Concessional funding is used for projects that contribute significantly to market development within climate action related sectors, such as energy or transport. In many cases, the financing aims to help overcome a market failure and provide returns to society beyond the investors' returns.

Instrument category

International climate finance

Implementation status

Moderate - tried and tested

Enabling conditions and success factors
  • Recipient governments should have the ability to absorb and benefit from this finance, maximising the development impact of such funding.
Instrument benefits
  • Mitigate political and commercial risks of lending.
  • Mitigate political and commercial risks for exporters.
  • Support short, medium and long term investments.
Challenges and risks to implementation
  • Restricted by mission statement and objectives.
  • Risk premiums are charged for supporting transactions.
  • Deal complexity.
Case studies

Asian Development Bank (ADB) grant and portfolio approach to mobilise private capital for waste to energy plant in Chinese cities

View case study

Adaptation investments financed via a natural capital finance facility in Athens, Greece

View case study

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