Sectoral Guidance for Tracking Green Finance

The 'Sectoral Guidance for Tracking Green Finance' (October 2024), commissioned by the International Development Finance Club (IDFC) and produced by the Climate Policy Initiative (CPI) and Trinomics, provides a technical framework for national and regional development banks to track climate and biodiversity finance. The guide applies 'Common Principles' across five priority sectors: energy, transport, water, agriculture, forestry, and other land use (AFOLU) and fisheries, and the urban sector. It details eligibility criteria for mitigation, adaptation, and biodiversity activities, offering methodologies for ex-ante greenhouse gas (GHG) emissions assessments and financial quantification to ensure transparency and consistency in reporting.

• The energy sector is identified as a primary driver of global emissions, accounting for up to three-quarters of global greenhouse gas (GHG) emissions. CPI estimates a significant financing gap in this sector, requiring approximately USD 3 trillion per year in climate finance until 2030 and USD 2.6 trillion per year from 2030 to 2050, with a current investment gap of USD 2.5 trillion per year.
• For energy sector mitigation, the guidance identifies 13 eligible activities. These include renewable energy generation, lower-carbon energy generation (such as low-carbon hydrogen), energy efficiency, energy storage, and the transport of energy. Eligibility often requires a 'substantial reduction in net GHG emissions' compared to fossil fuel benchmarks, though widely recognized low-emission sources like wind and solar are exempt from individual GHG assessments.
• Transport is projected to become the primary source of global GHG emissions by 2035, contributing 46% of emissions, and potentially 80% by 2050. To address this, the guide lists 11 mitigation activities focusing on modal shifts from high-carbon to low-carbon modes, such as shifting freight and passengers from road or air to rail and waterways.
• In the water sector, mitigation focuses on GHG emissions reduction, energy and resource efficiency, and demand management. Key eligible activities include energy-efficiency improvements in water supply systems and new wastewater management projects that reduce methane or nitrous oxide emissions. The guide notes that the global annual mitigation potential of the water sector exceeds 1.3 billion tonnes CO2e.
• The AFOLU and fisheries sector is estimated to contribute 13-22% of total global emissions (2010-2019) but offers significant mitigation potential, potentially providing 20-30% of the global mitigation needed for 1.5°C or 2°C pathways by 2050. Mitigation strategies include carbon sequestration through sustainable forest management and the reduction of GHG emissions from livestock and agricultural practices.
• Urban climate mitigation focuses on buildings and solid waste management. Buildings are responsible for 37% of global energy-related GHG emissions, while solid waste treatment contributes approximately 5%, largely due to missing landfill gas collection systems. Eligible activities include enhancing building design for energy efficiency and implementing anaerobic digestion of biowaste.
• Adaptation finance is tracked using a three-step validation process: demonstrating a context of vulnerability via a robust evidence base, establishing an explicit intent to reduce that vulnerability, and proving a direct link between the project activities and the reduction of vulnerability. Activities are then categorized as Type 1 (Adapted activities), Type 2 (Shared objectives), or Type 3 (Primary objective), which determines the percentage of costs counted as adaptation finance.
• Biodiversity finance is tracked through either an 'incremental' approach (summing exact budget items for biodiversity activities) or a 'proportional' approach (applying a coefficient to the total budget based on project objectives or activity types). The guide warns against double-counting, stating that biodiversity finance should be reported separately from climate mitigation and adaptation finance, even when co-benefits exist.
• The guidance emphasizes the use of ex-ante GHG emissions reduction assessments to validate mitigation eligibility. These assessments must compare expected emissions against a pre-project baseline—either a 'without project' or 'alternative project' scenario—and should cover Scope 1 (direct), Scope 2 (indirect energy), and Scope 3 (value chain) emissions where measurable and material.

APA

Stout, S., Alberti, C., Miao, G., Abraham, S., Strinati, C., Padmanabhi, R., & Petsinaris, F. (2024). Sectoral Guidance for Tracking Green Finance. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/11/IDFC-Sectoral-Guidance-for-Tracking-Green-Finance.pdf

Chicago

Stout, Sean, Caroline Alberti, Gaoyi Miao, Sasha Abraham, Costanza Strinati, Rajashree Padmanabhi, and Foivos Petsinaris. Sectoral Guidance for Tracking Green Finance. Climate Policy Initiative, 2024. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/11/IDFC-Sectoral-Guidance-for-Tracking-Green-Finance.pdf.

Wikipedia

{{cite report |last1=Stout |first1=Sean |last2=Alberti |first2=Caroline |last3=Miao |first3=Gaoyi |last4=Abraham |first4=Sasha |last5=Strinati |first5=Costanza |last6=Padmanabhi |first6=Rajashree |last7=Petsinaris |first7=Foivos |title=Sectoral Guidance for Tracking Green Finance |publisher=Climate Policy Initiative |date=October 2024 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2024/11/IDFC-Sectoral-Guidance-for-Tracking-Green-Finance.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stout2024sectoral, author = {Stout, Sean and Alberti, Caroline and Miao, Gaoyi and Abraham, Sasha and Strinati, Costanza and Padmanabhi, Rajashree and Petsinaris, Foivos}, title = {{Sectoral Guidance for Tracking Green Finance}}, institution = {Climate Policy Initiative}, year = {2024}, month = oct, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2024/11/IDFC-Sectoral-Guidance-for-Tracking-Green-Finance.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }