OECD blended finance guidance for clean energy
Meeting the Paris Agreement goals will need a rapid acceleration of finance towards
clean energy investments in emerging and developing economies. Blended finance is
an important tool that can help mobilise commercial investment towards clean energy,
whilst preserving scarce public resources for wider climate and development objectives.
A systematic approach to the deployment of blended finance – that tailors instruments
to the nature of underlying barriers to commercial investment, minimises concessionality,
has a clear exit strategy, and is co-ordinated within a wider ecosystem of support
and enabling measures – can help maximise its development impact and stimulate private
sector development.
This paper explores specific features of clean energy projects, and the wider transition,
to draw lessons for donors, policymakers in beneficiary governments, and financial
institutions on whether and how best to deploy blended finance in the sector. It revisits
the OECD DAC's Blended Finance Principles, specifically Principle 2: designing blended
finance to increase the mobilisation of commercial finance, and explores their applicability
to clean energy. It also explores sector-specific considerations for the deployment
of clean energy, setting out the considerations development practitioners can make
to inform better decision-making on, and maximise the development impact of, blended
finance interventions.
Published on August 30, 2022
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