low carbon development

This is the first installment of our blog series, Climate Finance FAQs. The series explores the often nebulous world of climate finance, providing clarity on some of the key terms and current issues. Read more posts in this series.

Surprising as it may sound, there is no standard definition of climate finance. In fact, there are many differing views on what type of funding constitutes climate finance, how it should be delivered, and how much money developing nations will need to mitigate climate change and adapt to its impacts. This vortex of information can be confusing to navigate. Here, we’ll do our best to break down all of the components that define “climate finance.”

Defining Climate Finance: Broadly to Narrowly

In its broadest interpretation, climate finance refers to the flow of funds toward activities that reduce greenhouse gas emissions or help society adapt to climate change’s impacts. It is the totality of flows directed to climate change projects—the same way that “infrastructure finance” refers to the financing of infrastructure, or “consumer finance” refers to providing credit for purchases of big-ticket household items.

The term is most frequently used in the context of international political negotiations on climate change. In this context, climate finance—or international climate finance—is used to describe financial flows from developed to developing countries for climate change mitigation/adaptation activities, like building solar power plants or walls to protect from sea level rise. This interpretation builds off the premise that developed countries have an obligation to help developing countries transform their economies to become less carbon-intensive and more resilient to climate change.

Developing countries will need about $531 billion of additional investments in clean energy technologies every year in order to limit global temperature rise to 2° C above pre-industrial levels, thus preventing climate change’s worst impacts. To attract investments on the scale required, developing country governments, with support from developed countries, must undertake “readiness” activities that will encourage public and private sector investors to put their money into climate-friendly projects.

WRI’s six-part blog series, Mobilizing Clean Energy Finance, highlights individual developing countries’ experiences in scaling up investments in clean energy and explores the role climate finance plays in addressing investment barriers. The cases draw on WRI’s recent report, Mobilizing Climate Investment.

The development of Thailand’s energy efficiency sector is an interesting case study. It demonstrates how strong government leadership combined with strategic support from international climate finance can drive the transition toward an energy-efficient economy.

In the early 1990s, Thailand’s economy was growing rapidly at 10 percent per year; the power sector was growing even faster. The government recognized that conserving energy would provide a low-cost way to meet its citizens’ rising demand for energy.

This post originally appeared on ChinaFAQs.org.

Leading China experts and top media representatives participated in a ChinaFAQs briefing this past Friday to discuss how the country will address pressing environmental, climate, and energy challenges at home and globally in the coming years. At the National People’s Congress beginning March 5, 2013, Xi Jinping and Li Keqiang are expected to formally become China’s president and premier, respectively. Other top spots in China’s ministries will also be assigned, with implications for China’s future of low-carbon development and for the United States.

The briefing was one of ChinaFAQs’ events highlighting the reasons for China’s action on low-carbon energy, including: energy security, economic competitiveness through technological innovation, and climate and environmental impacts.

Listen to the recording:

With more than 400 million of its 1.2 billion citizens without access to electricity, India needs extensive energy development. A new initiative aims to ensure that a significant portion of this new power comes in the form of renewable energy.

The Green Power Market Development Group

Today, WRI and the Confederation of Indian Industries (CII) launched the Green Power Market Development Group (GPMDG) in Bangalore, India. The group will help boost the country’s use of renewable energy like wind and solar power.

The public-private partnership brings together industry, government, and NGOs to build critical support for renewable energy markets in India. For starters, the group will connect potential industrial and commercial renewable energy purchasers with suppliers. A dozen major companies belonging to a variety of sectors—like Infosys, ACC, Cognizant, IBM, WIPRO, and others—have already joined the initiative and have committed to explore options for increasing their use of renewable energy.

The group also aims to make India’s clean energy development more mainstream. Green power buyers and generators in India currently face policy and regulatory barriers—such as high transmission costs and extensive approval processes. Through the GPMDG, the private sector will be able to work constructively with government agencies to instigate the types of renewable energy policies that will spur greater clean energy development.