Bending the Climate Change Curve by Blending Finance: What Is The Real Potential ValueAdded of Guarantees?

Stijn Claessens and Sony Kapoor

No 2605, FDL Policy Notes from CEPREMAP

Abstract: Guarantees are often presented as a powerful tool to mobilise climate finance in developing countries, yet their impact is frequently overstated. This paper argues that guarantees can play a much larger catalytic role, but only when they address specific market failures and are embedded within broader financing strategies. Real additionality requires simpler and more coordinated guarantee structures, stronger project pipelines, greater use of local-currency solutions, and closer integration with concessional finance and country-led investment platforms.

Keywords: emerging markets; developing countries; external financing; climate change; guarantees; market failures; externalities; development finance; multilateral development banks. (search for similar items in EconPapers)
Pages: 50 pages
Date: 2026-03
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Persistent link: https://EconPapers.repec.org/RePEc:cpm:notfdl:2605

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