Scaling up climate finance in the context of Covid-19

The document argues that the financial system's current inertia and short-term bias prevent the redirection of private capital toward net-zero, climate-resilient economies. It emphasizes that limiting warming to 1.5°C is technically feasible but requires a dramatic scale-up of investment in energy, land, urban, and industrial systems. The report advocates for a dual approach of 'market fixing' (carbon pricing and risk disclosure) and 'market shaping' (de-risking and policy support) to overcome investment barriers. In the context of Covid-19, it highlights the risk of 'colourless' recovery packages entrenching fossil fuel dependence and proposes integrating NDCs into investment plans, alleviating debt through climate swaps, utilizing multi-sovereign guarantee funds, and expanding green bond markets to support developing nations.

• Limiting global warming to 1.5°C is technically feasible but requires steep emissions reductions by 2030 and reaching net-zero CO2 emissions by 2050.
• Current Nationally Determined Contributions (NDCs) are insufficient, with full implementation projected to result in warming between 2.9°C and 3.4°C by the end of the century.
• Global low-carbon investment needs are estimated to be between 3.9% and 8.7% of world GDP over the next two decades, while the infrastructure investment gap could be as high as 15.9% to 32% between 2035 and 2040.
• There is a significant geographical misalignment of capital flows; three quarters of global climate finance is invested in the country where it is sourced, leaving sub-Saharan Africa with only 5% of climate-related financial flows in non-OECD countries ($19 billion).
• A 'market-fixing' approach, relying on carbon pricing and risk disclosure, is insufficient on its own because carbon price signals are often overwhelmed by other market noises and business uncertainty.
• A 'market-shaping' approach is necessary to remove political, regulatory, macroeconomic, and technical barriers that deter private investment in low-carbon infrastructure.
• Blended finance has historically been concentrated in mature technologies and high-income countries, with only 5.3% of mobilised private finance going to Least Developed Countries (LDCs) and other Low-Income Countries between 2012 and 2018.
• The Covid-19 pandemic caused a deep recession, with global growth contracting by 3.5% in 2020, and disproportionately affected developing countries where GDP contracted by 2.6% to 5% (excluding China).
• Recovery spending in the 50 largest economies is largely 'colourless'; only 18% of recovery spending and 2.5% of total spending will enhance sustainability.
• Developing countries face a severe debt crisis, with 55% of the poorest countries in or at high risk of debt distress as of January 2021.
• Integrating climate, sustainable development, and Covid-19 stimulus policies could reduce investment needs by 40%.
• Multi-sovereign guarantee funds, where AAA-AA rated developed countries provide backing, can reduce creditworthiness risks and expand access to capital markets for small states.
• The potential for green bonds is estimated at €29.4 trillion by 2030, but actual issuance remains far below this, with only $1 trillion issued in the ten years since launch.

APA

J.C, H., Y, G., H, D. C., F., B.-R., K., R., & A., R. (2021). Scaling up climate finance in the context of Covid-19. Green Climate Fund. https://www.greenclimate.fund/sites/default/files/document/scaling-climate-finance-context-covid-19-full-report_0.pdf

Chicago

J.C, Hourcade,, Glemarec, Y, de Coninck, H, Bayat-Renoux, F., Ramakrishna, K., and Revi, A. Scaling up climate finance in the context of Covid-19. Green Climate Fund, 2021. https://www.greenclimate.fund/sites/default/files/document/scaling-climate-finance-context-covid-19-full-report_0.pdf.

Wikipedia

{{cite report |last1=J.C |first1=Hourcade, |last2=Y |first2=Glemarec, |last3=H |first3=de Coninck, |last4=F. |first4=Bayat-Renoux, |last5=K. |first5=Ramakrishna, |last6=A. |first6=Revi, |title=Scaling up climate finance in the context of Covid-19 |publisher=Green Climate Fund |date=2021 |url=https://www.greenclimate.fund/sites/default/files/document/scaling-climate-finance-context-covid-19-full-report_0.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jc2021scaling, author = {J.C, Hourcade, and Y, Glemarec, and H, de Coninck, and F., Bayat-Renoux, and K., Ramakrishna, and A., Revi,}, title = {{Scaling up climate finance in the context of Covid-19}}, institution = {Green Climate Fund}, year = {2021}, url = {https://www.greenclimate.fund/sites/default/files/document/scaling-climate-finance-context-covid-19-full-report_0.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }