Grants

This guide by the Climate Policy Initiative defines grants as direct fund transfers used to support projects with low commercial potential or to make them investment-ready. It details the types of grants, the risks they mitigate, the providers involved, and the capacity requirements for recipients across different market maturity levels.

• In the context of climate finance, grants are utilized in three primary forms: development grants for non-commercial climate outcomes, technical assistance (TA) grants to build institutional capacity, and project preparation facilities (PPFs) to design projects that attract private or concessional finance.
• Grants address three main types of risk: credit risks by improving sovereign risk profiles and avoiding debt increases; liquidity risks by providing fiscal space for urgent adaptation and recovery; and market risks by absorbing volatility and covering upfront costs to crowd in private capital.
• Grant providers range from philanthropic foundations and crowd-sourced platforms to multilateral development banks (MDBs), vertical climate and environment funds (VCEFs), and bilateral donors. Notably, the Green Climate Fund (GCF) is the largest climate fund, with approximately 42% of its portfolio consisting of grants.
• The role and deployment of grants vary by market maturity. In shallow markets, grants are often channeled via UN or INGOs to overcome weak fiduciary controls. In emerging markets, the focus shifts toward national partner implementation and PPPs. In mature markets, grants are not a priority for core financing but are instead targeted at innovation pilots and frontier technologies.
• Grants impact debt sustainability both directly, by reducing the need to borrow for climate priorities, and indirectly, by improving creditworthiness through project preparation and preventing the diversion of funds from core debt service.

APA

Climate Policy Initiative (n.d.). Grants. https://www.climatepolicyinitiative.org/wp-content/uploads/2026/01/Grants.pdf

Chicago

Climate Policy Initiative. Grants. n.d. https://www.climatepolicyinitiative.org/wp-content/uploads/2026/01/Grants.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Grants |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2026/01/Grants.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiativendgrants, author = {{Climate Policy Initiative}}, title = {{Grants}}, institution = {Climate Policy Initiative}, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2026/01/Grants.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }