Climate Finance: Challenges and Responses

The document argues that while public and private funding for climate-resilient development is increasing, it remains insufficient to limit global temperature rise to below 2 degrees Celsius. It highlights the need for a more equitable international climate finance architecture, specifically calling for the inclusion of least developed countries and small island developing states in the design of the Green Climate Fund (GCF). The brief emphasizes that climate change should be treated as an economic concern managed by national ministries of finance and planning, and that public finance must be used strategically to unlock the private sector, which is expected to provide over 85% of the necessary funding.

• Current funding levels for low-carbon and climate-resilient development are increasing despite global fiscal austerity, but they are still inadequate to meet the goal of limiting global temperature rise to below two degrees Celsius.
• The international community faces significant knowledge gaps regarding the Green Climate Fund (GCF), specifically concerning its operational principles, the design of its Private Sector Facility, and the level of influence developing countries have in its design process.
• Climate change should be framed as an economic issue and a 'crisis multiplier', necessitating the direct involvement of national ministries of finance and planning, as well as increased funding flows to local governments.
• Developing countries, particularly low-income ones, lack the institutional and technical capacity to manage climate finance, often relying on project-based interventions rather than programmatic approaches that could attract more funding.
• The private sector is expected to provide the vast majority of climate finance, with UNFCCC estimates suggesting that more than 85% of all finance for climate change must come from private sources.
• Several barriers hinder private sector investment in developing countries, including a lack of long-term transparent public policy, domestic market risks (such as inflation and currency risks), a shortage of 'investment ready' projects, and low carbon prices.
• To scale up private investment, national governments should implement stable frameworks including feed-in tariffs, carbon pricing, and targeted subsidy regimes with sunset clauses.

APA

Huhtala, A., Bird, N., & Herweijer, C. (2013). Climate Finance: Challenges and Responses. Climate and Development Knowledge Network. http://cdkn.org/wp-content/uploads/2013/02/CDKN_ClimateFinance_PolicyBrief-FINAL.pdf

Chicago

Huhtala, Ari, Neil Bird, and Celine Herweijer. Climate Finance: Challenges and Responses. Climate and Development Knowledge Network, 2013. http://cdkn.org/wp-content/uploads/2013/02/CDKN_ClimateFinance_PolicyBrief-FINAL.pdf.

Wikipedia

{{cite report |last1=Huhtala |first1=Ari |last2=Bird |first2=Neil |last3=Herweijer |first3=Celine |title=Climate Finance: Challenges and Responses |publisher=Climate and Development Knowledge Network |date=February 2013 |url=http://cdkn.org/wp-content/uploads/2013/02/CDKN_ClimateFinance_PolicyBrief-FINAL.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{huhtala2013climate, author = {Huhtala, Ari and Bird, Neil and Herweijer, Celine}, title = {{Climate Finance: Challenges and Responses}}, institution = {Climate and Development Knowledge Network}, year = {2013}, month = feb, url = {http://cdkn.org/wp-content/uploads/2013/02/CDKN_ClimateFinance_PolicyBrief-FINAL.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }