Climate finance

© GIZ/Ursula Meissner

Funds for climate financing are scarce and must therefore be managed seriously and used sensibly.

 

From an economic point of view, a stable climate is a global public good. Measures for climate protection and adaptation to climate change cost money. An appropriate carbon price should actually ensure that environmental damage can be compensated. However, this is not the case. In order to cover the costs of climate protection and adaptation measures nevertheless, climate financing is used. At present, however, the investment requirement is so high that the climate financing funds are not sufficient to cover it. At present, there is still a lack of investment and market structures that make it possible to channel sufficient capital from investors into climate-friendly projects and adaptation projects.

However, the provision of funds to finance climate activities is only the first step towards making an effective contribution against climate change. For climate finance to be effective, partner countries and institutions must be prepared to manage and use the funds. The buzzword is "Climate Finance Readiness". It stands for the ability to access climate finance and use it sensibly.

GIZ has many years of experience in advising on climate finance. It provides its services in this area on behalf of the German Federal Government, the Green Climate Fund (GCF) and the NAMA Facility, a German-British initiative to provide financial support for nationally appropriate greenhouse gas mitigation measures. GIZ supports its partners in tapping sources of climate finance and using the funds effectively and transparently.

 

GIZ's services in detail:

- It advises its partners on the further development of climate plans and strategies. This provides the partners with a basis for their financing and investment decisions. For example, they can develop national climate financing strategies.

- Institutions responsible for climate financing and the coordination of funds are established or their capacities strengthened.

- In training sessions, GIZ partners learn how to gain access to international climate funds, how to use funds effectively and transparently, and how to report correctly on the use of funds.

- Private climate investors can benefit from GIZ's expertise in investment promotion. GIZ supports financial institutions in developing financial products to promote investment in climate-friendly projects.