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As measured in the Global Landscape of Climate Finance 2021 report, total climate finance has steadily increased over the last decade, reaching USD 632 billion in 2019/2020.

However, this is nowhere near enough finance to limit global warming to 1.5 °C.

Climate Policy Initiative has analyzed and aggregated scenarios that explore climate finance needs for energy systems, buildings, industry, transport, and other mitigation and adaptation solutions.

Based on these estimates, climate finance must increase by at least 590% – to USD 4.35 trillion annually by 2030 – to meet our climate objectives.

This diagram provides a snapshot of climate finance flows through the lifecycle. Starting from the left, it highlights the original source of financing – colored by public and private – through to how that finance is used on the right.

The thickness of the lines correlates to the amount of money flowing. CPI presents annual averages to smooth out fluctuations in the data, so the numbers here denote an annual average over 2019 and 2020. All figures are in USD billion.

So, who is behind the USD 632 billion? The public sector accounted for 51% (USD 321 billion) of CPI’s 2019/2020 tracked climate finance. Development Finance Institutions (DFIs) continued to provide the majority of public finance at almost 70%.

Private actors accounted for the remaining USD 310 billion, which represents a 13% increase from the 2017/2018 average, with commercial financial institutions and corporations together contributing almost 80% of the total.

The Landscape categorizes transactions by the instrument used to structure the provision of climate finance, covering grants, debt, and equity.

Grants accounted for 6% (USD 36 billion) of 2019/2020 climate finance, with governments as the main source of grant funding.

Similar to previous years, most climate finance in 2019 and 2020 was raised as debt, and market-rate debt accounted for 88% of that total. Almost 100% of concessional, low-cost project debt was provided by public institutions.

Equity investments accounted for 33% (USD 206 billion) of total climate finance, a step up from USD 167 billion in 2017/2018.

In terms of uses, mitigation finance continued to dominate at over 90% of total climate finance. However, adaptation finance increased by almost 53% in the last two years compared to the previous two. Adaptation’s total share of climate finance increased to 7%, while projects with dual uses accounted for 2%.

Nearly all adaptation finance tracked in the Landscape was funded by public actors (98%), and primarily flowed towards water & wastewater and other cross-sectoral projects.

Dual use finance primarily flowed to other & cross sectoral projects, and 86% of the total was committed by public actors.

The majority of mitigation finance went towards energy systems, which includes investments in renewable fuel production, renewable power and heat generation assets, transmission and distribution networks, as well as support to policy and national budget and capacity building. Private actors provided the majority of mitigation finance (54%), particularly in terms of the share of renewable energy finance, indicating the maturity of this market.

The Landscape tracks climate finance along six, broad-sector classifications: Water & wastewater; infrastructure & industry; other & cross-sectoral; land use; transport; and energy systems.

Water & wastewater includes projects concerned with water supply and sanitation, and wastewater treatment.

Infrastructure & industry includes, among others, construction work, heating, ventilation and air conditioning, and industrial, extraction and manufacturing processes.

Other & cross-sectoral covers miscellaneous projects including policy and national budget support and capacity building, biodiversity, land and marine conservation, and disaster-risk management.

Land use includes projects concerned with agriculture, forestry, and fisheries. Key activities include sustainable crops, afforestation & reforestation, and sustainable fish production.

Transport includes projects concerned with private road transport (e.g. EV chargers), rail & public transport, waterways, aviation, and transport-oriented infrastructure.

Energy systems covers power & heat generation, transmission & distribution, and fuel production. Key activities include renewable energy production, energy efficiency schemes, and infrastructure for resilience.