Green financial instruments are designed to either increase an eligible project’s revenue generation potential, or enhance its capital structure by providing access to efficient sources of debt and equity.
Suitable project ideas can be developed to qualify for carbon finance, which allow the creation of tradable emissions certificates issued by the United Nations. We firmly believe in the oversight provided by the United Nations Framework Convention on Climate Change and, while robust alternative approaches to certifying mitigation outcomes exist, we believe in a future where emission reduction and measurement standards are established via a multilateral process such as the UNFCCC. We also believe such markets offer the best long-term value to our clients. In specific situations and countries, it may also be possible to increase revenues through targeted tariff support programs available. These opportunities can sometimes be implemented together with a carbon finance solution.
Enhancements to Capital Structure
Climate finance makes available instruments to assist with project financing, such as development grants, loans or debt facilities, interest rate subsidies or concessional equity. Different opportunities exist depending on the project type, scale and location, as well as the co-benefits, often referred to as sustainable development benefits, deliverable.
There are instances where specific risks might otherwise present a barrier to the viability of a project or investment. In such cases, where sustainable development and environmental co-benefits are significant, the project may qualify for risk-sharing instruments, including insurance, guarantees and price floor support structures.