustrate the climate impacts and risks associated with exceeding 1.5°C and clearly underscore that greater ambition is urgently needed to achieve this limit as current Nationally Determined Contributions (NDCs) are inconsistent with Paris compatible pathways. This has implications for the role of...

The required mobilisation of funds for a Paris-compatible development urges for an improved coordination between all of the actors involved in the low-emission transition as well as demands comprehensive knowledge base to address the systemic challenge of financing sustainable economic development. This publication is part of a project enhancing the exchange of experiences between experts, business community and civil society policymakers to improve the assessment and design of domestic climate finance investment environments. It describes existing methods to track climate finance and...

The Paris Agreement aims to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C. To contribute to the fight against climate change, the MDBs have operated under what this report refers to as a Climate Finance Paradigm. Yet, given the urgency of the challenge and the rate at which the world must reduce emissions, this current paradigm is not enough and a new paradigm is needed. This report describes this new paradigm, called the Paris Alignment Paradigm, and provides recommendations on...

The Allianz Climate and Energy Monitor ranks G20 member states on their current attractiveness as potential destinations for investments in low-carbon electricity infrastructure. It further considers their current and future investment needs in line with a trajectory compatible with the 2°C/1.5°C temperature limits of the Paris Agreement. Key findings : France now most attractive for renewable energy investments, Brazil climbs 5 ranks and Italy 4 ranks with much improved conditions. All countries need to improve their policy framework for required low-carbon investments. Germany loses first...

This working paper assesses how Multilateral Development Banks can support the global temperature goal of the Paris Agreement. It illustrates how the banks could strengthen existing tools to align their portfolios and activities with the globally agreed mitigation goal. Other finance institutions can also profit from many of the approaches included in the paper. The analysis starts with a review of scientific scenarios to understand what the temperature goal means for different investment areas. It also reviews existing tools and activities at the Multilateral Development Banks. Building on...

The refrigeration and air conditioning (RAC) sector faces a particular challenge in the implementation of effective finance strategies given its cross-sectoral nature – extending from manufacturing of gases and appliances to energy end-use in buildings – and hence the different institutional responsibilities as well as policy and compliance regimes that affect the sector. Against this backdrop, this paper focusses on questions related to the financing of the low-carbon transition of the RAC sector. The objective of the paper is to provide an overview of the current finance situation in the...

The Allianz Climate & Energy Monitor Deep Dive aims to inform investors and policy-makers on the scale of investments needed in China, India and the US to be in line with the Paris goals; and what recent developments, especially regarding the leadership change in the US, mean for investing in renewable power in the future. Key findings: Investments in China and the US need to roughly double, in India even triple, to remain within the Paris Agreement warming limit. Renewable power investments will need to rapidly grow in the coming two decades to be in line with the Paris Agreement targets...

In a consortium led by the Finnish consultancy GAIA and with the Stockholm Environment Institute (SEI), NewClimate Institute carried out a study on behalf of the Nordic Working Group for Global Climate Negotiations (NOAK) to identify how Nordic finance institutions can best contribute to mobilising climate finance to developing countries in a way that supports the implementation of the Paris Agreement. The study mapped current financial support needs communicated through developing countries’ Intended Nationally Determined Contributions (INDCs) to identify potential support gaps where Nordic...