Global Landscape of
Climate Finance 2023
November 2023

AUTHORS
Barbara Buchner, Baysa Naran, Rajashree Padmanabhi, Sean Stout, Costanza Strinati,
Dharshan Wignarajah, Gaoyi Miao, Jake Connolly, and Nikita Marini.

ACKNOWLEDGMENTS
The authors would like to thank contributions from Kirsty Taylor, Rob Kahn, Caroline Dreyer,
Chavi Meattle, Valerio Micale, and Matthew Solomon for advice, editing, and internal review,
and Josh Wheeling, Angela Woodall, Elana Fortin, and Alice Moi for layout and graphic
design.
The authors also acknowledge contributions from Caroline Alberti, Charles Baudry, Léa
Faucheux, Arjun Rawal, Archie Graham, Ben Melling for data collection, research, and project
support.
The authors appreciate the review and guidance from the following experts outside Climate
Policy Initiative (in alphabetical order): Amar Bhattacharya (Brookings Institute), Ian
Cochran (University of Edinburgh), Jane Ellis (OECD), Gard Lindseth (Ministry of Climate& Environment, Norway), Renee Livesey (DESNZ), Padraig Oliver (UNFCCC), Eleonore
Soubeyran (LSE), Joe Thwaites (NDRC), Charlene Watson (ODI), and Sarah Zügel (Federal
Ministry for Economic Affairs & Climate Action, Germany).
Data collaboration: The authors would like to thank Climate Bonds Initiative and theInternational Energy Agency as well as over 40 public development finance institutions fortheir continued data collaboration.

ABOUT CPI
Climate Policy Initiative (CPI) is an analysis and advisory organization with deep expertise infinance and policy. Our mission is to help governments, businesses, and financial institutions
drive economic growth while addressing climate change. CPI has six offices around the world,in Brazil, India, Indonesia, the United Kingdom, and the United States.

SUPPORTED BY

Copyright © 2023 Climate Policy Initiative climatepolicyinitiative.org. All rights reserved. CPI welcomes the use of its material for noncommercial
purposes, such as policy discussions or educational activities, under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International (CC
BY-NC-SA 4.0) License. For commercial use, please contact adminsf@cpiglobal.org.

Figure ES1: Global climate finance flows in 2021/2022

LANDSCAPE OF CLIMATE FINANCE IN 2021/2022

Global climate finance flows along their life cycle in 2021 and 2022. Values are averages of two years’ data to smooth out fluctuations, in USD billions

SO U R C E S AN D I N T E R MEDI A RI ES

INSTRUMENTS

Which type of organizations are sources orintermediaries of capital for climate finance?

What mix of financial
instruments is used?

Governments
$100

1.27

TRILLION USD
ANNUALAVERAGE

Grants $69
Low-cost projectdebt $76

USES

SECTORS

What types ofactivities are financed?

What is thefinance used for?

Adaptation $63

Dual benefits $51

National DFIs
$238

Buildings &infrastructure$240

Bilateral DFIs $33
Multilateral DFIs
$93
Multilateralclimate funds $3

Water & waste$67
Industry $9

Others & crosssectoral $50

Project-levelmarket rate debt
$561

AFOLU $43

SOEs
$110
State-owned FIs$61
Other $15

Commercial FIs$235

Project-level equity$54
Unknown $7

Mitigation$1,150

Energysystems$515

Debt $129
Households/
individuals$184

Balance sheet
financing$498

Equity $368

Transport$336

Corporations$192

PublicPrivate“Other” public sources include export credit agencies and unknown public funds“Other” private sources include institutional investors, funds, and unknown“AFOLU” stands for agriculture, forestry, other land use, and fisheries. “Others & cross-sectoral” includes $6bn unknown

Source: Climate Policy Initiative
1

Global Landscape of Climate Finance 2023

EXECUTIVE SUMMARYKEY TAKEAWAYS
WHERE ARE WE NOW?
Average annual climate finance flows reached almost USD 1.3 trillion in 2021/2022, nearly
doubling compared to 2019/2020 levels. 1 This increase was primarily driven by a significant
acceleration in mitigation finance (up by USD 439 billion from 2019/2020). The remainderof the growth observed in 2021/2022 (USD 173 billion each year) stems from methodologicalimprovements and new data sources, which augment the flows tracked in 2019/2020.
Without these data improvements, annual finance flows in 2021/2022 would have amounted
to just below USD 1.1 trillion (see Figure ES2).
Despite the growth in 2021/2022, current flows represent about only 1% of global GDP.2
Figure ES2: Global climate finance in 2011-2022, biennial averages
USD billion

1,400

1,265
1,200

1,092

New data sources
USD 173 bn

1,000

800

2
3

653
574

600

Climate financetrends on acomparable basis463
400 364

365

200

0

2011/122013/142015/162017/18

2019/202021/22

Note: Climate finance flows are reported as biennial averages to smooth out annual fluctuations in data and expressed in
nominal USD. This means that annual figures do not account for the effects of inflation and exchange rate volatility over time.

1
2
2

Climate finance flows tracked in this report represent targeted climate mitigation and adaptation specific project-level allocation of capital.
Global GDP was USD 100 trillion in 2022, according to the World Bank (2023a)

Global Landscape of Climate Finance 2023

WHERE ARE WE HEADED?
In the average scenario, the annual climate finance needed through 2030 increases steadily
from $8.1 to $9 trillion. Then, estimated needs jump to over $10 trillion each year from 2031
to 2050. This means that climate finance must increase by at least five-fold annually, as
quickly as possible, to avoid the worst impacts of climate change.
Figure ES3: Global tracked climate finance and average estimated annual needs through 20503
Climate financeRange ofestimated needs

Needs in the
average scenario

USD billion

13,00012,00012,012

11,00012,227
10,76910,000
9,000

8,976

9,441

8,000
7,000
6,000

5,905

5,000
4,000
3,000
2,000
1,000 3640

2011/121,265
2021/22

2030

2050

Note: Climate finance needs estimates for 2023-2050 include direct investments in climate-specific physical assets andexcludes transition-related unabated fossil fuel finance. Estimates are based on secondary data collected from over 15 sectoral
scenarios (see Methodology document for detail). Climate finance needs for 2023-2050 are expressed in 2022 USD toensure comparability of estimates from several different scenarios.

3 For further details, see the Methodology document that accompanies this report. Changes in our climate finance needs estimates compared to
the 2022 Landscape report are due to regular updates and improvements in our coverage of climate finance needs scenarios. Compared to the lastreport, we include additional scenarios, particularly for the AFOLU, buildings, and industry sectors. Further changes include the revision of hydrogenand storage investment needs figures following updates in underlying scenarios, and the re-classification of some CCUS (carbon capture, use andstorage) needs estimates from the energy to the industrial sector, based on improvements in our internal data collection approach.
3

Global Landscape of Climate Finance 2023

THE COST OF INACTION
The longer we delay meeting total climate investment needs, the higher the costs will be,
both to mitigate global temperature rise and to deal with its impacts.
Figure ES4: Cumulative climate finance needs vs. losses under 1.5°C and BAU scenarios
USD trillion

2,500
Avoided losses
under a 1.5°C scenario

2,000

1,266

1,500

2,328

1,000
500
0

1,062
266
1.5°C scenario(2025-2050)

1.5°C scenario(2025-2100)

Climate finance needs

BAU scenario(2025-2100)

Losses due to climate change

Source: CPI analysis and NGFS (2022).
Although annual climate investment needs are large, the amount required is a fractionof the estimated losses likely to be incurred if we continue with business-as-usual (BAU)
investments that cause global temperature increases well above 1.5°C.
Using numbers based on 95th percentile estimations of BAU and 1.5 damages scenarios, theestimated losses shown in Figure ES4 are based on direct economic impacts of increased
weather-related and other uninsurable damages, increased production costs, productivity
losses, and health costs (NGFS, 2022). These are likely to be a dramatic underestimate
as they do not capture capital losses caused by stranded assets, losses to nature andbiodiversity, or those from increased conflict and human migration that cannot yet bereasonably costed.
Even though data and methodology on estimating future losses are still rudimentary, they are
forming a picture that clarifies the economic imperative to invest now, while also highlighting
the immense opportunities for businesses to adopt increasingly low-carbon and climateresilient pathways.

4

Global Landscape of Climate Finance 2023

WHAT DOES THE DATA TELL US?
We are making progress on increasing climate finance and on improving the sourcing of data
to better understand it.
Climate finance is on the rise
Global climate finance approached USD 1.3 trillion on annual average in 2021/2022
compared to USD 653 billion in 2019/2020. Most of this growth is due to an increase in
mitigation finance, with the largest growth in the renewable energy and transport sectors.
Climate finance data is also improving
A key function of the Global Landscape of Climate Finance (the Landscape) is to highlight
where data gaps exist and how to improve them. This year’s Landscape reflects additional
estimates on green bonds’ use of proceeds, which resulted in particularly improved
coverage in three sectors: agriculture, forestry, and other land use (AFOLU); buildings andinfrastructure; and waste.
Approximately 28% (USD 173 billion) of the 2021/2022 increase is attributable to improved
data.
However, growth is not sufficient nor consistent across sectors and regions
The growth in global climate finance largely results from significant increases in clean
energy investment in a handful of geographies. China, the US, Europe, Brazil, Japan, and India
received 90% of increased funds. While this marks promising progress, large climate financegaps remain even in these geographies, and climate finance in other high-emissions andclimate-vulnerable countries has shown meager progress in meeting their needs.
Climate finance is also uneven across sectors, for both mitigation and adaptation efforts. In
terms of mitigation finance, which totaled 1.15 trillion in 2021/2022:

5•

Energy and transport, which are the two largest-emitting sectors and where private
finance dominates, continue to attract the majority of flows: energy attracting 44% of
total mitigation finance; transport receiving 29%). There was an exponential growth in thesale of electric vehicles (EVs) in 2021/2022 led by China, Western Europe, and the US.

•

Agriculture and industry, the next-largest sources of emissions, receive
disproportionately little (less than 4% of total mitigation and dual benefits finance).
These two industries have a combined mitigation potential of 20 GTCO2 by 2030, higher
than that of the energy and transport sectors according to the Intergovernmental Panel on
Climate Change.

•

Emerging technologies, such as battery storage and hydrogen, are beginning to attract
private finance thanks to falling production costs, increased consumption, and policy
support. However, they remain far from their potential scale.

Global Landscape of Climate Finance 2023

Adaptation finance continues to lag•

While adaptation finance reached an all-time high of USD 63 billion, growing 28% from2019/2020, this still falls far short of estimated needs of USD 212 billion per year by 2030
for developing countries alone.

•

Tracked adaptation finance remains dominated by public actors (98%), with fragmented
flows from the private sector. Adaptation finance tracking challenges continue to impede
our understanding of progress of both public and private flows.

•

AFOLU, a critical sector with considerable vulnerability and wide-ranging adaptationneeds, received only USD 7 billion (11% of all adaptation finance).

Climate finance is geographically concentrated
Developed economies continued to mobilize the most climate finance, primarily from private
sources.
•

East Asia and the Pacific, the US and Canada, and Western Europe account for a
combined 84% of total climate finance. These regions also significantly outpace others inmobilizing domestic sources, which are critical to achieving scale.

•

China’s domestic climate finance mobilization was greater than that of all other countries
combined, accounting for 51% of all domestic climate finance globally.

•

International finance increased by 35% from 2019/2020, largely due to enhanced
commitments from developed economies. Developed economies committed 84% ofinternational finance, while emerging markets and developing economies (EMDEs),
including China, committed 13%. South-South climate finance accounted for under 2% of
total flows.

•

Flows continued to fall short of needs, particularly in developing and low-income
economies. Less than 3% of the global total (USD 30 billion) went to or within least
developed countries (LDCs), while 15% went to or within EMDEs excluding China. The
ten countries most affected by climate change between 2000 and 2019 received just USD
23 billion;4 less than 2% of total climate finance.

Private finance is growing, but not at the rate and scale required
Private actors provided 49% of total climate finance (USD 625 billion). As with mobilizing
domestic sources of finance, developed economies are much more successful at mobilizing
private finance than EMDEs.

4 According to the Long-Term Climate Risk Index (2021), the ten countries most affected from 2000 to 2019 are: Puerto Rico, Myanmar, Haiti,
Philippines, Mozambique, The Bahamas, Bangladesh, Pakistan, Thailand, Nepal.
6

Global Landscape of Climate Finance 2023

Figure ES5: Public vs. private climate finance by region

Western Europe
US & Canada

Central Asia andEastern Europe

325
34

175

Middle East andNorth Africa

South Asia

19

45

Latin America
and Caribbean

East Asia and Pacific558

Sub-Saharan Africa

52

30

Other Oceania
14

PublicPrivateTransregional13

All figures are USD billion

7•

The largest private sector growth came from household spending, which reached 31% of
all private finance.

•

This is the largest share that households have represented of private finance since CPI
started its tracking over a decade ago. This was driven predominantly by EV sales, which
doubled from 2020 to 2021. Such household spending growth was supported by strong
domestic fiscal policies to support uptake of low-carbon technologies.

•

Development finance institutions continue to provide the majority of public finance,channeling 57% of all public finance. However, more than 17% of public finance going to
LDCs comes in the form of market-rate debt, increasing their already substantial debt
burdens. In this context, renewed emphasis on the strategic use of public funds and otherconcessional finance to mobilize significantly more private capital is imperative.

Global Landscape of Climate Finance 2023

HOW CAN WE SCALE THE QUANTITY AND QUALITY OF CLIMATE FINANCE?
The context in which climate finance is being mobilized is evolving rapidly. Multiple ongoingcrises vie for political and financial attention, while raising the cost of capital. Yet, thepressure to turn climate commitments into deployed climate finance, both public and private,is growing on all fronts.
CPI proposes the following priorities to accelerate climate finance deployment and create real
economy impact:
AgendaActionTransforming thefinancial system

Bridging climate anddevelopment needs

Mobilizing domestic
capitalActing to improve
data

Summary

Reforming international financial
institutions

Build on existing momentum to reform mandates, operations,and business models to reduce the cost of capital and ensure
private capital mobilization

Leveraging concessional finance toexpand private flows

Transform the use of scarce concessional finance so it isaccessible, flexible, and applied where it is most needed

Strengthening private financial sector
net zero integrity

Expand from announcing 2050 targets to establish transparent
and verifiable shorter-term transition plans with a focus on
impacts in the real economy

Harnessing synergies between
development and climate action

Align more closely on these two investment agendas toaccelerate action on both fronts

Mainstreaming climate adaptation
and resilience into financial systems

Increase understanding of climate risks to improve resilienceand financial flows

Phasing out unabated fossil fuels
through a just transition

Ensure that pathways for ending fossil fuel development
account for the impacts on all key stakeholders at all levels,from national to local

Aligning Nationally Determined
Contributions (NDCs) with 1.5°C
scenarios

Better align NDCs with Paris Agreement goals to createstronger domestic policy and investment signals

Improving the local ecosystem forclimate investment

Bolster capacity building and create stronger enabling
environments to unlock untapped domestic private capital,
particularly in EMDEs

Simplifying and standardizing
taxonomies and reportingWork across countries to harmonize and enhance theinteroperability of these tools to reduce reporting burdens

Making climate finance data widely
available and accessible

Achieve greater transparency and leadership from governments
and DFIs on a new, standardized, and centralized approach to
tracking climate finance data

The above topics are discussed in detail in the Recommendations section of this report.
While pursuing low-carbon and climate-resilient development makes the most long-term
economic sense, winning the public debate on its urgency and bringing along all groups is key
to success. Revealing not only the effectiveness of climate investment to achieve the Paris
Agreement goals, but also its necessity in reaching longer-term development, resilience, andsecurity goals will help build the case for faster change.

8Global Landscape of Climate Finance 2023

CONTENTS

9

Executive summaryKey takeaways

2
2

1.

Introduction
Methodological improvements to the Landscape

10
12

2.

Sources and intermediaries
2.1
Public finance
2.2
Private finance

15
15
19

3.

Uses and sectors
3.1
Mitigation
		
3.1.1
Energy		
3.1.2 Transport		
3.1.3 Supporting infrastructure		
3.1.4 Industry		
3.1.5 Buildings and infrastructure		
3.1.6 AFOLU
3.2
Adaptation
3.3
Dual benefits

21
22
22
24
25
26
26
26
27
31

4.

Instruments
4.1
Mitigation instruments
4.2
Adaptation instruments

32
32
33

5.

Geography
5.1
Domestic and international flows
5.2
LDCs and EMDEs
5.3
South-south flows

35
35
36
37

6.

Conclusions and recommendations1. Transforming the financial system
2. Bridging climate and development needs
3. Mobilizing domestic capital
4. Acting to improve data
Future developments

39
39
40
41
41
42

7.

Annex I: Data tables43

8.

Annex II: Domestic budget tagging

48

9.

References

49

Global Landscape of Climate Finance 2023

1.

INTRODUCTION

Amid adjacent crises, the climate emergency continues to deepen, increasingly weighing
on lives and livelihoods across the globe. High inflation has raised borrowing costs. Yet
the climate crisis demands our attention. Illustrations of the scale and severity of climatechange are proliferating, with associated losses and damages to income, assets, people, andecosystems strengthening the need for immediate action.
Despite recent momentum on climate finance and emerging solutions, extensive further
action is urgently required. Political pressure backing the climate finance agenda is building,with the first ever Global Stocktake in 2023 under the Paris Agreement urging an increase
in climate finance, the G20 leadership prioritizing sustainable finance, and ongoing calls toreform international financial institutions. Significant country-specific cooperation is also
emerging, including through platforms such as the Just Energy Transition Partnerships andthe V20 Climate Prosperity Plans.5 Meanwhile, the potential for, and realization of, SouthSouth climate finance flows is growing. Public pressure is pushing climate change up thepolitical agenda. Moreover, there is a notable rise in awareness of the many co-benefits ofclimate interventions, inter alia for nature and air quality.
Ultimately, the necessary funds are available, but need to be redistributed or reallocatedto uses consistent with global climate goals. In 2021/2022, CPI tracked USD 1.27 trillion
in global annual climate flows. Estimated needs to mitigate and adapt to climate change
range from USD 5.4 trillion to USD 11.7 trillion per year until 2030, and between USD 9.3
trillion and 12.2 trillion per year in the following two decades.6 While the funding gap is large,
taking a broader perspective on global spending reveals the feasibility of closing it: global
military expenditure in 2022 was estimated at USD 2.2 trillion (SIPRI, 2023); global fossil
fuel subsidies in the same year reached USD 7 trillion (IMF, 2023a);7 and the International
Monetary Fund (IMF) estimated that USD 11.7 trillion in emergency fiscal measures wereannounced globally in 2020 in response to the COVID-19 pandemic (IMF, 2020) (see Figure1). There is, undoubtedly, enough liquidity in capital markets, with approximately USD 114
trillion in assets under management globally by the end of 2022 (TAI, 2023).

5 For further details on the V20 see https://www.v-20.org/climate-prosperity-plans.
6 For further details, see the Methodology document that accompanies this report. Changes in our climate finance needs estimates comparedto our 2022 Global Landscape report are due to regular updates and improvements in our coverage of climate finance needs scenarios. Compared
to last year, we include additional scenarios, particularly for the AFOLU, Buildings, and Industry sectors. Further changes include the revision ofhydrogen and storage investment needs figures following updates in underlying scenarios, and the re-classification of some CCUS (carbon capture,
use and storage) needs estimates from Energy to Industry based on improvements in our internal data collection approach.
7 This figure includes explicit and implicit fossil fuel subsidies, for example, pricing in local pollution costs.
10

Global Landscape of Climate Finance 2023

Figure 1: Climate finance in context

USD 1.3 tn

global climate finance flows
2021/2022

USD 2.2 tn

global public expenditurein military, 2022

USD 7 tn

global (implicit & explicit)
fossil fuel subsidies, 2022

USD 11.7 tn

global COVID-19 emergency
fiscal measures, 2020

USD 8.6 tn

global climate finance needs
annually until 2030

On the other hand, delaying climate action and failing to keep the world on a 1.5°C
trajectory will result in significantly higher costs down the line. Climate change impacts,
such as increasing temperatures, rising sea levels, and more frequent extreme weather
events, will result in labor losses, reduced agricultural yields, and decreased global tourism,
as well as damages to assets, capital, and productive land. Rising temperatures andworsening air quality will also increase rates of mortality, climate-related illness, and overall
healthcare spending.
Various studies suggest that under current policies, warming will exceed 3°C, leading tomacroeconomic losses of at least 18% of GDP by 2050 and 20% by 2100 (Swiss Re Institute,2021; NGFS, 2022). However, these are likely to be dramatic underestimates since they failto capture costs related to biodiversity loss, stranded assets, and broader social issues.8
Overall, the projected social and economic costs of a warming world will far outstrip thoseof transition. And the costs of inaction will rise the longer we delay. Figure 2 shows how
increasing climate investments to the levels needed by 2050 (USD 266 trillion cumulatively),
will lead to a considerable reduction in social and economic losses by 2100: USD 1,266 trillion
lower compared to a business-as-usual (BAU) scenario. In other words, sticking to BAU
would create more than double the losses of a 1.5oC scenario.

811

Estimates of costs of inaction are discussed in more detail in the Methodology document which accompanies this report.

Global Landscape of Climate Finance 2023

Figure 2: Cumulative climate finance needs vs. losses under 1.5°C and BAU scenarios
USD trillion

2,500
Avoided losses
under a 1.5°C scenario

2,000

1,266

1,500

2,328

1,000
500
0

1,062
266
1.5°C scenario(2025-2050)
Climate finance needs

1.5°C scenario(2025-2100)

BAU scenario(2025-2100)

Losses due to climate change

Note: Productive investments, or expenditures on either climate or non-climate investments, will generate additional economic
returns, and are greater under a 1.5°C scenario. Social and economic costs represent losses without additional returns. All
figures are expressed in 2022 USD to ensure comparability of estimates from different scenarios. Numbers based on 95th
percentile estimations of BAU and 1.5 damages scenarios.

Source: CPI analysis and NGFS (2022).

METHODOLOGICAL IMPROVEMENTS TO THE LANDSCAPE
The 2023 Global Landscape of Climate Finance provides the most comprehensive update
on climate finance flows to the real economy, globally, providing a consistent baseline
against which to measure changes over time. It aggregates multiple data sources andanalyses climate finance committed by both public and private actors in 2021/2022.9
The Landscape captures primary financing in real economy sectors that reduce greenhousegas (GHG) emissions and build climate resilience. While the term climate finance isincreasingly used to refer to all ‘climate aligned’ finance – including investments that dono harm to the climate – our analysis focuses on deployment of climate-specific capital.
It excludes secondary financial market transactions, such as equity market movements orrefinancing, given that these are not new investments but rather exchanges of money linked
to existing assets. This approach helps to maintain data consistency and comparability acrossdata sources and to avoid double counting flows. Additionally, financing through instruments
such as insurance, guarantees, tax credits, and subsidies are not included in order to avoid
overestimating those finance flows that essentially represent ‘promises’ of future funds.

9
12

A biennial average over the two years is taken to smooth out fluctuations in the data.

Global Landscape of Climate Finance 2023

The 2023 Global Landscape of Climate Finance has made methodological advancements
in filling data gaps. The flows tracked in this report represent the conservative, lower boundamounts going to project-level activities, based on rigorous analysis that roots out double
counting. Nevertheless, certain limitations persist due to lack of data, definitional clarity, andgranularity (See Figure 4). To address these issues, we continually evolve our methodology
and data sources.
For the first time, tracked project-level data has been complemented with new aggregatedestimates of climate finance reported by third parties including the IEA’s World Energy
Investment report, and green bond use of proceeds estimates generated by Climate Bonds
Initiative (CBI). After omitting double-counted flows,10 these represent an additional USD
173 billion (14%) of the USD 1.3 trillion annual average tracked climate finance flows in
2021/2022 (see Figure 3). This improved data capture is particularly notable for domestic
public and private finance to three sectors: agriculture, forestry, and other land use (AFOLU);
buildings and infrastructure; and waste.
The Sankey diagram (Figure ES1) presents a combination of CPI-tracked project-level data
and third-party estimates, giving a more complete picture of the lifecycle of climate finance in
2021/2022.11 Throughout this report, we clarify which increases on previous years’ figures
are due to methodological changes and which represent market trends.
Figure 3: Summary of tracked and additional data (2021/2022)

TRACKED - USD 1.09 trillion
Project level data across sectors

UNKNOWNNEW DATA ADDITIONS - USD 173 billion

Data gaps from private
sector and domestic
budgetary expenditure

Buildings and infrastructure, AFOLU and waste sectors

10 We added the regional and sectoral aggregated data with low or no coverage in CPI data, to eradicate double-counting in additions to the data.
11 More information on the methodology is available here.
13

Global Landscape of Climate Finance 2023

Data availability continues to prevent a full account of domestic governments’ climate
finance (see Box 4) and South-South flows, as well as private investment in sectors otherthan energy. These gaps can be reduced through improved reporting and tracking by
domestic and private climate finance actors, spurred by regulations for mandatory andstandardized disclosure.
Figure 4: Tracked and untracked climate finance by actor and sector (2021/2022, USD bn)
Agriculture,
Forestry, Other
Water &
land uses
Wastewater and Fisheries

EnergySystems

Transport

Buildings &Infrastructure

Private

262

210

131

2

Public(International)

37

27

8

Public(Domestic)

215

100

101

TrackedLimited tracking

Industry

Adaptation

Others &Cross-sectoral

8

?

2

?

11

11

8

28

42

32

24

2

34

6

Not tracked

Complemented with new data sources

Contextualizing climate finance flows is key. To this end, CPI has conducted a literature
review on climate finance needs and the cost of inaction. We considered a wide range ofliterature with projections across various timeframes and warming scenarios (for further
details, see the Methodology document).
In addition, for the first time, our assessment includes country classifications pertaining toleast developed countries (LDCs), emerging markets and developing economies (EMDEs),and developed economies.

14

Global Landscape of Climate Finance 2023

2. SOURCES AND INTERMEDIARIES

Global climate finance flows continued to be largely equally split between
public and private actors in 2021/2022. Both prioritize the energy, transport,
and buildings and infrastructure sectors, though public finance also targets
relatively underserved sectors, such as AFOLU, water and wastewater, andindustry.
Figure 5: Sources of public and private climate finance (USD bn)
640

625

Public funds 0.2
Export credit agencies (ECAs)

1.8

Multilateral climate funds

2.9

Bilateral DFIs

32.6

State-owned FIs

60.9
93.1

Multilateral DFIs

99.6

Governments

110.3

SOEs

238.4

National DFIs
Funds

6.2

Institutional investors

6.3

Households/individuals
Corporations

PublicPrivate2021/22 annual average, USD billion

2.1

Commercial FIs

184.5
192.2
235.0

PUBLIC FINANCE

Public actors committed an annual average of USD 640 billion in climate finance in
2021/2022, approximately half of the global total. This represents a 91% (USD 305 billion)
increase from USD 335 billion in 2019/2020, of which USD 57 billion stems from improved
data on flows to the buildings and infrastructure, AFOLU and water sectors.

15

Global Landscape of Climate Finance 2023

Figure 6: Climate finance by public actor (USD bn)

37%

National DFIs, $238 bn

State-owned enterprises, $110 bn

17%
16%

Governments, $100 bn

15%

Multilateral DFIs, $93 bn

9.5%

State-owned DFIs, $61 bn

5%Bilateral DFIs, $33 bn

Export credit agencies (ECA), 0.3%; Public funds, <0.1%

Multilateral climate
funds, $3 bn

0.5%

Development finance institutions (DFIs) provided the majority of public climate finance in
2021/2022, committing USD 364 billion.
National DFIs remained the largest source, committing USD 238 billion (or 37% of the
public total), dominated by domestic commitments by institutions in East Asia and thePacific. Of the USD 33 billion provided by bilateral DFIs, 64% was in the form of low-costproject debt, demonstrating their role in scaling concessional finance for low-carbon andclimate-resilient development. Additionally, 67% of finance from national and bilateral DFIs
originated from EMDEs, with nearly all of this either remaining in the originating country or
going to other EMDEs.
Multilateral DFIs provided USD 93 billion, or 15% of total public commitments in
2021/2022, up 36% on USD 68 billion in 2019/2020. Roughly 45% of financing frommultilateral DFIs went to EMDEs, and 40% to developed countries. LDCs received 14%,or USD 13 billion, approximately USD 7.8 billion (60%) of which was in the form of debt.
Climate finance from multilateral DFIs is increasing and there are further developments
analyzing ways to increase the lending capacity of multilateral development banks (MDBs),such as the Independent Review of MDBs Capital Adequacy Frameworks (MDBs, 2023a).
Calls to reform international financial institutions – especially MDBs and the IMF – havegained momentum (see Box 1).
Tracked climate finance from governments and their agencies reached USD 100 billion,
or 16% of total public commitments, up from USD 32 billion in 2019/2020. This is largely
attributable to the inclusion of new data sources in the Landscape from CBI on Use ofProceeds (UoP) and from the IEA on EV investment. Sovereign green bond issuances
outpaced the wider green bond market in 2021 (CBI, 2022). The four largest issuers – France,
Germany, the UK, and Italy – contributed almost a third of sovereign green bonds’ UoP (USD
26 billion) in 2021/2022. Enabling policies for EVs, such as incentives for car makers andpurchasers, spurred EV investment in the US, China, and Western Europe in 2021/2022.
This is expected to continue as countries in these regions implement strengthened domestic
16

Global Landscape of Climate Finance 2023

climate finance policies. For instance, the US Inflation Reduction Act 2022 commits nearly
USD 370 billion in direct funding and tax credits for energy transition and clean technologies
within the country.
Multilateral climate funds (MCFs) provided USD 3 billion, representing 0.5% of public
climate finance. This is a 21% decrease from 2019/2020. The Green Climate Fund (GCF)
provided 71% of total MCF commitments, with a 45% increase in its adaptation finance.
Financing from MCFs is expected to rise further as they receive new donor replenishments.
In 2022, the GCF passed a significant milestone, launching its second replenishment process
which will determine its funding from 2024 to 2027 (GCF, 2022). The Global Environment
Facility (GEF), which funded USD 190 million worth of climate projects in 2021/2020,
down from USD 960 million in 2019/2020, also received new donor pledges in 2023 (GEF,
2023). The Least Developed Countries Fund, the only fund dedicated to supporting climate
adaptation needs in LDCs, provided 3% of MCF finance in 2021/2022.
State-owned financial institutions (SOFIs) and state-owned entities (SOEs) continued toaugment their roles as climate finance providers, contributing USD 61 billion and USD 110
billion respectively, particularly in East Asia and the Pacific. Most commitments of SOFIs
and SOEs were for GHG mitigation in the energy sector. Heavy industry SOEs are majorenergy consumers in many countries and have potential to drive the transition from polluting
to green practices, addressing climate and biodiversity challenges (ADB, 2021).
Less than 15% of public climate finance was channelled to AFOLU, water and wastewater,
and industry, collectively. This indicates an alarming delay in climate action in these sectors,
which are critical to reducing GHG emissions and climate vulnerability. Together, theseindustries represent 21.8 GtCO2 net emissions reduction potential by 2030, which is higher
than that of the energy, transport and building and infrastructure sectors combined (IPCC,
2022a). Energy systems and sustainable transport remain the top recipient sectors of public
climate finance, receiving USD 252 billion (39%) and USD 127 billion (20%) respectively.
Public investment in buildings and infrastructure reached USD 109 billion (17%), owing tostate support for increasing the energy efficiency of buildings in major economies in Western
Europe, as well as in the US and Canada (IEA, 2023a).

17

Global Landscape of Climate Finance 2023

Box 1: Reforms in international financial institution architecture2023 was a pivotal year in the international finance arena, with a strengthening call for reformsof the international financial architecture. Recommendations include revising MDB strategies andoperations to better catalyze public and private finance for climate change, biodiversity and nature,
as well as infrastructure in developing economies. While a consortium of MDBs committed in 2021
to disburse USD 65 billion in climate finance globally, including doubling adaptation finance to USD
18 billion, consideration is needed to ensure that these funds are effective in mobilizing private sector
finance. The IMF found that, on average, MDBs only crowd-in private finance of about 1.2 times theresources they commit themselves (IMF, 2022a). In 2022, USD 100 billion of MDB climate finance
was supported by USD 120 billion of co-finance. Of this amount, 57% (USD 69 billion) came fromprivate sources, while the rest was from other public sources (MDBs, 2023b). International financial
institutions require not only more capital but also innovations in their operating models to increase
the effectiveness of their climate finance, particularly to mobilize private capital. To this end, CPI
proposes advancing four high-impact, risk-sharing instrument categories, which can help MDBs totarget concessional capital that addresses risks and leverages private climate investment.
1.

Greater use of guarantees to address credit risk: Studies suggest that increased and purposefulcredit guarantee facilities with standardized contracts and agreed criteria have the potential tomobilize 6-25 times more financing than loans (BTF, 2023; CPI, 2023a). Effective implementationof blended concessional guarantees would require long-term reforms of MDB capital allocation
rules to incentivize guarantees by altering MDB internal risk weightings and Official Development
Assistance accounting rules.

2. Local and affordable currency lending to address currency risk: By lending in local currencies,
MDBs can shoulder the responsibility for hedging against currency mismatches, which is currently
borne by borrowers. Existing and proposed hedging facilities can scale significantly with additional
investment, including using subsidies to provide below-market hedging rates for climate projects(TCX, 2023). A non-profit facility that offers currency hedges for climate projects in high-emitting
countries at concessional rates can also be considered. Addressing currency risks also requires
capacity building in borrowing countries to support the development of local currency markets.
3. Project development models to support development risk: Project development typicallyaverages 2-5% of total project cost, and can leverage 20-50 times more early-stage investment(CPI, 2022a). Using concessional finance to build and scale project development facilities thatprovide technical assistance, advisory services, and tailoring models to attract earlier investment
can help to scale bankable, investment-ready projects in developing countries.
4. Originate-to-distribute models: Such models could effectively bundle diverse projects into
attractive portfolios through securitization or similar means by using pre-agreed underwriting
criteria, thereby de-risking investments for private sector participation.
Such innovative risk-mitigation instruments are not currently tracked under CPI’s Landscapeanalysis. Instruments such as guarantees and insurance are not included as climate finance, giventhat the funds they commit would only materialize upon a payment default by a borrower, or upon an
insurance claim being made. However, increasing use of such instruments could warrant a separate
tracking category in future. The Joint MDB Group reported climate finance guarantees of USD 2.7
billion (across low-, middle- and high-income countries) in 2022 alone (MDBs, 2023c).

18

Global Landscape of Climate Finance 2023

2.2

PRIVATE FINANCE

Private actors provided 49% of total climate finance, averaging USD
625 billion in 2021/2022 compared to USD 318 billion in 2019/2020.
Approximately USD 120 billion of the increased amount results from
improved data in the buildings and infrastructure, and AFOLU sectors, withthe remaining USD 187 billion annual increase attributable to higher financial
flows to the energy and transport sectors.
Figure 7: Climate finance by private actor type (USD bn)
38%
Commercial FIs, $235 bn
Corporations, $192 bn
31%

29%

Households/individuals, $184 bn
Funds, $6 bn
Institutional investors, $6 bn

Less than 1%: Unknown - $1 bn

Most private finance was concentrated in the US, Western Europe, and other developed
economies, and mainly targets mitigation efforts. More than USD 571 billion or 91% of thisfunding was channelled domestically. International private finance to EMDEs reached around
USD 15 billion, or 28% of total international private finance.
Commercial finance institutions (banks) provided 38% of private climate finance in
2021/2022, mainly in the form of debt. Their financing to the energy sector slightly
decreased, particularly in 2022, likely due to the rising cost of capital. Although banklending to climate-positive sectors is increasing, fossil fuel funding remains prevalent, withparticularly high lending to Africa and the Middle East (IEA, 2023a).
Corporations provided USD 192 billion or 31% of private flows in 2021/2022. As in previous
years, renewable energy and low-carbon transport dominated, representing 91% of total
corporate flows. We estimate that 25% of corporate flows, or USD 46 billion on annual
average, went to energy-efficient buildings and infrastructure. A third of the largest public
and private corporations have net-zero pledges, however, less than 10% are on track tomeet them. Achieving net-zero and climate resilience targets would require a major shift
in investment and business models by corporations, which create direct impacts in the real
economy. Companies will need to adopt holistic climate finance approaches that strategicallytarget their financial resources to meet climate goals at pace (CPI, 2023b).
Household spending on climate mitigation reached USD 184 billion in 2021/2022 which isan increase of USD 130 billion from 2019/2020. This is driven by rising global EV purchases,
reaching 142 billion in 2021/2022. This was supported by strong domestic policies sustained
over a decade, including support for the uptake of low-carbon technologies, tightening
technical specifications, and the designation of low- and zero-emissions zones to reduce air
19

Global Landscape of Climate Finance 2023

pollution and reduce congestion particularly in China, Europe, the US, and Japan. In addition,
EVs are cheaper to run than internal combustion cars in many countries, despite the current
increases in electricity prices. Residential solar PV, solar water heaters, and energy efficiency
related home improvements account for the remaining climate-related household spending.
In 2021/2022, institutional investors and funds each provided USD 6 billion in direct
climate finance. These mostly represent direct investment in renewable energy projects, andphilanthropic giving. Institutional investors’ indirect allocation of capital through equity andbond markets falls outside the scope of this assessment, which tracks direct investment in
the real economy. Institutional investors also tend to acquire portfolios of renewable energy
projects after they have been commissioned due to large ticket size requirements, therefore,
they may not be captured in the Landscape in an effort to avoid double counting.
Despite growing adoption of environmental, social and governance considerations and net
zero targets by private finance providers, much remains to be done to examine how these
actors are channeling climate finance to the real economy, and whether their efforts are
creating change on the ground (see Box 2).12

Box 2. Climate finance integrity: real economy impacts of financial institutions
As climate finance increases – driven partly by more financial institutions’ setting of net zero goals –ultimately what matters are the impacts such institutions are creating in the real economy.
For example, while 98% of the 565 financial institutions who are members of the Glasgow Financial
Alliance for Net Zero have announced some form of net zero target for their financing activities andportfolios, less than half have set well-developed goals with specific targets and timelines. This leaves
capital waiting on the sidelines, rather than being deployed effectively. To shift net zero targets toactual investment practices, financial institutions should identify climate risk leadership within theirorganizations, align internal incentive systems to well-defined targets, and engage with policymakers,
clients, and shareholders on transition planning and finance.
Regulatory bodies are starting to put more pressure on financial institutions to address and reporton climate risks. For example, the UK became the first G20 country to require its largest companies
to report in line with the Taskforce on Climate-Related Financial Disclosures, and the EU’s Corporate
Sustainability Reporting Directive will require any large company that raises money on European stock
exchanges to disclose climate-related information. In addition, California, the world’s fifth-largest
economy, enacted legislation in October 2023 that will set in motion climate-related disclosure
requirements for companies doing business in the state, a first for the US.
An increasing number of financial institutions are also making progress on voluntary disclosure of
their portfolio/financed emissions. However, none are currently able to demonstrate full coverage,
and disclosure of investment data is still very patchy. More startling, evidence suggests that 75%
of financial institutions who are starting to positively engage on net zero alignment are also still
actively opposing progress on climate legislation (CPI, 2023c).
To increase accountability for financial institutions to move beyond making long-term announcements
to near-term action, CPI is releasing an updated version of its Net Zero Finance Tracker (NZFT). The
NZFT leverages more than 250 data sources to provide a comprehensive assessment of how selectedpublic and private finance institutions are progressing on Paris Agreement goals and delivering net
zero impact on the ground.
The NZFT is available from November 9, 2023, at https://netzerofinancetracker.climatepolicyinitiative.org

12 More analysis from the OECD on tracking net zero commitments from financial actors can be found here
20

Global Landscape of Climate Finance 2023

3. USES AND SECTORS

Global climate finance continues to be channelled primarily towards
mitigation efforts, which received 91% of the total in 2021/2022 (a slightincrease from 89.7% in 2019/2020).
Mitigation projects in the energy and transport sectors were together responsible for twothirds of total climate finance flows in 2021/2022.
While adaptation finance increased by 29% in 2021/2022 to USD 63 billion, compared to
USD 49 billion in 2019/2020, the share of total climate finance directed to adaptation almost
halved in the same period. This demonstrates a worrying lack of progress at a time whenclimate risks are escalating and countries’ climate vulnerabilities are growing. Adaptation
finance also seems to remain a prerogative of the public sector. While this is at least partly
due to limitations in tracking private adaptation finance (see Section 2.2), there are also
several barriers that prevent private actors from financing and facilitating adaptation toclimate change (CPI, 2022b). This means that the public sector continues to play a pivotal
role in ensuring the availability of adaptation finance.
Figure 8: Uses of climate finance with private-public splits
USD billion

1200

1000

800

614
PrivatePublic

600

400

536
200

62

0

Mitigation

21

Adaptation

1.5
42
Dual Benefits

9Global Landscape of Climate Finance 2023

3.1

MITIGATION

In 2021/2022, mitigation finance reached almost USD 1.2 trillion per year. The investment
gap, however, remains considerable: mitigation finance needs to surpass USD 8.4 trillion
per year between now and 2030, and to rise to USD 10.4 trillion per year in the following
two decades. The largest investment gaps in absolute terms are observed in the transportand energy sectors, where an additional USD 2.4 trillion and USD 2.2 trillion per year
is needed, respectively, between now and 2050. In relative terms, the largest gaps areobserved in AFOLU and industry, where funding needs to grow over 180 times and 136 times,
respectively, compared to 2021/2022 levels. Underfunding in these sectors is concerning,
given their large mitigation potential (see Figure 9). AFOLU is estimated to have the largest
mitigation potential, at an average of 14.5 GtCO2e by 2030 (IPCC, 2022a), yet the sector
received minimal finance in 2021/2022 (USD 7 billion in mitigation and a further USD 29
billion for dual benefits).
Figure 9: Climate finance flows in key mitigation sectors, finance needs and mitigation potential
USD billion

GtCO2e11,00015
14

10,000

13
9,000

12
11

8,000

10

7,000

9

6,000

8

5,000

7
6

4,000

5

3,000

4
3

2,000

2
1,000
0

1

EnergyTotal
2019/202021/22

Transport
Annual financeneeds by 2030

Buildings &Infrastructure

Industry

Annual financeneeds 2031-2050

AFOLU

Other

0

Annual mitigation potential
by 2030 (GtCO2e)

Note: Historical finance flows (2019-2022) are expressed in nominal USD. Climate finance needs for 2023-2050 are expressedin 2022 USD. Average mitigation potential is sourced from the IPCC AR6 (2022a). This applies to similar analyses hereafter.

3.1.1

ENERGY

Mitigation investments in low-carbon energy systems reached USD 510
billion per year in 2021/2022 (or 44% of total mitigation finance), of which
USD 490 billion went to renewable energy generation.
22

Global Landscape of Climate Finance 2023

Despite the increase, annual investment in the sector needs to at least triple by 2030, with
65% of financing expected to come from private sources (IEA, 2023a). Long-term clear
policy signals in the real economy are key to enabling further private capital mobilization.
Figure 10: Mitigation finance to the energy sector, and by sub-sector
Energy sector breakdown

Power & heattransmission& distribution,$10.7 bn

Renewable energy breakdown

Solar PV, $251 bn

Policy support,
capacity building
and other, $5.7 bn

51%

Onshore wind, $131 bn
Offshore wind, $45 bn
Hydro, $16 bn

44%

27%

Renewableenergy,$494 bn

At $510 bn, energy
sector represented
44% of total
mitigation financein 2021/22

3%
2% 1%

97%

Bioenergy, $11 bn
Solar thermal (incl. CSP), $5 bn

9%

Others, $32 bn

7%

Solar PV dominated renewable energy investment (USD 251 billion), followed by onshore
wind (USD 131 billion). Strong growth was observed in offshore wind, receiving USD 45
billion, up 42% on 2019/2020. Year-on-year growth in renewable energy investment in thepast decade has spurred a 130% increase in global renewable energy capacity, compared
to only 24% growth in non-renewable capacity (IRENA, 2023). As of 2022, renewables
constituted 30% of electricity generation globally (IEA, 2023b).

An estimated USD 925 billion was channelled to new fossil fuels in
2021/2022, rebounding to pre-pandemic levels.
Figure 11: Renewable energy vs. fossil fuel annual investment, 2015-2022
Renewable energy investment

USD billion

Fossil fuel investment

1,400

1,216

1,200

1,022

1,000

1,034

1,019

1,003
783

800
600
400

953

897

340

263

351

322

329

348

430

499

200
0

2015

2016

Source: IRENA and CPI, 2023

23

2017

2018

2019

2020

2021

2022

Global Landscape of Climate Finance 2023

In addition to direct investments, as captured in Figure 11, considerable funds are channelled
to fossil fuels via subsidies. The IMF estimates that in 2022 alone USD 1.3 trillion was
spent on explicit fossil fuel subsidies, globally, with an additional USD 5.7 trillion in implicit
subsidies (IMF, 2023).13
While renewable energy investment is growing, the past two years were not without
challenges. Rapid inflation of materials and component costs has reduced profit margins forclean energy projects. Nonetheless, the market for renewable energy investment remained
resilient.
Renewables continued to attract higher shares of private finance than other mitigation
sectors, with increasingly diverse financial instruments being deployed. Higher overall
interest rates have increased capital costs, including for the energy sector. This has affected
the composition of renewable energy finance to a higher equity proportion, as the provision ofdebt is reduced.

3.1.2

TRANSPORT

Low-carbon transport finance reached an all-time high of USD 334 billion peryear, in 2021/2022, accounting for 29% of mitigation finance. EVs continue
to fuel investment in the sector.
Figure 12: Mitigation finance to the transport sector, with sub-sectoral breakdown
Transport breakdown

72%

Private road transport, $239.4 bn

29%

At $334 bn, low-carbon
transport represented 29%of total mitigation financein 2021/22

Rail & public transport, $77.6 bn
Waterways, $4.1 bn

23%
1%

4%

Other/unspecified, $12.6 bn

Note: “Other” low-carbon transport support areas include transport infrastructure projects such as roads, urban transit, and EV
charging infrastructure.
Private road transport dominated investment in the sector (72%), followed by rail and public
transport (23%).

13 Implicit subsidies are those implied by charging below efficient fuel prices.
24

Global Landscape of Climate Finance 2023

Finance for private road transport more than doubled from USD 73 billion annual averagein 2019/2020 to USD 239 billion in 2021/2022. Public subsidies represented 13% of total
private road transport finance in 2021/2022, compared to 10% in 2019/2020. EV markets
are maturing and becoming competitive, especially for cars, and public subsidies are
therefore now shifting to areas such as heavy transport and charging infrastructure (IEA,
2023c). Nonetheless, EVs still have a long way to go to fully replace fossil fuel alternatives.
For example, only 16% of sport utility vehicles were electric in 2022. Prices for some lowcarbon transport technologies rose in 2021 and 2022, largely due to rising prices of criticalminerals, semiconductors, and bulk materials.

Box 3: Low-carbon transport investments spur global health benefits
Climate change and air pollution are closely interconnected in their causes. Many outdoor air
pollutants have a climate warming effect and GHG emissions can exacerbate outdoor air pollution(CAF and CPI, 2023a).
Therefore, action to tackle climate change often has direct positive impacts on air quality, withenormous benefits to human health, economic development, and social justice. Finance for lowcarbon transport can deliver positive local and national health outcomes in the short-to-medium term,
through:•

The adoption of cleaner vehicle technologies, such as low-emission vehicles (including electricand hybrid vehicles) and alternative fuels, which can reduce tailpipe emissions.

•

The increased use of public transport, including buses, trams, and trains (which tend to have lower
per-passenger emissions than personal vehicles), as well as non-motorized transportation, such as
cycling and walking, which all reduce overall emissions.

•

Imposition of more stringent emissions standards for internal combustion engine vehicles, as well
as regular inspection and maintenance programs, to reduce tailpipe emissions can help to ensurethat vehicles operate with minimal emissions.

According to a recent study by the Clean Air Fund and CPI, of total outdoor air quality finance provided
by international public funders in 2015-2021, 67% (USD 11.6 billion) went to projects that tackled both
air pollution and climate change (CAF and CPI, 2023b). Transport-sector projects received the largest
share of these flows (57% or USD 5.4 billion). Investments targeted rail and public transport systemprojects, which have an immediate positive impact on air pollution, particularly in urban areas.

3.1.3

SUPPORTING INFRASTRUCTURE

CPI acknowledges that supporting infrastructure investment, such as for electricity
transmission and distribution, battery storage and EV chargers, is an important enabler ofenergy transition. For example, transmission and distribution lines need to grow in parallelwith renewables to accommodate increases in supply of clean energy. Transmission anddistribution investment is only tracked in our analysis if the investments are specificallytagged for renewable energy distribution, given the risk that grids also transmit fossil fuelenergy. Global transmission and distribution investment, however, is estimated to havereached USD 274 billion in 2022, whereas investment in public charging infrastructure
reached USD 24 billion in the same period (BNEF, 2023).
25

Global Landscape of Climate Finance 2023

3.1.4

INDUSTRY

While directly accounting for 5% of total global emissions, and 29% when indirect emissions
from energy use are counted, the industry sector lacks investment progress. Total investment
tracked averaged USD 8.5 billion annually in 2021/2022, primarily targeting energy efficiency
improvements, and upstream and midstream renewables for industrial use. Technologies
required to decarbonize the steel and cement sectors are at varying stages of development(CPI, 2023c). In addition, such interventions have relatively high perceived risks, unprovenbusiness models, and do not offer market-based competitive returns. Global hydrogen
investment, which is critical to decarbonize hard-to-abate sectors such as steel and heavyduty transport, is estimated at USD 1 billion in 2022 compared to annual needs of USD 80
billion through 2050 (BNEF, 2023; ETC, 2023). Studies suggest that the industrial sector
needs roughly USD 70 billion per year for decarbonization (ETC, 2023).

3.1.5

BUILDINGS AND INFRASTRUCTURE

Energy efficiency investments for buildings and infrastructure totaled USD 240 billion in
2021/2022. This figure includes new data additions of USD 130 billion. Western Europe, andthe US and Canada accounted for 49% and 28% of flows, respectively, followed by China(9%). These regions have more developed policies including building energy codes, andheating intensity standards, as well fiscal incentives for heat pumps and clean technologies.
Energy efficiency building codes are particularly lacking in EMDEs. Energy efficiency related
efforts need to be stepped up, given that total energy consumption in the buildings sector
has increased by an average of 1% per year over the last decade (IEA, 2023b). Although
tracked climate finance in the buildings sector focuses on energy efficiency, the greatest
opportunities lie in reducing embodied carbon in construction materials, and in cleaner andmore efficient heating and cooling, including through passive design (CCFLA, 2022).

3.1.6

AFOLU

Finance for the AFOLU sector tagged as mitigation reached an annual average of USD
6.5 billion in 2021/2022. However, we tracked further USD 29 billion with dual benefits,of which USD 25 billion comes from estimates on the UoP of green bonds. This excludes
other investments in the sector such as farm-level renewables or biofuels, which arecaptured under energy systems in this report. While data sources are improving, granularity
on subsectors and solutions is lacking. For example, there is no standardized reporting
framework on UoP, resulting in uneven details and formats of reporting by bond issuers.
A centralized reporting platform and guidance on standardized reporting would assist inassessing the investment gap.
Overall, climate finance to agrifood systems14 has been strikingly low considering its
mitigation potential: it represents just 4.3% of total climate finance with an annual averageof USD 28.5 billion in 2019/2020 (CPI, 2023d). Climate finance for agrifood systems must
increase by at least sevenfold from current levels to reach the most conservative estimatedneeds for the climate transition, which is in the order of hundreds of billions of dollars
annually (FOLU, 2019).

26

14 This includes sectors at systemic level beyond what is historically tracked as AFOLU such as food loss, waste changes in consumption patterns
and low-carbon diets, livelihoods of rural populations etc. (CPI, 2023d)

Global Landscape of Climate Finance 2023

3.2

ADAPTATION

Adaptation finance grew modestly in 2021/2022 reaching USD 63 billion in 2021/2022.
Adaptation increased by 29% to an annual average of USD 63 billion in 2021/2022,
compared to USD 49 billion in 2019/2020. This reflects a drive by public financial
institutions to avoid or minimize the adverse impacts of climate change. Indeed, the JointMDB Group doubled their collective adaptation finance on 2019 levels to USD 18 billion in
2021, four years ahead of their 2025 deadline (MDB, 2023).
Figure 13: Adaptation finance by source and instrument
INSTRUMENTS

17%, $10.9 bn

USES

Grants $69

21%, $13.4
37.5
59%, $

Adaptation $63

Low-cost projectdebt $76

Water & waste $67
Industry $9

Dual benefits $51
36%,

Project-levelmarket rate debt
$561

$2

2.9
11 %
, $7

Project-level equity $54
Unknown $7

Buildings &infrastructure$240
Others & crosssectoral $50

AFOLU $43

6
0.

1%

,$

SECTORS

49%, $31.1 bn

0.9
,$
%
1

Energysystems$515

Mitigation$1,1502%

Debt $129,$

Balance sheet
financing
$498

1. 5

Transport$336

Equity $368

All figures in USD billion

Nevertheless, the global adaptation funding gap is widening. CPI analysis indicates thatdeveloping countries need USD 212 billion per year in adaptation finance up to 2030, and
USD 239 billion per year between 2031 and 2050 (see Figure 15).15 This is roughly 3.5 times
higher than the USD 63 billion adaptation finance tracked in 2021/2022. CPI analysis alsosuggests that the adaptation needs of African countries alone will require roughly USD 52
billion per year until 2030 (CPI, 2022c).
Urgent pursuit of climate-resilient development is key to address the growing costs ofclimate change. Recent analysis by the World Meteorological Organization found that
there is a high likelihood the world will breach the 1.5°C temperature threshold prior to2030 (WMO, 2023). This would exacerbate multiple climate hazards, posing numerous
risks to people, ecosystems, and assets. According to the IPCC (2022b), some soft limits
for adaptation have already been reached globally, and hard limits for adaptation have beenreached in some ecosystems. Warming exceeding 3°C could lead to macroeconomic losses of27

15 These estimates are based on an extensive review of existing literature around adaptation finance needs. For more details, please see
Methodology document.

Global Landscape of Climate Finance 2023

at least 18% of GDP by 2050 and 20% by 2100 (Swiss Re, 2021). With further temperaturerises, losses and damages will increase, and human and natural systems will reach the limitsof their ability to adapt. Some soft limits for adaptation have already been reached globally,and hard limits for adaptation have been reached in some ecosystems.16
Tracked adaptation finance remains dominated by public actors (98%). DFIs together
provided 86% of total tracked adaptation finance (USD 54.2 billion). national DFIs
were the largest source therein (USD 26.5 billion, 42%), followed by multilateral DFIs
(USD 21.2 billion, 34%). However, DFIs face several challenges in scaling up adaptation
finance, including aligning flows with national development priorities, building projectpipelines, mobilizing private sector finance, screening projects for adaptation benefits (e.g.,standardizing metrics to categorize projects as adaptation), climate-proofing investments(e.g., large-scale infrastructure projects), and tagging and tracking adaptation finance acrosstheir portfolios (IDFC, 2022).
The water and wastewater sector received almost half of tracked adaptation finance (USD
31 billion). This high share is partly due to the capital-intensive nature of large water andwastewater treatment and desalination plants, but also underscores the relevance of suchinfrastructure to building resilience against floods and drought. At the sub-sectoral level,
adaptation finance largely went to water supply and sanitation projects (USD 15 billion), andwastewater treatment (USD 7.5 billion).
In addition, cross-sectoral solutions that are critical for adaptation, such as policy andcapacity-building support and disaster risk management, received USD 3.9 billion and USD
6.7 billion, respectively. AFOLU, a high-emitting and climate-vulnerable sector with wideranging adaptation potential, received only USD 7 billion of adaptation finance in 2021/2022.
Figure 14: Adaptation finance by sector vs. needs
USD billion

250

200

150

100

50

0

Total

2019/20

Water &
Wastewater

2021/22

Others &Cross-sectoral

Annual finance needs by 2030

Agriculture, Forestry,
Other land uses
and Fisheries

Transport

Annual finance needs 2031-2050

16 Adaptation limits: The point at which an actor’s objectives (or system needs) cannot be secured from intolerable risks through adaptive actions.
Hard adaptation limit: No adaptive actions are possible to avoid intolerable risks. Soft adaptation limit: Options may exist but are currently notavailable to avoid intolerable risks through adaptive action.
28

Global Landscape of Climate Finance 2023

Monitoring adaptation finance from the private sector and local governments remains
fraught with tracking challenges. These include the context-specificity of what counts as
adaptation, the complexity of linking climate risks with adaptation measures, the absenceof clear impact metrics, and confidentiality concerns. In addition, unlike mitigation finance,
adaptation finance is usually counted as incremental or proportional to total project costs,
especially by international public climate finance providers. While rigorous, this approach isoften resource-intensive for private sector and domestic public actors to follow. To overcome
such challenges, concerted efforts are needed across public and private sector actors toagree upon a common language for tracking adaptation finance (CPI, 2022d).
The private sector needs to step up adaptation efforts. Every dollar invested in adaptation
could provide net economic benefits in the range of 2-10 dollars in the form of reduced risks,losses, increased productivity, and innovation (GCA, 2019). The business imperative to avoid
climate-related losses, as well as factors such as changing consumer demand, emerging
technologies and operational efficiencies are creating opportunities for the private sector
to invest in adaptation (Randall et al., 2023). Improving understanding of climate impacts
and risks can help to influence investment decision making, and to price climate risks intobusiness models and associated revenue streams (IIGCC, 2022).
Sub-Saharan Africa is the largest recipient of international adaptation finance; however,
an immense funding gap persists. Sub-Saharan Africa received 31% (USD 11 billion) ofinternational adaptation finance in 2021/2022. However, analysis of African countries’
collective Nationally Determined Contributions (NDCs) and National Adaptation Plans
suggests that the continent needs at least USD 52 billion, or 2.5% of Africa’s GDP per year,
to meet its adaptation goals by 2030. International support must scale at least five-fold by2030 (CPI, 2022c).
Figure 15: Adaptation finance by region
Domestic - 45%

International - 55%

USD billion

East Asia and Pacific28.6

Sub-Saharan Africa

10.8

Latin America & Caribbean

6.1South Asia

5.8

Western Europe

4.2

Middle East and North Africa

2.7

Central Asia and Eastern Europe

2.1

Transregional

1.9

US & Canada
Other Oceania

29

1.0
0.1

Global Landscape of Climate Finance 2023

LDCs strike a better balance between adaptation and mitigation finance than EMDEs, but
unprecedented international support is needed across both groups. A larger portion of
LDCs’ total climate finance was for adaptation, accounting for 38%, whereas for EMDEs,
adaptation represented only 6% of their total climate finance. However, in absolute terms,
the 50 LDCs, which have a collective population of more than 1 billion and contribute lessthan 4% of world’s GHG emissions (WRI, 2023) received only USD 11 billion (18%) of total
global adaptation finance. These countries will face severe impacts from climate change andrequire urgent financial support to implement climate-resilient development along with thenecessary institutional and technical capacity and expertise (IMF, 2022b).
Analyses of the NDCs of LDCs indicate that these countries need USD 40 billion per year foradaptation between 2020 and 2030 (IIED, 2021) Considering this, LDC adaptation financealone needs to quadruple each year. At COP26, developed countries were urged to double
adaptation finance to developing countries to USD 40 billion per year by 2025. However, thiswould only cover the needs of LDCs alone.

Box 4: Mainstreaming climate change in domestic budget expenditure
Assessing domestic climate-related expenditure is essential to complement the picture provided byinternational flows, helping to prioritize action based on national context. Developing the necessary
capacity and data systems for climate budget tagging can help domestic actors to monitor progress,
identify gaps, and raise ambition accordingly. Increased transparency can also help to mobilize
additional finance from other sources (World Bank, 2023b). This process often requires concerted
efforts and coordination from various government ministries, for example, ministries of finance andenvironment.
Reported domestic climate finance varies widely as a percentage of countries’ GDP – from less than
0.01% in Eswatini to 2% in France (see Annex II).
Domestic tracking varies in scope and period, meaning that CPI is unable to aggregate these figures toinclude in its tracked data for its Landscape reports.
Nonetheless, assessments of domestic budget expenditure offer learnings for other countries
seeking to start climate finance budget tagging. For example, some countries are “learning by doing”
via small pilot exercises, prior to broadening tagging across all ministries (World Bank, 2023b).
Learnings from established systems such as gender responsive budgeting, can be transferred toclimate budget tagging. Finally, budget tagging exercises can be extended beyond climate to trackprogress on other key policy goals such as air quality, and other aspects of the UN SDGs.
Dedicated national climate finance tracking studies by independent bodies also offer valuable insights
to identify key investment gaps and barriers to scaling up finance. For example, South Africa’s
Presidential Climate Commission will be producing regular climate finance landscapes to trackprogress against the country’s recently agreed energy transition investment plan, and adjusting its
approach as needed.

30

Global Landscape of Climate Finance 2023

3.3

DUAL BENEFITS

Funding tagged as dual benefits – delivering both climate mitigation and adaptation
benefits – reached USD 51 billion in 2021/2022, a 200% increase on USD 17 billion
in 2019/2020. Governments contributed almost half of this, much of which was spentdomestically, followed by multilateral DFIs (USD 8.9 billion, or 17%). This reflects public
sector efforts to invest in projects that deliver both mitigation and adaptation outcomes,
thereby maximizing the efficacy of limited public finance (Bhattacharya, A et al, 2022). The
majority of dual-benefit finance went to the AFOLU sector (57%), with many funded projects
yielding biodiversity co-benefits, for example through afforestation or reforestation.
Figure 16: Dual-benefit finance by source and instrument
I N STRUME NTS
Grants $69
Low-cost projectdebt $76

14%, $7 bn13%, $6.6

65%, $37.5

US E S
Adaptation $63

S E C TOR S
7%, $3.4 bn

Water & waste $67
Industry $9

Dual benefits $51
Buildings &infrastructure
$240

27
%,

$13
.5
57%
, $29
8%
, $3
.9

Project-levelmarket rate debt
$561

Project-level equity $54
Unknown $7

3.6
,$
%
7

Energysystems$515

Mitigation$1,150,$0Balance sheet
financing$498.7Transport$336

Equity $368

All figures in USD billion

31

AFOLU $43

1%

Debt $129

Others & crosssectoral $50

Global Landscape of Climate Finance 2023

4. INSTRUMENTS

Debt was the most common financial instrument used to channel climate finance globally(USD 766 billion, or 61%) with a smaller role played by equity (USD 422 billion or 33%) andgrants (USD 69 billion, or 5%). Of the total debt finance, USD 561 billion was provided atmarket rate, representing 53% of total tracked climate finance. Debt issued directly throughbalance sheets averaged USD 129 billion (10%). Concessional finance was 11% of total
climate finance. Low-cost project-level debt constituted only 6% of tracked climate financeand reached USD 76 billion in 2021/2022, 96% of which came from DFIs. Grants averaged
5% of total climate finance (USD 69 billion), compared to USD 30 billion in 2019/2020.
Mitigation flows were disbursed via a broader range of financial instruments than those foradaptation, given the more diverse actors involved, with differing risk-return profiles(Figure 17).
Figure 17: Climate finance by use and instrument
Adaptation

59%

Dual Benefits

21%

65%

Mitigation

13%

43%
0%

20%

14%

32%
40%

Project-level market rate debt
Balance sheet financing (equity portion)

4.1

17%

60%

Low-cost project debt

11%
80%

GrantsBalance sheet financing (debt portion)

100%

Project-level equity
Unknown

MITIGATION INSTRUMENTS

The majority of mitigation finance in 2021/2022 was raised through debt, accounting for
USD 676 billion (59%). USD 490 billion (73%) of this was provided as project-level marketrate debt. Debt issued for mitigation directly through balance sheets of companies totaled
USD 129 billion (19% of all mitigation debt) while a smaller share (12%, or USD 56 billion)
was provided as low-cost project debt.17
Three sectors – energy, buildings and infrastructure, and transport – received the majorityof market-rate debt for mitigation. In 2021/2022, the energy sector accounted for 41%
of total market-rate debt for mitigation (USD 252 billion), followed by buildings andinfrastructure (28%, or USD 172 billion) and transport (23%, or USD 144 billion). In theenergy sector, concessional finance (grant financing and low-cost project debt) was low as aproportion of total mitigation financing (4%), reflecting the maturity and commercializationof several renewable technologies. For the buildings and infrastructure, and transport sectors,
concessional finance accounted for 19% and 13% of each respective mitigation finance total.

17 debt extended at terms more preferable to those prevailing on the market
32Global Landscape of Climate Finance 2023

Overall, public actors provided the majority of total mitigation debt (60%, or USD 404
billion), while private actors were responsible for 81% of total mitigation equity financing(USD 342 billion). Public actors, mainly national and multilateral DFIs, reduced their share of
project-level market-rate debt for mitigation from 72% in 2019/2020 to 56% in 2021/2022,
reflecting the rising share of private finance for mitigation projects, particularly for renewableenergy, energy-efficient buildings, and sustainable transportation. Indeed, commercial
financial institutions and corporations together provided 43% of total market-rate debt for
mitigation projects.
Almost half of total market-rate debt financing for mitigation (47%, or USD 291 billion) wasfor projects in EMDEs. High inflation in 2021/2022 has increased the cost of capital, globally,
with implications for borrowing countries investing in mitigation projects (IMF, 2022c).
DFIs – whether national, bilateral, or multilateral – are therefore increasingly important given
their ability to reduce the cost of capital by tackling geographical-, technology-, and projectspecific risks. International DFIs can use blended finance structures to provide concessional
funding that supports project preparation, deploy risk-sharing, and provide data aggregationand standardization support during the operation phases of mitigation projects in developing
countries.18
Governments further provided USD 30 billion in grants for mitigation on annual average,
USD 26 billion of which was in the form of domestic subsidies for the transport sector.
The remaining USD 4 billion was channelled internationally to energy, transport and othercross-sectoral projects. Government subsidies are expected to increase following major
climate-related domestic policy initiatives such as the US Inflation Reduction Act (2022), theEuropean Green Deal (2019) and Japan’s Green Growth Strategy (2020), among others.

4.2 ADAPTATION INSTRUMENTS
Market-rate debt dominates adaptation finance, amounting to USD 37.5 billion or 60%of the total in 2021/2022. National DFIs, primarily in China, were the largest source ofmarket-rate debt for adaptation (63%), mainly funding domestic projects for water treatment
plants, and water supply and sanitation systems (92%). Multilateral DFIs were the secondlargest providers of market-rate debt for adaptation, mostly in the ‘other and cross-sectoral
projects’ category (60%), as well as AFOLU (30%), and water and wastewater (15%). Only
approximately 1%, or USD 500 million, of adaptation finance was in the form of (projectlevel) equity.
Concessional lending and grants combined constituted USD 24 billion, or 38% of tracked
adaptation finance. Concessional lending amounted to USD 13 billion, while grant financing
totaled USD 11 billion. The share of grants in total adaptation financing has slightly decreased
from 20% in 2019/2020 to 17% in 2021/2022. DFIs together provided 93% of total
concessional loans for adaptation, while governments were most prominent in grant financing
for adaptation (USD 5 billion, or 49% of total adaptation grants). Half (USD 5 billion) ofinternational adaptation grants went to Sub-Saharan Africa whereas all other regions each
received less than USD 1 billion in grants. There is further opportunity to strategically scaleconcessional finance to remove persistent investment barriers and unlock capital at scale,particularly in EMDEs and for emerging technologies.

18 Ibid.
33

Global Landscape of Climate Finance 2023

It is difficult to provide an accurate picture of the instruments used by private actors forfunding adaptation due to a lack of standardized, accessible information. Based on available
data, of the USD 1.5 billion tracked private adaptation finance in 2021/2022, 38% was debt
from commercial financial institutions, followed by grants from philanthropies (30%), withthe remainder funded as equity by corporations.

Box 5: Debt vulnerability, concessionality, and climate financeTo achieve both climate and development objectives, developing economies need investment of
USD 2.4 trillion each year until 2030. Of this total, USD 1 trillion should ideally be sourced externally(Songwe et al., 2022).
However, multiple global crises have exacerbated challenges to raising the required finance andimpede advancements toward climate and development goals. Studies suggest that exchange rate
depreciation and high primary fiscal deficits are affecting debt burdens to a comparable extent
as historical drivers like real GDP growth, and interest expenditure. In addition, G20 international
debt service suspension initiatives ended in 2021, which will put heavily indebted countries under
additional stress (Bretton Woods, 2022).
Our analysis shows that countries in debt distress received 17% of their international public climate
finance as loans – further raising their debt burdens. As of August 2023, 29 countries had a high riskof debt distress and ten were already in it (IMF, 2023b). These countries collectively received about
6% of international public climate finance in 2021, while 11% went to countries with low and moderate
debt distress. Highly distressed and in distress countries received 43% and 17% of their international
public climate finance in the form of loans, respectively. In comparison, those countries at low andmoderate risk of debt distress received 92% and 56% of their international public climate finance asloans, respectively (OECD, 2023).
Figure 18: Share of climate finance instrument by debt distress level (2021)
83%

In distress
High

17%
32%

56%

Moderate

44%
8%

Low

11%

36%

20%

65%

27%
100%

No data
0

20%
Grant

40%

Low-cost project debt

60%

80%

100%

Project-level market rate debt

Note: The figure above disaggregates the share of international public climate finance mobilized in 2021 (particularly
bilateral climate-related official development assistance) by finance instrument type (i.e., grants and loans) for
each debt distress risk category. Countries captured include low-income countries for which the World Bank’s Debt
Sustainability Analysis had debt distress data.

34

Global Landscape of Climate Finance 2023

5. GEOGRAPHY

5.1

DOMESTIC AND INTERNATIONAL FLOWSIn 2021/2022, a substantial majority (84%, or USD 1 trillion) of tracked climate finance
was raised and spent domestically. This continues the trend observed since 2011 whereby
the bulk of climate finance is derived from domestic sources. This emphasizes theimportance of cultivating a domestic enabling environment with greater levels of assurance
for investors. The Songwe and Stern report (2022)on scaling climate investment suggeststhat around half of climate finance required by emerging markets could be attracted fromlocal sources, by strengthening public financial policies, institutions and domestic capital
markets (Songwe et al., 2022).
The remaining USD 203 billion was channelled internationally to fund projects acrossborders, 74% of which was from public actors. International finance increased by 28%, from
USD 158 billion in 2019/2020, with EMDEs and LDCs together providing 14% of the total.
There is growing opportunity for EMDEs to finance internationally, complementing theirdomestic policy with external policies that ensure climate-friendly trade and investment links
with the rest of the world (World Bank, 2022).
Private investment outpaced public finance for climate projects funded domestically,
accounting for 54% of total domestic finance. Domestic private investment in battery EVs
constituted approximately a third of overall domestic private investment, primarily in East
Asia and the Pacific. A confluence of factors such as the right enabling conditions, regulatory
certainty, better standardization, skilled local financial intermediaries, and a pipeline ofbankable projects need to be enhanced to further scale up private climate investments.
Domestic climate finance was heavily concentrated in East Asia and the Pacific, particularly
in China, with the region accounting for 51% of total domestic flows. Western Europe
followed at 26% of total domestic flows, and the US and Canada at 15%. In East Asia andthe Pacific, national DFIs accounted for one-third of total domestic climate finance (USD 176
billion), whereas commercial finance institutions in Western Europe and the US and Canada
played a more prominent role in total domestic climate finance (37% and 35%, respectively).
Some of the most prominent policy initiatives influencing the uptick in domestic climate
finance include the Inflation Reduction Act in the US, the Green Deal Industrial Plan of the EU,
and the direct incentives across the EV value chain in China (IEA, 2023g).
Climate finance in Sub-Saharan Africa was dominated by international flows (92%). Several
other regions – Central Asia and Eastern Europe; Latin America and the Caribbean; Middle
East and North Africa; and South Asia – had a more balanced split between domestic andinternational climate finance flows (see Figure 19).

35

Global Landscape of Climate Finance 2023

Figure 19: Domestic and international climate finance by destination region
Domestic
84%

International
16%

USD billion

558

East Asia and Pacific325

Western Europe
175

US & Canada
Latin America & Caribbean

52

South Asia

45

Central Asia and Eastern Europe

34

Sub-Saharan Africa

30

Middle East and North Africa

19

Other Oceania

14

Transregional

13

5.2

LDCS AND EMDESUSD 30 billion, or just over 2% of global climate finance in 2021/2022, flowed to orwithin LDCs, while USD 179 billion, or 14% of the total, went to EMDEs excluding China.
Approximately 44% of total tracked climate finance flowed to or within developed countries.
The ten countries19 most affected by climate change between 2000 and 2019 received
only USD 23 billion, less than 2% of total climate finance. While not responsible for highemissions historically, EMDEs and LDCs are disproportionately vulnerable to the impacts ofclimate change and face substantial related funding challenges. The urgency of addressing
climate change is intertwined with the multifaceted development challenges that thesecountries face, while high existing debt levels further constrain= their ability to finance aclean and just transition (see Box 5) (Brookings, 2023).
Balance sheet financing (equity portion) and market-rate debt are the major instruments
used to channel climate finance to EMDEs, at 38% and 35% respectively, which contributeto these countries’ rising debt service burdens (Songwe et al., 2022). On the other hand,climate finance to LDCs is mainly channelled through grants (42%), followed by concessionalloans (28%).
Average project ticket sizes are lower than USD 100,000 in LDCs and USD 2.2 million
in EMDEs, which is substantially lower than the USD 6.3 million average in developed
countries. This reflects the difficulties faced by LDCs and EMDEs in securing finance forlarge-scale projects. Such challenges arise from these projects’ relatively high risk profiles,
both perceived and actual, as well as the complex funding application processes of major
MCFs and DFIs (WRI, 2021).

19 According to the Long-Term Climate Risk Index, the ten countries most affected from 2000 to 2019 were Puerto Rico, Myanmar, Haiti,
Philippines, Mozambique, The Bahamas, Bangladesh, Pakistan, Thailand, Nepal (2021).
36

Global Landscape of Climate Finance 2023

Figure 20: Destination region of public and private climate financeWestern Europe
US & Canada

Central Asia andEastern Europe

325
34

175

Middle East andNorth Africa

South Asia

19

45

Latin America
and Caribbean

East Asia and Pacific558

Sub-Saharan Africa

52

30

Other Oceania
14

PublicPrivateTransregional13

All figures are USD billion

5.3

SOUTH-SOUTH FLOWSIn 2021/2022, USD 18.1 billion, under 2% of global climate finance, was committed by andfor countries in the global south, 86% of which was provided by public actors. While suchflows cannot substitute for North-South climate finance, there is growing recognition of thepotential for South-South collaboration to tackle the climate crisis, given that these countries
often share similar financial, capacity-building, and technological needs and constraints.
Moreover, countries in the Global South may face similar climate risks and can therefore
learn from each other to build resilience and reduce vulnerabilities as their shared climate
threats escalate. As is the case with South-South collaboration in general, South-Southclimate finance may be built on common values, including solidarity, fairness, mutual benefit,
and sovereign ownership (IsDB, 2019). This is particularly important as the current NorthSouth development model, including climate projects therein, is generating debt distress inmany low- and middle-income countries (see Box 5). Moreover, South-South climate financecan be raised and distributed regionally, where there is better understanding of the particularmarket context. Data on climate finance flows within the Global South remain scarce,
however, especially given the lack of official data reporting and aggregation platforms forsuch flows.
The majority of South-South climate finance was committed by countries in Latin America
and the Caribbean (USD 6.1 billion, or 34%), followed by those in East Asia and the Pacific(USD 5.1 billion, or 28%). For East Asia and the Pacific, approximately two-thirds of SouthSouth flows remained in the region, while in Latin America and the Caribbean 86% stayed
within the region. Latin American countries are particularly well-positioned for South-South
partnerships on climate change, given that nine countries have part of the Amazon rainforest
37

Global Landscape of Climate Finance 2023

within their borders and could pursue cross-border land management and knowledge
exchange for mitigation and adaptation-related forestry projects (UNDP, 2021).
Figure 21: South-South Climate Finance
SOURCE OF FINANCE

Latin America
and Caribbean$6.1

East Asia and Pacific$5.1

Middle East andNorth Africa$3.2

Sub-Saharan Africa$2.2

All figures in USD billion

RECIPIENT OF FINANCE

Latin America
and Caribbean$6.0

Sub-Saharan Africa$3.7

East Asia and Pacific$3.5South Asia
$2.7
Middle East andNorth Africa $1.1

South Asia
$1.4

Central Asia $0.5

Central Asia $0.1

Transregional $0.5

Note: For the purposes of this analysis, South-South climate finance is considered international finance committed to and by

G77 countries (including China) for climate change mitigation and adaptation projects. This includes these countries’ weighted
contributions to multilateral financial institutions’ climate projects, for example, the World Bank.

38

Global Landscape of Climate Finance 2023

6. CONCLUSIONS AND RECOMMENDATIONSReaching an average of almost USD 1.3 trillion per annum in climate finance for the firsttime in 2021/2022 was a noteworthy milestone. However, this figure is modest when set in
the wider global context, accounting for only about 1% of global GDP. Climate finance must
increase by at least five-fold annually, as quickly as possible, to avoid the worst impacts ofclimate change.
Despite the significant climate investment gap and persistent barriers to filling it—
including high cost of capital, real and perceived investment risks, and competing politicalpriorities—2023 has demonstrated that action for increasing climate finance is building
momentum. There are emerging opportunities for a step change towards achieving ourshared climate and sustainable development goals, while also safeguarding nature.
To mobilize capital at the scale required, there is a need to increase both the quantity ofclimate finance and to improve its quality by focusing on using resources more efficiently
and effectively. To this end, CPI proposes the following four priorities to build on emerging
opportunities:
1. Transforming the financial system
2. Bridging climate and development needs
3. Mobilizing domestic capital
4. Acting to improve data

1. TRANSFORMING THE FINANCIAL SYSTEM
There are growing debates around the need for broad financial system reform that ensuresfinancial institutions are sustainable, fit-for-purpose to address multiple crises, and able
to finance global public goods. Action to harness this momentum for financial systemtransformation could include:
1a. Reforming international financial institutions. Such institutions are uniquely positioned toscale up climate finance. Reforms to their operating models – such that their rules, processes,
and incentives are aligned with climate and development needs – will need to be prioritizedto create near-term finance mobilization. MDBs and other multilateral DFIs can also focus on:

39•

Creating country-sector climate finance disbursement platforms that fund programs
based on countries’ developmental priorities and needs.

•

Prioritizing support for mobilizing domestic finance to strengthen and deepen local
capital markets. Through investment and technical assistance, they can engage andsupport capacity building with key national and sub-national capital providers.

•

Evolving their business models through standardization of their processes; balance
sheet optimization through new originate-to-distribute models; revising eligibility forconcessional finance; improving cross-country risk diversification and data-sharing; andensuring that their responses meet the needs of current crises (CPI, 2023e).

Global Landscape of Climate Finance 2023

1b. Leveraging concessional finance to expand private flows. Concessional finance is
crucial for managing risks and uncertainties related to emerging technologies and markets.
Nevertheless, market-rate debt was the most-used climate finance instrument globally
between 2011 and 2022. Grant and concessional finance, which consistently remained
below 7% of total flows in 2011 to 2022, needs to increase and become more strategicallycoordinated.
This can be achieved through expanding institutional capacity to work with concessional
finance and reforming the mandates of and metrics used by international financial
institutions to allow for more, and more innovative, use of concessional finance. This includes
using concessional finance more flexibly based on the type of risks faced, and reforming
eligibility requirements of concessional finance providers to ensure access for sectors andregions most in need.
1c. Strengthening private financial sector net zero integrity. Private sector and voluntary
coalitions, such as the Glasgow Financial Alliance for Net Zero and The Institutional
Investors Group on Climate Change, are helping to drive the adoption of long-term net zerocommitments and transition planning. They are supporting global-and country-level efforts
for policy changes designed to mobilize private capital to support the low-carbon transition.
However, these commitments are yet to clearly translate into meaningful changes in private
capital flows towards climate solutions and away from harmful activities. To accelerate thetransition, private investors need to:•

Set short-term targets for portfolio alignment and deliver transparent transition planning.

•

Align all new investments with Paris Agreement and net zero goals, ensuring attribution
is set at the activity or asset-level in the real economy, as well as at the individual entitylevel, instead of solely at the ownership and portfolio levels.

•

Assess the alignment of investment activity using country- and region-specifictemperature pathways, and as a function of their exposure to climate risks.

2. BRIDGING CLIMATE AND DEVELOPMENT NEEDS
Climate and development goals need be treated as mutually reinforcing and integrated
pathways. Achieving both entails adopting a systems approach to secure longer-termsustainability while using existing resources more effectively and efficiently. In this context,
the following areas warrant more attention:
2a. Harnessing synergies between development and climate action. The climate change
and development agendas are strongly interconnected. The pursuit of low-emission andclimate-resilient development provides multiple opportunities to deliver co-benefits fornature, public health, energy access, energy and water security, food systems reliability, andgender equality, among others. Investors should consciously evaluate projects to harness thesynergies between social, economic, and environmental goals, pricing co-benefits into projectappraisals to fully capture, and subsequently monitor, the efficacy of climate finance.
2b. Mainstreaming climate adaptation and resilience into financial systems. In addition
to targeted interventions to reduce the impacts of physical climate risk, such as improving
sustainable building codes and establishing early warning weather systems, it is necessary
to integrate and mainstream adaptation activities across all financial systems. For example,
40

Global Landscape of Climate Finance 2023

many private actors operate in sectors with significant climate risks, such as multinational
corporations in agricultural supply chains, real estate developers in coastal zones, andinfrastructure investors in water systems. However, public and private financial actors often
lack the strategic and technical capacity to conduct thorough climate risk assessments, pricerisks and to incorporate adaptive measures. Clear terminology, asset classes, and concrete
typologies, with stronger consensus on what comprises finance for adaptation and resilience,and finance for loss and damage, would help to bolster the business case for adaptation andresilience finance.
2c. Phasing out unabated fossil fuel through a just transition. The data continues to revealthat fossil fuels are deeply embedded in economies and communities. Pathways for ending
fossil fuel extraction and consumption must account for the impacts on all key stakeholders
at all levels from national to local – this includes workers and communities, public and private
employers, governments, and financial institutions. Properly structured and transparently
executed financing mechanisms can enable an early and equitable retirement of fossil fuelproduction, while also expanding renewable energy, especially in EMDEs (CPI, 2023f).

3. MOBILIZING DOMESTIC CAPITAL
While 84% of climate finance (USD 1 trillion) was raised and spent domestically, the results
vary significantly; emerging markets struggle to mobilize their private sector capital report(2022) suggests that around half of emerging markets’ climate finance needs could be met
by local sources if public financial policies, institutions, and markets are strengthened. To
facilitate this, governments and international organizations can focus on:
3a. Aligning NDCs with 1.5°C scenarios. Current NDCs are still significantly misalignedwith the Paris Agreement goals, and are predicted to lead to a global temperature rise well
above 2.5°C (UNEP, 2022). Providing capacity and support to update NDCs will enable amore detailed picture of needs by sector and country, helping increase ambition, provide themuch-needed policy signals, and more clearly define where investment is needed. Countries
which go further to translate comprehensive NDCs into sector-by-sector investment plans
will be better positioned to unlock their own domestic resources and attract competitive
international financial flows.
3b. Improving the local ecosystem for climate investment. In addition to clear and ambitious
policy frameworks, this can be achieved by supporting capacity building of domestic financial
institutions, funding needs assessments and creating readiness assessments roadmaps,
expanding project facilitation and technical support, and advancing monitoring, reporting,and verification systems. These activities will enhance collaboration between local public
development banks and domestic private capital.

4. ACTING TO IMPROVE DATA
High-quality climate finance data is crucial for understanding investment gaps, building
effective solutions, informing investors, and measuring collective progress. Despiteadvancing data efforts for more than a decade, pervasive data gaps across actors and sectors
still exist.

41

Global Landscape of Climate Finance 2023

4a. Simplifying and standardizing taxonomies and reporting. The abundance of frameworks
related to climate finance creates more confusion than clarity. There are at least 30
taxonomies and 200 frameworks, standards, and guidelines on sustainability reporting andclimate-related disclosures across 40 countries.
•

Countries need to work on harmonizing and enhancing the interoperability of these tools
to reduce reporting burdens and inconsistency of reporting for climate finance actors.
The efforts of the G7 and G20 are key to building cohesion on reporting and disclosure
between the major economies; while the efforts of other states help demonstrate what is
possible.

•

Existing initiatives such as those of the International Sustainability Standards Board,
the International Platform on Sustainable Finance, the Net Zero Public Data Utility, andNetwork for Greening the Financial System Data Directory can be collectively leveraged
to help investors standardize the climate finance reporting process. This is crucial to makedecision-useful data available and to foster understanding of how and where to prioritize
investment going forward.

4b. Making climate finance data widely available and accessible. Governments need to build
consensus on a new, standardized, and centralized approach for tracking climate financedata. Existing efforts such as the G20 Data Gaps Initiative can be leveraged for this.
DFIs can provide greater transparency and leadership by making climate finance data andmethodologies accessible for activities including assessment of climate risks and impact
outcomes. For example, making the credit default data from MDB and DFI investments
provided by the Global Emerging Markets (GEMS) risk database consortium publicly
available would build investor understanding and strengthen the risk assessment of MDB
assets, incentivizing thereby private sector financing.
Private data providers can consider where opportunities lie to harmonize and collaborate;
what data to release publicly and what needs to be retained behind paywalls. Civil society
organizations can go further to build partnerships, share analysis and data, to improve
scrutiny across different climate finance sectors. Improvements in data collation methods
and in technology will continue to create opportunities to enhance coverage.

FUTURE DEVELOPMENTS
The two-year Global Stocktake process for implementation of the Paris Agreement willconclude at COP28 in December 2023. Its findings will inform the path ahead to limit global
temperature rise to 1.5°C.
The growing political momentum to reform our global financial architecture, with a focus oninternational finance institutions, may see them strengthen their commitments to eradicate
poverty and reduce inequality, while also ensuring finance for and protection of global public
goods.
Parties to the UNFCCC, and all financial actors globally, urgently need to embrace these calls
for action and reach a consensus on respective responsibilities and means of implementation– including climate finance – to create practical action at the scale and speed that is required.

42

Global Landscape of Climate Finance 2023

7.

ANNEX I: DATA TABLES

Table A.1: Breakdown of global climate finance by public and private actors (USD bn)
Actors

2017

2018

2019

2020

2021

2022

Private

268

280

303

333

565

685

Commercial FIs

46

50

116

128

223

247

Corporations

165

147

118

132

182

203

Funds

6

10

8

3

5

7

Households/individuals

41

65

51

59

147

222

Institutional investors

8

8

3

5

7

5

Unknown

2

7

7

0.3

1

Public

340

261

337

332

549

730

Bilateral DFIs

18

26

23

25

27

38

Export credit agencies

2

3

1

1

2

2

Governments

30

35

36

31

93

106

Multilateral climate funds

3

3

4

4

4

2

Multilateral DFIs

56

58

62

75

82

104

National DFIs

174

94

160

130

209

268

Public funds

2

2

2

2

0.3

0.1

SOEs

26

23

12

13

88

133

State-owned FIs

30

18

38

52

44

77

Total

608

540

639

664

1114

1415

Table A.2: Breakdown of global climate finance for adaptation & mitigation split by public and private
sources (USD bn)
Use

2019

2020

2021

2022

Private

303

333

565

685

Adaptation

0.5

2

1

2

Mitigation

301

328

554

674*

Dual benefits

1

3

Unknown

9
0.2

Public

338

332

549

730

Adaptation

42

55

54

70

Mitigation

282

261

453

619

Dual benefits

14

16

Unknown
Total

43

9
0.4

640

665

42

41

0.2

0.3

1114

1415

Global Landscape of Climate Finance 2023

Table A.3: Breakdown of global climate finance by instruments (USD bn)
Instrument

2017

2018

2019

2020

2021

2022

Balance sheet financing (debt portion)

95

93

104

119

102

156

Balance sheet financing (equity portion)

114

131

142

170

306

431

Grants

25

30

31

29

57

80

Low-cost project debt

51

79

55

66

78

74

Project-level equity

52

38

56

46

50

58

Project-level market-rate debt

271

168

246

225

513

609

6

10

8

6

608

539

640

665

1114

1415

Use/Sector

2017

2018

Adaptation

23

34

Water & Wastewater Management

8

11

Agriculture, Forestry, Other land uses and Fisheries

7

7Disaster Risk Management

48

Infrastructure, Energy, & Other Built Environment

1

3

Other / Cross-Sectoral

3

5

Mitigation

575

493

Unknown
Total

Table A.4: Breakdown of global climate finance by use and sector (USD bn)

Industry, Manufacturing, & Trade
Transport
Information and Communications Technology
Renewable Energy Generation

350

322

Sustainable/Low-Carbon Transport

155

115

Energy Efficiency

36

32

Other / Cross-Sectoral

14

9Agriculture, Forestry, Other land uses and Fisheries

139Non-energy GHG reductions

1

Waste & Wastewater Management

2

Policy, National Budget Support & Capacity Building

1

Transmission & Distribution Systems

3

3

Use/Sector

2019

2020

2021

2022

Adaptation

42

56

55

72

Agriculture, Forestry, Other land uses and Fisheries

4

6

7

7

Buildings & Infrastructure

1

1

0.2

0.2

Energy Systems

1

1

1

0.1

Industry

0.4

0.1

Information and Communications Technology

0.1

0.2

Others & Cross-sectoral

20

21

21

25

Transport

2

7

2

1

0.1

0.1

Unknown

44

3

Water & Wastewater

14

20

23

39

Mitigation

582

589

1008

1293

Global Landscape of Climate Finance 2023

Use/Sector
Agriculture, Forestry, Other land uses and Fisheries

2019
7

2020
9

2021

2022

6

7

Buildings & Infrastructure

33

57

224

255

Energy Systems

316

345

462

559

Industry

2

5

2

14

1

1

15

16

17

Information and Communications Technology
Others & Cross-sectoral

60

Transport

163

Unknown

153

260

407

1

2

2

Waste

1

2

21

20

Water & Wastewater

1

1

13

10

Dual Benefits

16

19

51

50

Agriculture, Forestry, Other land uses and Fisheries

2

2

31

27

0.1

0.1

2

6

Industry

0.2

0.1

Information and Communications Technology

0.02

0.02

Buildings & Infrastructure
Energy Systems

2

1

Others & Cross-sectoral

9

7

9

11

Transport

1

1

0.1

1

6

5

2

1

0.4

2

3

Unknown
Waste
Water & Wastewater

1

3

Unknown

1

0.5

Transport

0.5

0.2

Unknown

0.1

0.3

1114

1415

Total

640

665

Table A.5: Breakdown of energy system sector climate finance by sub-sector (USD bn)
Energy System Sub-sector

2019

2020

2021

2022

Fuel Production

1

1

5

2

Other/Unspecified

1

1

1

0.4

Policy & National Budget Support & Capacity Building

1

3

4

2

Power & Heat Generation

314

333

446

544

Power & Heat Transmission & Distribution

8

9

9

17

Total

324

347

464

565

Table A.6: Breakdown of transport sector climate finance by sub-sector (USD bn)
Transport Sub-sector

2019

2020

2021

2022

1

0.2

0.05

Other/Unspecified

92

64

6

17

Policy & National Budget Support & Capacity Building

2

2

2

3

Private Road Transport

62

84

184

295

Rail & Public Transport

17

11

68

88

Transport-oriented Urban Development and Infrastructure

1

Aviation

0.0004

Waterway
Total

45

174

163

2

6

263

410

Global Landscape of Climate Finance 2023

Table A.7: Breakdown of buildings & infrastructure sector climate finance by sub-sector (USD bn)
Buildings & Infrastructure Sub-sector

2019

2020

Appliances & Lighting

2021

2022

0.04

0.05

Building & Infrastructure Construction Work

32

44

90

99

HVAC & Water Heaters

14

14

13

15

Other/Unspecified

122

141

Policy & National Budget Support & Capacity Building

0.1

0.1

225

255

Total

46

58

Table A.8: International & Domestic climate finance flows by OECD/Non-OECD destination (USD bn)
OECD/Non-OECD destination

2019

2020

2021

2022

Domestic

495

494

921

1203

Non-OECD

297

282

457

675

OECD

197

211

463

528

International

146

171

194

212

From Non-OECD to OECD

3

4

6

5

From Non-OECD to Other Non-OECD

16

28

17

23

From OECD to Non-OECD

72

81

83

102

From OECD to Other OECD

44

51

81

73

From Transregional to Non-OECD

11

7

7

8

Table A.9: International & Domestic climate finance flows by Developed/EMDEs/LDCs destination (USDbn)

46

Developed/EMDEs/LDCs destination

2021

2022

Domestic

921

1203

Developed

441

505

EMDEs

459

680

LDCs

3

2

Unknown

17

15

International

194

212

From Developed to Other Developed

80

73

From Developed to EMDEs

64

77

From Developed to LDCs

20

24

From EMDEs to Developed

3

3

From EMDEs to Other EMDEs

18

22

From EMDEs to LDCs

3

5

From LDCs to EMDEs

1

1

From LDCs to Other LDCs

0.2

0.5

Unknown

5

8

Global Landscape of Climate Finance 2023

Table A.10: Breakdown of global climate finance by region of destination (USD n)

47

Region

2017

2018

2019

2020

2021

2022

Central Asia and Eastern Europe

19

24

34

26

32

36

East Asia and Pacific

309

191

279

284

455

660

Latin America and the Caribbean

37

37

37

33

45

59

Middle East and North Africa

15

14

16

17

18

20

Other Oceania

12

10

10

8

12

15

South Asia

30

31

30

33

40

50

Sub-Saharan Africa

15

23

21

22

26

34

Transregional

10

15

13

17

14

12

US and Canada

68

93

90

74

160

190

Western Europe

96

101

110

150

312

338

Total

608

539

640

665

1114

1415

Global Landscape of Climate Finance 2023

8. ANNEX II: DOMESTIC BUDGET TAGGING
Table A.11: Various national tracking initiatives differing in scope, timeline, and approach 1
Country

Biennial
UpdateReportClimate Budget
Tagging

Armenia

Climate Public
Expenditure andInstitutional Review

Climate FinanceLandscape2019

Austria

2019-2020

Bangladesh

2019-2020

Domestic Climate Finance
USD mn / % of GDP
73
922f

2010-2014

228

Cambodia

2019-2020

568

Columbia

2019-2020

711

Cabo VerdeIn planning

Chile

2019-2020

365

Cote d’Ivoire

2017*

Eswatini

In design

2021

Ethiopia

In design

2014aFranceGhana

2019-2020

Honduras

2019-2020

1,700

2011-2021

23,812 / 2%

In action

357 / 0.31%

2019-2020

2,466

India

2019-2020

Ireland2019-2020

8,184
2,061

Italy

1,224eIndonesia

2019

Kenya
Lesotho280.43 / 0.01%

In action

5,775
2016

2018

2019-2020

37

Malawi2019

Mauritania

2019-2020

Mauritius

2021

2,400
12.5
0.3

Pilot

MexicoNamibia

In design

Nepal

2019-2020

Niger

2016d/2018d55 / 0.03%

2019-2020

4,305
4,122

In design

Nicaragua

2019-2020

80

Nigeria

Pilot

27.41

Rwanda2019-2020

Philippines
South Africa

2019-2020

37,116

2019-2020

FijiSouth Africa

9.59
203
2019

2019-2020

180

Pilot

Timor Leste

2020, 2023 ongoing
2018-2021

203
191

Sweden2020

362

EuropeanCommission

2019

39,326

Notes: 1- period for which tracking was conducted a-partial; b- pending; c- unsuccessful due to consultant issues in
2018/2019; d- environment expenditure review; *The study was for the AFOLU sector, e -Air and climate share of
Ecorendiconto only, f-national Ministry of finance analysis Source: Authors’ compilation on a best effort basis; World Bank
(2020). CABRI (2021), UNDP (2019), **Onyimadu & Uche (2021), Eswatini, France, EU, UNFCCC (2022), various CPI reports
48

Global Landscape of Climate Finance 2023

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Global Landscape of Climate Finance 2023

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