2025 Policy Bulletin: Climate Finance for Development

The document outlines strategies for public development banks (PDBs) to enhance climate finance, focusing on Paris alignment, public-public collaborations, and private capital mobilization. It emphasizes the need for a bottom-up approach to ensure national ownership and the use of de-risking tools like guarantees to close investment gaps in emerging markets and developing economies (EMDEs). Key recommendations include improving transparency in alignment assessments, expanding concessional funding for national development banks (NDBs), and supporting just energy transitions through the early retirement of coal plants.

• Paris alignment commitments among public development banks (PDBs) have seen a slowing adoption rate since 2022, and only a minority of these institutions have made explicit commitments to such alignment.
• Multilateral development banks (MDBs) often prioritize 'do no harm' principles over proactive transformation in their Paris alignment methodologies, and they frequently fail to publish all alignment assessments for sovereign projects, limiting accountability.
• Collaborations between MDBs and national development banks (NDBs) are hindered by political economy, governance, and capacity issues; between 2015 and 2022, MDBs provided approximately USD 7 billion to NDBs for climate projects in EMDEs.
• Financial guarantees are a powerful but underutilized tool for mobilizing private capital in EMDEs due to structural barriers including high costs, complex applications, and misaligned timelines.
• Country platforms (CPs) offer a mechanism for delivering climate-positive growth, as demonstrated by South Africa's Presidential Climate Commission, which used a collaborative process to create a Just Transition Framework for mobilizing finance.
• PDBs face financial and social challenges when retiring fossil fuels in resource-strapped nations, particularly where young coal fleets risk becoming 'stranded assets' if retired early.
• PDBs can support the development of domestic carbon markets and debt-for-climate swaps in EMDEs, though implementation is currently limited by a lack of national capacity and PDB resources.

APA

Climate Policy Initiative (2025). 2025 Policy Bulletin: Climate Finance for Development. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/02/2025-Policy-Bulletin-Climate-Finance-for-Development.pdf

Chicago

Climate Policy Initiative. 2025 Policy Bulletin: Climate Finance for Development. 2025. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/02/2025-Policy-Bulletin-Climate-Finance-for-Development.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=2025 Policy Bulletin: Climate Finance for Development |date=February 2025 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2025/02/2025-Policy-Bulletin-Climate-Finance-for-Development.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative20252025, author = {{Climate Policy Initiative}}, title = {{2025 Policy Bulletin: Climate Finance for Development}}, institution = {Climate Policy Initiative}, year = {2025}, month = feb, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2025/02/2025-Policy-Bulletin-Climate-Finance-for-Development.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }