Landscape of Guarantees for Climate Finance in EMDEs

Potential solutions to expand, simplify, and potentially discount the availability of political and currency risk coverage in EMDEs for climate finance have gained traction in the last year, which could lead to greater availability of guarantees for climate projects. [...] The mapping and initial analysis contained in this report are intended to identify major gaps in the availability of guarantees and form the basis for productive future research on ways to improve the existing system of guarantee mechanisms for climate-related projects. [...] The limitation of ECAs is that they are tied to host country and regions providing equipment and services to the beneficiary country and finance needs to 12 Landscape of Guarantees for Climate Finance in EMDEs be advanced by an accredited commercial bank, which are limited. [...] All of the guarantee products offered by MDBs and Specialized Institutions are intended for use in EMDEs, given the mandates of MDBs and the specific development purposes of the Specialized Institutions. [...] The fact that guarantees specifically tailored for use in EMDEs account for the majority of the guarantees covered in this study suggests that they are being effectively used as a tool to mitigate the various real and perceived risks associated with investing in developing regions.