Public Financing Instruments to Leverage Private Capital for Climate-Relevant Investment

This working paper from the World Resources Institute's Climate Finance Series analyzes how public funds can leverage private sector investment for climate-relevant projects in developing countries. By mapping the investment practices of the World Bank Group, the Global Environment Facility (GEF), and the Clean Technology Fund (CTF), the paper identifies necessary improvements in the use of financing instruments and the removal of institutional barriers to better mobilize private capital.

• Public actors and international mechanisms, such as the Green Climate Fund, should optimize the use of financing instruments by expanding beyond loans to include equity and guarantees to mitigate private sector risks across different geographies. This approach involves targeting grant support toward poorer countries with less robust financial markets and new technologies that lack commercial returns without initial public support, while coordinating project finance with domestic climate policies and financial markets.
• To effectively leverage private capital, the Green Climate Fund should be capitalized by developed governments with a reasonable amount of grant funding for the Fund and its Private Sector Facility. This would allow for maximum flexibility in utilizing a suite of products—including loans, equity, and de-risking instruments—tailored to the needs of individual projects or programs.
• Institutional barriers to private sector investment must be addressed through several internal reforms: improving coordination to offer complementary financing options, creating employee incentives for increasing private sector participation (with checks against unnecessary subsidies), streamlining transaction times and fee structures (especially for non-loan and non-grant instruments), and enhancing data transparency and monitoring systems.
• There is a need to educate recipient governments on the use of complex financial instruments, such as guarantees, to ensure they can be applied appropriately in climate-relevant projects.

APA

World Resources Institute (n.d.). Public Financing Instruments to Leverage Private Capital for Climate-Relevant Investment. https://www.wri.org/research/public-financing-instruments-leverage-private-capital-climate-relevant-investment

Chicago

World Resources Institute. Public Financing Instruments to Leverage Private Capital for Climate-Relevant Investment. n.d. https://www.wri.org/research/public-financing-instruments-leverage-private-capital-climate-relevant-investment.

Wikipedia

{{cite report |author=World Resources Institute |title=Public Financing Instruments to Leverage Private Capital for Climate-Relevant Investment |url=https://www.wri.org/research/public-financing-instruments-leverage-private-capital-climate-relevant-investment |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendpublic, author = {{World Resources Institute}}, title = {{Public Financing Instruments to Leverage Private Capital for Climate-Relevant Investment}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/public-financing-instruments-leverage-private-capital-climate-relevant-investment}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }