Climate mitigation not only reduces emissions, it can also act as a catalyst for economic growth. Across sectors and regions, mitigation investments are helping to lower costs, strengthen industries, and unlock new sources of private finance, demonstrating that climate action and economic development can go hand in hand. In 2025, Mitigation Action Facility projects delivered 51 economic co-benefits.
Reducing operational costs and increasing competitiveness
One of the most immediate economic co-benefits of mitigation is reduced operational costs. The Viet Nam – Sustainable Industries project is improving energy efficiency across 300 facilities in the textile, apparel, and food and beverage sectors. By supporting the electrification of energy-intensive processes and introducing more efficient technologies, the project helps reduce energy costs, often one of the largest operational expenses for these industries.
At the same time, improved energy efficiency and lower emissions enhance competitiveness. As global markets increasingly demand low-carbon supply chains, industries that adopt cleaner and more efficient technologies are better positioned to remain competitive. The India – Industrial Clusters project supports small and medium-sized enterprises (SMEs) in this transition, helping them modernise production processes, reduce costs, and strengthen their position in sustainability-driven markets.
New markets and economic opportunities
Climate mitigation also drives the creation of new markets and industries by increasing demand for low-carbon technologies, services, and business models. As countries transition away from fossil fuels, new value chains are emerging across sectors such as renewable energy, electric mobility, and energy efficiency.
The Brazil – E-Buses Industry project, for example, supports the development of domestic electric bus manufacturing. By building a local value chain around clean mobility, the project is creating new economic opportunities while positioning Brazil in the growing global market for electric transport solutions.
Mobilising private investment
Another key economic co-benefit is the mobilisation of private investment. By reducing risks and demonstrating the viability of low-carbon technologies and business models, mitigation projects can attract private capital and scale impact far beyond initial public funding.
The Kenya – Small Vehicles E-Mobility project combines demand-side subsidies with innovative financial instruments, including partial and first-loss credit guarantees. By lowering investment risks and improving access to finance, the project supports market development, entrepreneurship, and the growth of a new electric mobility sector in Kenya.
Together, these examples highlight a key message: climate mitigation is not only a necessity, it is also an opportunity for economic transformation. Through lower operating costs, stronger competitiveness, the creation of new markets, and the mobilisation of private finance, mitigation actions are helping to build more resilient, efficient, and future-ready economies.
Climate mitigation that delivers for people, economies and the planet
Across its portfolio, the Mitigation Action Facility supports climate mitigation projects that go beyond emissions reductions, delivering tangible environmental, economic, social, and political and institutional co-benefits. These impacts are captured under Output Indicator 5.1, which tracks how projects contribute to broader sustainable development outcomes.
– In 2025, projects reported 19 additional co-benefits, bringing the cumulative total to 152, a 15% increase compared to 2024.
– The majority of projects (17 out of 25) met or exceeded their co-benefit targets, with several significantly overachieving.
– Lower performance is mainly observed in early-stage projects, where co-benefits are expected to materialise in later implementation phases.
Together, these results highlight how climate mitigation, across all four dimensions, can deliver meaningful benefits for people, economies, and the environment.
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