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Mobilising private finance through demonstration effects – Compass PE2 Final Report

International Climate Finance (ICF) is a core component of the United Kingdom’s contribution to developed countries’ shared goal of mobilising US$100 billion of public and private climate finance a year by 2020.

Significant amounts of private investment will be key to achieving a sustainable, low-carbon climate-resilient (LCCR) transition where the private sector is driving a long-term solution to climate change. ICF, therefore, focusses its investments upon demonstration which will mobilise private finance, aiming to make catalytic investments that can be scaled up and replicated by private finance.

This evaluation seeks to establish whether private investors are influenced by evidence from ICF-supported projects (i.e. by demonstration effects) into investing in LCCR projects, without or with less development finance, directly and/or through funds.

We focussed on a sample of 20 ICF programmes, 10 of which were investigated in depth, which intended to mobilise private finance through demonstration effects into follow-on projects, outside the ICF programme.

During our evaluation we interviewed 154 individuals, including teams working on ICF supported-programmes, implementing partners, businesses and developers, and a range of investors including development finance institutions. We also interviewed key sector experts, reviewed programmes and other documents, and focussed on two areas where transformational change was indicated.

Download the Appendix.