Accelerating and scaling up climate innovation

The document analyzes the 'innovation chain'—emergence, deployment, and widespread adoption—to explain why capital fails to flow to climate projects in developing countries. It details a strategy by the Green Climate Fund (GCF) to overcome these barriers through policy support, piloting new technologies, de-risking investments via blended finance, and strengthening domestic financial institutions.

• Climate innovation in developing countries is hindered by barriers across three stages: emergence, deployment, and widespread adoption. These include limited awareness of risks, weak entrepreneurial ecosystems, high perceived policy and technical risks, and a lack of affordable long-term project finance.
• The 'valley of death' for climate start-ups in developing countries is more severe than in mature markets, starting earlier and ending later due to high upfront capital needs, longer payback periods, and a lack of early-stage risk capital.
• Climate venture capital is heavily concentrated in developed regions, with over 93 per cent of funding focused on the United States, Canada, China, and Europe.
• Blended finance for climate investment has historically bypassed Least Developed Countries (LDCs) and focused on mature technologies in middle-income countries; between 2012 and 2017, only 6 per cent of private finance mobilised by official development finance went to LDCs.
• The Green Climate Fund (GCF) employs a four-pronged strategy to scale innovation: establishing conducive policy environments, facilitating the emergence of solutions through piloting, de-risking projects to crowd-in private finance, and aligning domestic finance with sustainable development.
• GCF uses its Readiness Programme to help developing countries design green economic stimulus measures and translate Nationally Determined Contributions (NDCs) into investment plans, having approved 456 grants to 136 countries as of October 2021.
• To support the emergence of innovation, GCF is partnering with the Korean Development Bank (KDB) and Global Green Growth Institute (GGGI) to provide technical support and a USD 100 million fund for early-stage equity capital in East Asia.
• The Subnational Climate Fund Global (SCF Global) uses USD 150 million in GCF first-loss equity to mobilise USD 600 million in senior private equity for subnational mitigation and adaptation projects, targeting a deal size of USD 5-75 million.
• Domestic financial institutions in developing countries lack the capacity to access international capital markets; for example, only 3 per cent of green bonds issued in 2020 came from the developing world, excluding China.
• GCF is supporting the development of green bond facilities and listing on stock exchanges, such as the Caribbean green bond listing on the Jamaica Stock Exchange, to improve the aggregation and refinancing of project assets.

APA

Green Climate Fund (2021). Accelerating and scaling up climate innovation. https://www.greenclimate.fund/sites/default/files/document/accelerating-and-scaling-climate-innovation_0.pdf

Chicago

Green Climate Fund. Accelerating and scaling up climate innovation. 2021. https://www.greenclimate.fund/sites/default/files/document/accelerating-and-scaling-climate-innovation_0.pdf.

Wikipedia

{{cite report |author=Green Climate Fund |title=Accelerating and scaling up climate innovation |date=November 2021 |url=https://www.greenclimate.fund/sites/default/files/document/accelerating-and-scaling-climate-innovation_0.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{greenclimatefund2021accelerating, author = {{Green Climate Fund}}, title = {{Accelerating and scaling up climate innovation}}, institution = {Green Climate Fund}, year = {2021}, month = nov, url = {https://www.greenclimate.fund/sites/default/files/document/accelerating-and-scaling-climate-innovation_0.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }