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T20 Indonesia 2022 Policy Brief: International Financing Framework To Bridge The Climate Financing Gap Between Developed And Developing Countries

Author

Listed:
  • Alvin Ulido Lumbanraja

    (Northwestern University – Kellogg School of Management)

  • Teuku Riefky

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

Abstract

To tackle climate change, countries need to channel more capital to green projects. Additionally, typical green projects tend to have a lower return and/or higher fixed costs relative to brown investment projects. This, along with the higher cost of capital and limited fiscal spaces, means that the state budget of developing countries will not be enough to fulfil the financing needs of climate-related projects. Furthermore, shallow domestic financial markets also limit the available domestic funds for green projects in developing countries. This policy brief proposes an actionable framework to promote the flow of private capital from developed countries into green projects in developing countries.

Suggested Citation

  • Alvin Ulido Lumbanraja & Teuku Riefky, 2022. "T20 Indonesia 2022 Policy Brief: International Financing Framework To Bridge The Climate Financing Gap Between Developed And Developing Countries," T20 Indonesia 2022 Policy Brief 202203, LPEM T20 Indonesia, revised Mar 2022.
    • Handle: RePEc:lpe:t20ina:202203
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    File URL: https://www.t20indonesia.org/wp-content/uploads/2022/10/TF7_International-Financing-Framework-to-Bridge-Climate-Financing-Gap-between-Developed-and-Developing-Countries.pdf
    File Function: First version, 2022
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    Keywords

    international finance — t20 — financing gap — private capital — developing countries — developed countries;

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