Addressing the barriers to climate investment

The document identifies various project-level barriers to climate investment, such as externalities, financial market imperfections, and regulatory risks, and suggests tailored financial instruments—including grants, concessional loans, guarantees, and equity—to address them. It emphasizes that financial support should target projects that are societally beneficial but commercially unattractive, and that such instruments must be supported by a consistent policy environment to be effective.

• Investment barriers vary by sector and activity, but generally, mitigation projects provide a global public good, while adaptation projects often function as 'club goods' benefiting specific groups or regions.
• Financial instruments should only be used when barriers cannot be removed through policy measures; for instance, investment subsidies for energy efficiency are less effective if government intervention keeps consumer energy prices artificially low.
• The guide identifies seven broad categories of investment barriers: externalities and public goods, imperfections in financial markets, new and unproven technologies, information problems and behavioural failures, economies of scale, political and economic frameworks in developing/emerging countries, and regulatory risk.
• The choice of financial instrument should be tailored to the technology's development stage: grants or venture capital are suitable for early-stage technologies, while concessional loans and guarantees are better for mature technologies in the deployment or diffusion stage.
• Public finance instruments risk 'crowding out' private investment if they act as a substitute for investment that would have occurred regardless of public support.
• The GET FiT (Global Energy Transfer Feed-in Tariffs for Developing Countries) pilot in Uganda demonstrates the effectiveness of combining a grant (to top-up feed-in tariffs) and a guarantee (to address regulatory risk) to mobilise private investment in renewable energy.

APA

Berliner, J., Grüning, C., Kempa, K., Menzel, C., & Moslener, U. (2013). Addressing the barriers to climate investment. Climate and Development Knowledge Network. http://cdkn.org/wp-content/uploads/2013/11/CDKN_GuideFinancialInstruments_final_web-res.pdf

Chicago

Berliner, Johannes, Christine Grüning, Karol Kempa, Carola Menzel, and Ulf Moslener. Addressing the barriers to climate investment. Climate and Development Knowledge Network, 2013. http://cdkn.org/wp-content/uploads/2013/11/CDKN_GuideFinancialInstruments_final_web-res.pdf.

Wikipedia

{{cite report |last1=Berliner |first1=Johannes |last2=Grüning |first2=Christine |last3=Kempa |first3=Karol |last4=Menzel |first4=Carola |last5=Moslener |first5=Ulf |title=Addressing the barriers to climate investment |publisher=Climate and Development Knowledge Network |date=November 2013 |url=http://cdkn.org/wp-content/uploads/2013/11/CDKN_GuideFinancialInstruments_final_web-res.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{berliner2013addressing, author = {Berliner, Johannes and Grüning, Christine and Kempa, Karol and Menzel, Carola and Moslener, Ulf}, title = {{Addressing the barriers to climate investment}}, institution = {Climate and Development Knowledge Network}, year = {2013}, month = nov, url = {http://cdkn.org/wp-content/uploads/2013/11/CDKN_GuideFinancialInstruments_final_web-res.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }