Transition Finance

To reach the climate goals set in the Paris Agreement, economy-wide decarbonization is essential. This would require deploying and scaling up new and innovative technologies, often called transition technologies. However, financing for these technologies is currently limited. The chapter looks at financing transition technologies from the perspective of financial institutions. It attempts to think through the concept of transition finance and discusses the current definition and emerging regulations in the field. Building on the definitions, it explores the current challenges of financing these technologies, including- lack of enabling environment, high cost of capital, and lack of innovative financial instruments. Finally, the chapter presents a set of solutions for channeling capital to transition technologies.

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