This paper explores ways of financing the transition from brown, carbon-intensive models of economic development to low-carbon, green economies.
Countries are beginning to better understand their progress in transitioning from brown to green models of economic development. However, there is no single set of indicators to allow an assessment of the financing of this transition. Drawing on several stakeholder interviews and an expert workshop, this paper maps the landscape of financing the transition and proposes a concrete set of indicators to measure country progress.
Part A recommends that in order to mobilise green finance and to shift away from brown finance, a range of public and private actors have to take action. These actors are those whose day-to-day roles, responsibilities and priorities are not always focused on the implications for and from climate change, but who nevertheless have a key role in financing the transition. Governments, central banks and financial authorities have at their disposal tools from three categories: 1) financial policies and regulations; 2) fiscal policy levers; and 3) public finance. A transition requires applying a combination of tools in each category. Together, these sets of tools support increased private green finance.
Part B proposes nine indicators across these three categories. These indicators can be applied to G20 countries to provide a broad summary of progress in financing the transition.