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This report by the International Institute for Sustainable Development (IISD) examines the role of credit enhancement in scaling up sustainable infrastructure, particularly in developing countries. It defines credit enhancement as the transfer of project risk to creditworthy third parties to improve financial feasibility. The document identifies supply-side barriers, such as the conservative risk management and incentive structures of multilateral development banks, and demand-side challenges, including low awareness among policy-makers. It concludes that while a Universal Guarantee Facility is being discussed, empowering existing de-risking agencies and increasing domestic investor participation may be more effective strategies.

This report provides a guide for policy-makers, particularly in developing countries, on how to use public spending to catalyze private investment for climate-friendly infrastructure and clean energy.