Are country platforms and blended finance helping to close the financing gap for sustainable growth? At a panel session at Devex’s Climate + Finance event held in London last month, we asked three experts to explore the efficacy and challenges of the two modalities.
John Murton, senior sustainability adviser at Standard Chartered Bank; Alice Carr, executive director for public policy at Glasgow Financial Alliance for Net Zero; and Chris Taylor, U.K. Just Energy Transition Partnerships envoy at the Foreign, Commonwealth & Development Office were asked to share their insights on successful models, systemic hurdles, and future strategies to close the climate financing gap for sustainable growth.
“Country platforms is an idea that's been around for a few years, that you will better solve some of the sustainable development challenges in a country by bringing all the partners together ... to clarify priorities and set out a plan to coordinate activities to achieve those goals,” said Murton, highlighting the Just Energy Transition Partnership, or JETP, with South Africa that was unveiled at the 26th United Nations Climate Change Conference, or COP 26, where donors pledged $8.5 billion in concessional finance to support South Africa’s commitment to net zero by 2050. This initiative has driven regulatory reforms, said Murton, including the unbundling of South African energy public utility Eskom and new rules for embedded energy generation, unlocking significant private sector investment.
The session provided a nuanced view of the potential and limitations of country platforms and blended finance, namely the strategic use of development finance and philanthropic funds to mobilize private capital flows to emerging and frontier markets. While these models are instrumental in driving sustainable development, their success hinges on effective coordination, innovative financing strategies, and supportive policy environments. A number of insights shared by the panelists offer a road map for leveraging these models to achieve global sustainability goals.
Innovative financing models
GFANZ’s Carr elaborated on the innovative aspects of the Indonesian JETP to help overcome challenges such as long-term power purchase agreements for coal and complex geography requiring substantial grid investment.
“Seven global financial institutions committed to mobilizing private finance that at least matched the public sector commitments,” said Carr, adding that the country platforms have facilitated critical dialogues on project development and financing, and prioritizing the use of scarce public finance to unlock change.
FCDO’s Taylor emphasized the importance of systemic coordination. “We need this clarity on the goal, a clear plan, an investable plan, the policies in place, the supportive policy environment, and the finance ... you kind of need them all to move together and to be consistent,” he said, highlighting the need for radical coordination across various levels of government and donors to support comprehensive transformations in economies like Vietnam.
Mind the gap
Addressing the challenge of closing the financing gap, Standard Chartered’s Murton spoke of the need for private sector investment “in areas that perhaps in some markets have been regulated ... freeing up the market for the private sector to make those investments.” He provided an example from the telecom sector in Africa, where private investment revolutionized access to telephony. By fostering similar conditions in the power sector, said Murton, substantial private investments can drive sustainable growth.
GFANZ’s Carr added that country platforms allow for better prioritization of finance. “We’re trying to pivot some of the finance to solve new problems … We are rejigging who finances what. And there are cases where ... things have been financed with public money that, actually, with a small change to policy, could become bankable, and then you can free up that public money to do something else,” she said.
FCDO’s Taylor pointed out the complexity of the climate finance landscape, making it challenging for countries to navigate. “Supporting countries to come up with plans is key ... There's more we can do to try and gear up instruments or evolve that landscape to make it easier to come in and support those country-led plans,” he said.
A path forward
The panelists concurred that while country platforms and blended finance models are not a panacea, they offer valuable frameworks for coordinating efforts and mobilizing resources for sustainable development.
Giving their final thoughts to the Devex audience in London, Standard Chartered’s Murton underscored the potential of private sector investment to bridge the financing gap; GFANZ’s Carr highlighted the need for systemic solutions to optimize the use of public and private finance; and FCDO’s Taylor called for enhanced coordination and simplification of the climate finance landscape to support transformative change in emerging economies.
Click on the video to watch the full session.
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