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The Development Bank of Southern Africa (DBSA), supported by the Climate Policy Initiative and Promethium Carbon, has developed two financial instruments to scale the voluntary carbon market (VCM) in South Africa. A proposed carbon credit-backed bond would raise capital for project loans, with repayments consisting of cash interest and carbon credits. A Carbon Repo Facility would provide short- to medium-term liquidity by allowing developers and banks to sell carbon credits with an agreement to repurchase them later. These tools aim to bridge the gap between high demand for offsets—driven by the national carbon tax—and a limited supply of bankable projects caused by high early-stage costs and regulatory ambiguity.

The document argues that traditional green finance is insufficient for the Indian iron and steel sector because many necessary transitional technologies are not yet 'green' enough or are economically unviable. It identifies four core enablers for a transition finance (TF) market: sectoral roadmaps, climate finance taxonomies, credible corporate transition plans, and specialized TF instruments. To address high capex and cash flow constraints, the authors propose the Partial Deep Discount Carbon STRIPS (PDDCS) bond, which offers long-term debt (25-30 years) and allows investors to receive coupons in either cash or carbon credits generated by the project. The brief also suggests a flexible version (PDDB+C) to align with current Indian Carbon Credit Trading Scheme (CCTS) regulations, which currently limit carbon trading to registered entities.

The report identifies a significant investment gap in health facility electrification across seven priority markets, estimating a total need of $2.6 billion, with $1.4 billion for public and $1.2 billion for private facilities. It argues that the current dominance of donor-funded 'Design, Build, Operate, Transfer' (BOT) models is unsustainable due to a lack of funding for ongoing operation and maintenance (O&M). The analysis suggests a shift toward 'Energy as a Service' (EaaS) models, which would require new financial de-risking instruments—such as sovereign credit guarantees, liquidity pools, and performance-linked grants—to attract private capital and ensure long-term sustainability.

CILRIF is a financial innovation designed to provide cities with long-term climate insurance and access to capital for resilience building. The mechanism uses a results-based pricing structure where insurance premiums decrease as cities implement adaptation measures, thereby reducing overall financing costs and managing climate risk. The initiative targets specific cities in South Africa, the Philippines, and Sierra Leone, focusing on risks such as riverine floods and extreme heat.

The document analyzes three case studies from the Global Innovation Lab for Climate Finance to demonstrate how linking financial instruments to policy tools—such as national land-use regulations, insurance subsidies, and subsidized rural credit—can stimulate demand, identify project pipelines, and attract private capital. It provides specific design considerations to mitigate risks like market distortion, political instability, and 'leakage' of deforestation.

The policy brief argues that gender-smart sustainability-linked bonds (SLBs) can scale up financing for gender objectives by utilizing multi-KPI structures. It analyzes four different approaches to determining 'trigger events'—the conditions that lead to financial adjustments like coupon step-ups—using examples from Schneider Electric, EQT, H&M, and BlackRock. The authors recommend that issuers avoid structures that allow KPIs to be ignored and instead prefer frameworks requiring the full achievement of all sustainability targets to ensure high ambition and credibility.

The Sustainable Agriculture Finance Facility (SAFF) is a ten-year revolving credit facility in Brazil designed to overcome low adoption rates of integrated crop-livestock-forest (ICLF) systems. By providing bundled loans tailored to ICLF risk and cash flow profiles, alongside a unique certification system and technical assistance, SAFF aims to mobilize significant capital for sustainable land use. The pilot phase targets USD 68 million for 90,000 hectares in the Center-South region, with the potential to scale to USD 1.4 billion over ten years, contributing to Brazil's goal of implementing five million hectares of ICLF by 2030.

The 'Financing for Low-Carbon Auto-Rickshaws' instrument is a loan product delivered via a non-banking financial company (NBFC) to facilitate the transition from conventional to electric auto-rickshaws in India. It addresses barriers to ownership by providing 100% debt financing, removing collateral requirements, and offering lower interest rates. The model utilizes a community-driven collection system to reduce default risks and pools equity, debt, and concessional capital to lower borrowing costs. The initiative aims to reduce annual carbon emissions by over 22 million tonnes and significantly increase driver incomes compared to renting.

The Green FIDC is a proposed financial structure designed to address the funding shortfall for green projects in Brazil by securitizing receivables through asset-backed securities. It utilizes a two-stage process: providing construction and development finance for greenfield projects using risk-appropriate public or concessional funds, followed by refinancing through senior shares in Brazilian Capital Markets once projects are operational. A pilot project with Órigo Energia for residential rooftop solar systems has already secured 30% of junior and mezzanine shares from private investors. The broader program aims to leverage up to USD 1 billion in clean investment and avoid up to 6 million tons of CO2.

The document identifies that low access to debt capital hinders India's goal of 40 GW of rooftop solar by 2022. It argues that while foreign debt could bridge this gap, small-scale developers are precluded from using it due to foreign exchange (FX) risk and their inability to access commercial hedging instruments like cross-currency swaps due to poor credit ratings. The proposed 'Transitional FX Debt Platform' routes USD loans from the Overseas Private Investment Corporation (OPIC) through a local private Indian financial intermediary that lends in INR to borrowers. To make this viable, the platform utilizes OPIC credit guarantees to mitigate borrower default risk and donor grants to subsidize the landed cost of debt, ensuring it remains competitive with domestic benchmark rates. The study estimates that every $1 of donor grant capital could leverage $17 to $34 of additional foreign debt into the sector.

The document outlines 14 key lessons for boosting low-carbon and climate-resilient investment. It highlights the role of fiscal policy in sustainable land use, the importance of government-backed assurances in Power Purchase Agreements to unlock debt finance, and the utility of public-private partnerships like the Global Innovation Lab for Climate Finance to develop bespoke financial instruments. Specific solutions mentioned include currency hedging to reduce renewable energy costs and guarantees for energy efficiency savings.

The document identifies three primary barriers to green investment in developing countries: risk gaps (policy, technology, financial, and sovereign), viability gaps (access to finance and high costs), and knowledge gaps. It argues that while sufficient global capital exists, public policy and finance must be better targeted to unlock it. The briefing provides case studies on fiscal policy adjustments in Indonesia to promote sustainable land use, the use of public-private partnerships and government guarantees to develop geothermal power in Kenya, and various innovative instruments developed through the Global Innovation Lab for Climate Finance, such as Energy Savings Insurance and FX hedging facilities.

The Energy Efficiency Enabling Initiative is proposed as a private equity fund to address the funding gap in energy efficiency, particularly in emerging economies. By utilizing donor-backed concessional equity in a first-loss position and providing technical assistance, the fund aims to crowd in private institutional investors. A pilot fund of USD 100 million in countries such as Mexico and Colombia is estimated to generate 200-225 GWh of annual savings and abate 20-100 kt of CO2 per year. The initiative's structure relies on three pillars: a one-stop-shop fund with public finance equity, a guaranteed-risking facility for high-risk projects, and a technical assistance package for energy service providers and SMEs.

The Climate Smart Shrimp Fund (CSSF) is a financial mechanism designed to help shrimp farmers increase production efficiency and climate resilience while restoring mangrove ecosystems. The fund consists of a technical assistance facility for training and certification and a revolving debt facility for infrastructure upgrades. Following pilot programs in Indonesia, Ecuador, and the Philippines, the fund seeks various forms of capital, including grants and equity, to scale its operations.

The Financing Steel Decarbonization (FSD) instrument is designed to mobilize private finance for the adoption of commercially available and pre-commercial low-carbon technologies in India's steel sector. It consists of two entities: the Steel Decarbonization Financing Facility (SDF), a blended debt fund, and the Steel Decarbonization Initiative (SDI), a service provider for project implementation. Over five years, FSD intends to deploy nearly USD 1 billion to mobilize an additional USD 3.4 billion in private investment, targeting a 25% reduction in emission intensity for approximately 20 MTPA of capacity.

The Reservoir Methane Capture Mechanism introduces a "methane-as-a-service" model to capture methane from hydropower reservoirs, converting it into biogas for electricity and generating carbon credits. Managed via a special purpose vehicle (SPV), the mechanism aims to reduce risks for hydropower operators. A pilot project involving five plants is planned, with a long-term goal in Brazil to mobilize USD 3 billion in capital and avoid 6.8 million tons of CO2e emissions annually.

The Rooftop Solar Private Sector Financing Facility aims to address the lack of high-quality debt capital in India's rooftop solar sector. By aggregating small projects into a structured investment, the facility intends to attract institutional investors and demonstrate the commercial viability of asset-backed securities. The proposed mechanism involves an aggregation phase using a warehouse line of credit, followed by a securitization phase to issue bonds to domestic and international investors. The facility targets the addition of 500 MW of capacity and 20,000 jobs by 2022, with an initial capital requirement of $100 million for its pilot stage.