Project Preparation and Business Development Facilities

Greater support for early project preparation, from a variety of sources, is critical to supporting low-carbon ideas and attracting greater volumes of private finance.

2030 Goals

Adjust the role of MDB and DFI financing in early project prep, moving from mezzanine investors to early, first loss tranches.
Adapt PDBs mandates to scale up technical assistance and readiness activities to address the mismatch in local capacity development and create an enabling environment that better facilitates the origination of bankable projects.
Address mismatch between credit rating preservation and risk appetite / perception to drive investments into early project preparation.

Status
Moderate progress

There is general consensus for the need to enhance local capacity development, but only a small percentage of private actors are making progress.
High cost of capital limits investment in early stages of project development. Credit ratings continue to impact the cost of capital; EMDE PDBs therefore remain constrained in balancing high credit profiles with scaling climate finance.
Better enabling environments for investments are also critical, including creating support for EMDE corporates, subnational authorities, and sovereign projects to attract financing. While nascent, climate funds and development banks are increasingly focusing on funding and de-risking early-stage climate projects, particularly in emerging markets. These include GCF’s PPF supporting projects in LDCs and SIDs, the World Bank's support on preparing feasible projects in climate sensitive sectors, and EBRDs Green Cities program. High cost of capital limits investment in early stages of project development. Credit ratings continue to impact the cost of capital; EMDE PDBs therefore remain constrained in balancing high credit profiles with scaling climate finance.
Better enabling environments for investments are also critical, including creating support for EMDE corporates and sovereign projects to attract financing. While nascent, climate funds and development banks are increasingly focusing on funding and de-risking early-stage climate projects, particularly in emerging markets. These include GCF’s PPF supporting projects in LDCs and SIDs, World Bank's support on preparing feasible projects in climate sensitive sectors.

Leading Actors

Private FIs

BlackRock (the Climate Finance Partnership), HSBC, Mitsubishi UFJ Financial Group (MUFG)

Public FIs

KfW (Germany), Dutch Entrepreneurial Development bank (FMO), Proparco

Multilateral Development Banks

Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Inter-American Development Bank (IDB), World Bank

International Organizations

Green Climate Fund, United Nations Capital Development Fund (UNCDF), UN Habitat

Alliances

Cities Climate Finance Leadership Alliance (CCFLA), FiCS

Supportive Stakeholders

Global Infrastructure Facility

Resources

The below resources all pertain to the topic of Project Preparation and Business Development Facilities.