On May 1, 2024, the World Bank Group delved into the complexities of CCDR investment estimates and the pivotal role the private sector is expected to play in advancing climate finance goals.
Discussing the findings from the completion of CCDRs covering 42 economies, experts highlighted the continued trend of larger climate-development financing needs in countries that have contributed least to global warming. Stéphane Hallegatte, David Groves, Camilla Knudsen, and Ammara Shariq emphasized the importance of international concessional finance for low and middle-income countries, where investment needs can range from 1.1% to 8.0% of GDP depending on the country's income classification.
In comparing CCDR estimates with global assessments, the experts noted that while there are various global estimates available, direct comparisons are challenging due to differences in scopes, baselines, and mitigation and adaptation scenarios. These variations underscore the unique challenges posed by adaptation and resilience, with investment needs influenced by factors such as risk aversion, political considerations, and the retrofitting of existing assets.
Regarding the role of the private sector in bridging the climate financing gap, experts highlighted the necessity of mobilizing private capital, especially in low and middle-income countries. The second IHLEG report estimated that at least $1 trillion of private capital would be required by 2030 to meet climate and development goals. Despite the potential for increased private sector participation, assessing the exact share of investment that could be covered by private funds remains challenging due to data limitations and the need for appropriate policies and financial instruments.
Nevertheless, CCDR estimates suggest that with the right policy reforms, the private sector could substantially contribute to financing needs across various sectors. This potential for increased private sector involvement presents an opportunity to address countries' development and climate investment requirements, ultimately allowing for the allocation of public resources to sectors that still require significant support.