The European Bank for Reconstruction and Development (EBRD) on Wednesday announced its intention to double the mobilization of private sector climate financing by 2025.

The way to achieve this target was set out in an Action Plan on Mobilizing Private Capital for Climate Finance unveiled at the 26th session of the United Nations Framework Convention on Climate Change Conference of the Parties (COP26) in Glasgow, Scotland.

The EBRD said its plans range from activities to stimulate investment from green and sustainability-linked bonds through innovative financing mechanisms for industrial decarbonization to targeted loans to support for the circular economy.

"Globally, there is a significant increase in private capital committed to green finance. The EBRD will help direct that money to its countries of operations," said EBRD President Odile Renaud-Basso.

Its ability to do so rests not on a single approach or instrument but on a broad range of bespoke interventions. Some seek to increase the supply of private capital to EBRD countries of operations, he added.

However, he said "the key focus of the Bank’s work is to increase the demand for this capital: the supply of bankable investment projects that attract financial flows seeking a return."

Together with other multilateral development banks (MDBs), the bank plays a leading role in helping to decarbonize economies and enable the transition to a more sustainable future, with a focus on involving the private sector in tackling climate change.

A major challenge in emerging economies and developing countries is a shortage of bankable climate projects.

Several factors limit the supply of such projects. The most fundamental is the lack of either an implicit or an explicit carbon price. Without a carbon price, many green investments are not commercially viable.

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