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Concessional Resources to Accelerate Climate Action

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The next decade is critical to see whether countries can move fast enough to implement plans to adapt to this increasingly complex challenge: the climate and biodiversity crisis. 

The LAC region benefits from accessing donor resources to address climate change’s challenges in their economies, finding ways to increase ambition, and searching for solutions to tackle climate change. Through concessional climate finance, Multilateral Development Banks like the IDB provide financing to developing countries through grants and concessional lending.

In the third episode of IT’S POSSIBLE, we discussed the topic of concessional climate finance and featured the NDC Pipeline Accelerator Multi-Donor Trust Fund (ACL).

Hosted by Isabelle Braly-Cartillier, Operations Lead Specialist, IDB, the episode focused on how concessional climate finance is accelerating climate-resilient and sustainable investments with three expert guests: Gloria Visconti, Sector Lead Specialist, IDB, Leena Klossner, Deputy Managing Director, NDF, and Marcelino Madrigal, Energy Division Chief, IDB.

What is Concessional Climate Finance?

Concessional climate finance is the pool of financial resources with a cost below market rates. It can be provided, among others, through reimbursable resources like loans or, non-reimbursable resources like grants, or a mix of both. Some examples of these resources that can cover the incremental cost of innovative investments that address climate change for climate mitigation and adaptation are provided by the Green Climate Fund, the Climate Investment Funds, and the NDC Pipeline Accelerator Multi-Donor Trust Fund (ACL).

Most of these financial resources come from national budgets, but the IDB, as well as other multilateral development banks, are supporting Latin American countries to cover those costs through IDB ordinary capital blended with concessional climate finance.

Concessional climate finance is a central tool to mobilize resources towards the energy transformation in the region. Here are three learnings in the implementation of Concessional Climate Finance presented by our expert guests in the episode:

1. Adaptability and scalability: we need to adapt continuously to address the upcoming demands and needs of a rapidly changing environment. This includes how finance is tailored to needs and how access is granted to these funds. If we want timely, innovative and real solutions, we have to shift and make finance more agile to respond to the challenge. Mobilizing concessional financing is critical to support LAC countries in their mission to fulfill their international commitments and bring transformational change. The scaling-up of climate finance mechanisms could be an efficient way to increase the private sector’s interest in mobilizing climate finance and thus make progress to accelerate climate action. 

2. Measurement: impact measurement is instrumental in the mobilization and distribution of resources. By analyzing the impact, we can create data that will feed into the learning loop to create better projects and results. There is a need to implement measurement frameworks for climate investments that include financial data, social data, and SDG markers to build solid cases because only what gets measured gets financed.

3. Continuity: as seen in the case of the NDC Pipeline Accelerator Multi-Donor Trust Fund (ACL), there are excellent financing facilities, financing mechanisms, and existing products that are creating a difference in climate finance. Given the speed and scale of the challenges, mobilizing climate financing resources should, as much as possible, use existing channels to funnel these resources and avoid duplicating efforts. However, it is also crucial to take note of the existing mechanisms and give continuity to the projects working in the different countries. It’s about more than reinventing the wheel; it’s returning to the basics and designing and implementing correctly.

The IDB champions policy dialogue, modeling investments, and pioneering innovative financial mechanisms to transition to low-carbon and climate-resilient economies. These collaborations multiply resources and empower the IDB to leverage partnerships, driving progress toward global climate and biodiversity commitments. Click here to listen to the It’s Possible concessional climate finance episode on your favorite platform. 

Here’s more It’s possible podcast episodes:

  1. Episode 1 – Just Transition
  2. Episode 2- Biodiversity

Leena Klossner

Leena Klossner is the Deputy Managing Director of the Nordic Development Fund (NDF) where she also leads the fund’s strategy, outreach and communications activities. Since 2009, she has played a key role in developing several NDF strategies in the area of climate change and development, and has helped to develop innovative climate finance mechanisms for the public and private sectors in the area of both climate change adaptation and mitigation, most recently focusing on blended finance structures. Ms Klossner has over 25 years of experience related to global development questions, with a focus on climate change during the last 14 years. She joined NDF in 1999 to work with the fund’s operations in Asia and led NDF’s operations department for several years. Prior to joining NDF, Ms Klossner worked with private sector consulting services related to development questions globally. Throughout her career, she has also been closely involved in development research, lectured at the Helsinki University about the EU development financing mechanisms as well as published articles about trade relations between Finland and developing countries. Ms Klossner holds degrees in development studies/political science, international law and business administration.

Marcelino Madrigal Martínez

Dr. Marcelino Madrigal is the head of the Energy Division of the Inter-American Development Bank (IDB). In his more than twenty years of experience in the energy sector worldwide, he has served as a former commissioner of the Regulatory Commission in Mexico, senior specialist at the World Bank, research professor at the Technological Institute of Morelia and member of the national system of researchers in Mexico. He was also the president of the International Committee of the World Regulators Forum 2018 and vice president of the Ibero-American Association of Regulators (ARIAE). Dr. Madrigal holds bachelor's, master's and doctoral degrees in electrical engineering from the Instituto Tecnológico de Morelia, the Universidad Autónoma de Nuevo León and the University of Waterloo in Canada. His areas of expertise include operation, planning, market design, regulation and projects for the transition and decarbonization of the electric power sector. He has published more than 10 refereed technical articles and was winner of the Outstanding Young Engineer Award of the Institute of Electrical and Electronics Engineers (IEEE).

Gloria Visconti

Gloria Visconti is a Climate Change Lead Specialist at the Climate Change and Sustainability Division of the Inter-American Development Bank (IDB), where she coordinates the areas related to International Climate Finance. Among her responsibilities, Gloria is the technical focal point of the IDB for the Green Climate Fund and the Climate Investment Funds. She was senior policy adviser at the Ministry of Environment of Italy and at the Prime Minister Office in the G8 Task Force working on climate and energy policies. Gloria was Practitioner Fellow at Harvard’s Center for International Development and Associate in the Energy Technology Innovation Project at Harvard’s Belfer Center for Science and International Affairs. She has a PhD at the University of Bologna and a Master in Public Administration at Harvard University.

Isabelle Braly Cartillier

Isabelle Braly-Cartillier is a Lead Specialist in the Resource Mobilization Division at the Inter-American Development Bank (IDB), focusing on innovative financial instruments for climate and biodiversity. She previously worked in the IDB’s Capital Markets and Financial Institutions, focusing on developing sustainable debt markets in Latin America and the Caribbean. She also worked on socio-environmental risk management in the financial sector. Prior to joining the IDB, Isabelle worked for over ten years in investment banking, structuring financial products for a wide range of public and private financial institutions, including development banks and pension funds in Asia, Africa, and Europe. She holds a master’s degree in management from EM Lyon Business School in France.

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