Plugging the Energy Efficiency Gap with Climate Finance:
The role of International Financial Institutions (IFIs) and the Green Climate Fund to realise the potential of energy efficiency in developing countries
This report examines the current role of climate finance in funding EE projects and the potential to channel funds to relevant EE projects in developing countries under the new Green Climate Fund (GCF). The objectives of the report are to examine:
• the share of climate finance currently being channelled to energy efficiency measures, and
• how the design of climate finance can better facilitate energy efficiency projects.
Improving energy efficiency (EE) can deliver a range of benefits such as improved air quality, enhanced economic competitiveness and, at the national scale, a higher degree of energy security. Significant improvements in energy efficiency in developing countries could provide greater opportunity for economic growth while also providing broader access to energy and related services even from limited energy resources. However, several barriers limit the scaling-up of funding of EE projects in developing countries (some are common also to developed countries).
The report focuses primarily on public climate finance flows from “north” to “south”, probing the current use of funds from multi-lateral development banks (MDBs), bi-lateral financial institutions (BFIs) and carbon markets for energy efficiency projects and the design of the future climate financial mechanisms such as the Green Climate Fund to encourage energy efficiency improvements in developing countries.