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Estimating Mobilized Private Climate Finance

Methodological Approaches, Options and Trade-offs

by Aman Srivastava, Raphaël Jachnik (OECD) and Randy Caruso (OECD) - April 2015

This working paper, a collaboration with OECD, aims to guide the development of more robust methodologies to estimate climate finance mobilized by public interventions; these methodologies are a critical component of the MRV architecture of international climate finance

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Key Findings

The report presents a 4-stage framework of decision points that need to be considered in estimating publicly mobilized private finance. This framework outlines different methodological options and choices needed to make these estimates. It assesses trade-offs and implications of these choices in terms of their accuracy, the incentives they provide, their potential to be standardized across entities, and their practicality.

The report further identifies and suggests practical options available in the short-term for estimating mobilized private finance, while underlining the need to provide transparency about underlying definitions, assumptions and limitations. It also recommends longer-term actions to improve these methods, including the need to converge on definitions, to build data systems and to improve and standardize estimation methods.

Executive Summary

The participation of the private sector in financing the transition to low-carbon, climate resilient (LCR) economies is critical. While public finance and policy interventions can mobilise significant levels of private finance, the ability to estimate such mobilisation is currently limited. This is particularly apparent in the context of assessing amounts of private finance mobilised by developed countries, under the United Nations Framework Convention on Climate Change (UNFCCC), for LCR activities in developing countries. The primary aim of this study is to provide Parties to the UNFCCC with a better understanding of the key considerations and methodological options for improving estimates of publicly mobilised private finance.

Quantifying the linkages between public interventions and private finance flowing towards LCR activities is a technically complex and challenging endeavour. As a step towards addressing this complexity, this report examines and assesses a range of methodological choices and options for making such estimates. The framework developed here is based on the key decision stages involved in making these estimates. It enables a better understanding of the trade-offs and implications of different choices, potentially making it a valuable tool to inform the development of more robust methods. The report is in particular intended to guide future efforts to assess and test different methodological approaches, including through pilot measurements by relevant actors (e.g., countries, public finance institutions and researchers). The insights from this work will help shape future work under the Research Collaborative on Tracking Private Climate Finance.

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