Green finance: An empirical analysis of the Green Climate Fund portfolio structure

While multilateral climate negotiations are at a deadlock, climate finance faces a crossroads as the lending community needs to develop renewed strategies on the ‘Future of Environment Funds’. Most policy and scholarly attention have been directed on how to improve the largest multilateral climate fund – the Green Climate Fund (GCF) – own funding, compared to surprisingly few studies on the allocation strategies of the GCF funding. A conventional view so far has been of a Fund devoted mostly to finance non-bankable projects with public funding. Yet, improving the ability of the GCF to channelize both public and private sources of finance, and to contribute to de-risking more traditional sources of finance, would scale up climate finance and at the same time also improve the GCF own attractiveness for contributors. In this paper we empirically analyse the GCF portfolio structure and strategy and suggest the GCF can skillfully fund non-bankable parts of larger “nearly bankable projects”. This supports a view of the GCF that departs from the conventional one. •Non-bankabl projects, grant funded, have a low leverage, but a high potential for mobilising other concessional sources of finance such as international guarantees and international in-kind funds.•Nearly-bankable projects, which are either loan funded, have a high leverage on international loans and national public equity; or to a minor extent on equity funded, in which case they are likely to mobilise national public loans and national private equity.