Most of the policy measures introduced in 2020 and 2021 as a response to the socioeconomic crises induced by the COVID-19 pandemic focused on addressing health concerns and a speedy economic recovery. Considerably less attention has been paid to combatting climate change and preventing environmental degradation, for which many governments in the Asia Pacific region lack the needed financial resources. There are, however, various options to mobilize green and climate finance to address climate change, recover from the COVID-19 pandemic, and achieve a wider range of environmental and sustainable development objectives. Enhancing the availability of green and climate financing and developing clear, coherent and supportive policies are crucial for all economies in the region to recover swiftly and resume growth in a resilient and sustainable manner.
This report examines critical policy gaps and barriers to climate finance, such as constrained fiscal space, weak institutional capacities to implement Nationally Determined Contributions (NDCs), policy and regulatory gaps, and lack of investment-ready projects. To enable green growth and sustainable development in the region, these barriers need to be overcome in line with each country’s long-term strategic development vision and broad legal framework, as well as international commitments to reduce greenhouse gas emissions through initiatives such as the NDCs.
The report also discusses a range of financial instruments and mechanisms, including project finance, funds and facilities, thematic bonds, carbon pricing, and debt for climate swaps, and highlights their utility, scalability, governance and related monitoring issues. Implementing these instruments and mechanisms can help overcome existing challenges to climate change finance and unlock the growing private sector demand for green and climate investment opportunities.
This report is a joint publication developed by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the Global Green Growth Institute (GGGI). ESCAP and GGGI are working together to support the Asia-Pacific region in reaching its climate targets through research, technical assistance, and support for innovative financing solutions targeted at climate action. Together we believe that NDCs need to be drastically enhanced to achieve carbon neutrality by 2050 – however, these commitments need to be accommodated by policy action and financing to support investment in a green future.