Toward Accelerating Climate Finance: Forging a New Partnership between the Global South and the Global North

This policy brief outlines the growing climate finance gap in emerging market and developing economies (EMDEs) and least developed countries (LDCs). It recommends that G7 countries utilize blended finance, debt-for-climate swaps, and MDB reforms to lower the cost of capital and mobilize private investment. Additionally, it calls for the harmonization of green industrial policies to prevent protectionism and the implementation of universal disaster index insurance to protect vulnerable populations.

• There is a significant gap between current climate finance flows and the investment required to meet the Paris Agreement's 1.5C target. While cumulative flows totaled $4.8 trillion between 2011 and 2020, it is estimated that at least $4.3 trillion is required annually by 2030.
• High costs of capital, driven by perceived risks, divert international investments away from EMDEs toward advanced economies and the People's Republic of China. This is illustrated by the required return on solar projects, which ranges from 7% in Germany to 52% in Argentina.
• Blended finance is a critical tool for mobilizing private capital in LDCs, but its effectiveness is hindered by a lack of investor participation, lack of strategic focus, and inefficient use of public capital. Total investment in blended finance fell by nearly 50% from the 2016–2018 period to the 2019‡ period, reaching only $14 billion.

APA

Khanna, N., Sonesson, C., Sengupta, S., & Suryadarma, D. (2023). Toward Accelerating Climate Finance: Forging a New Partnership between the Global South and the Global North. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/T7JP_TF1_Toward-Accelerating-Climate-Finance-Forging-a-New-Partnership-between-the-Global-South-and-the-Global-North.pdf

Chicago

Khanna, Neha, Casper Sonesson, Shayak Sengupta, and Daniel Suryadarma. Toward Accelerating Climate Finance: Forging a New Partnership between the Global South and the Global North. Climate Policy Initiative, 2023. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/T7JP_TF1_Toward-Accelerating-Climate-Finance-Forging-a-New-Partnership-between-the-Global-South-and-the-Global-North.pdf.

Wikipedia

{{cite report |last1=Khanna |first1=Neha |last2=Sonesson |first2=Casper |last3=Sengupta |first3=Shayak |last4=Suryadarma |first4=Daniel |title=Toward Accelerating Climate Finance: Forging a New Partnership between the Global South and the Global North |publisher=Climate Policy Initiative |date=May 2023 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/T7JP_TF1_Toward-Accelerating-Climate-Finance-Forging-a-New-Partnership-between-the-Global-South-and-the-Global-North.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{khanna2023toward, author = {Khanna, Neha and Sonesson, Casper and Sengupta, Shayak and Suryadarma, Daniel}, title = {{Toward Accelerating Climate Finance: Forging a New Partnership between the Global South and the Global North}}, institution = {Climate Policy Initiative}, year = {2023}, month = may, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/T7JP_TF1_Toward-Accelerating-Climate-Finance-Forging-a-New-Partnership-between-the-Global-South-and-the-Global-North.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }