Climate ambition is set by governments, but it can only be delivered at scale if markets are structured to reward it.
Nationally Determined Contributions (NDCs) commit countries to emission reductions in energy, transport and industry — three sectors that together account for 73% of global annual greenhouse gas emissions. But the buses, factories, grids and supply chains that make those reductions real are overwhelmingly financed, built, operated and maintained by private actors.
This is the premise the Mitigation Action Facility was built on. Since 2012, our portfolio has grown to 66 projects across 38 countries, back by EUR 835 in Donor commitments and additional EUR 1.03 billion leveraged from private actors and EUR 943 million from public actors. Every one of those projects is designed to do something more demanding than reduce emissions during its lifetime: it is designed to change the conditions under which private capital and private enterprise operate so that low-carbon choices continue to make commercial sense long after our funding ends.
“Our role is to absorb the early risk in climate finance that keeps private capital on the sidelines, through grants and financial instruments that make a project bankable. Once the commercial logic holds on its own, the project no longer needs us, and that is the point. Public funding can open the door, but private capital is what has to walk through it and keep the market moving. ”
– Kholmati Kholik,
Desk Officer,
Technical Support Unit (TSU) to the Mitigation Action Facility
Why are private actors central to transformational change?
Transformational change is a catalytic shift in systems and behaviours. Private actors sit at the point where each of those shifts either takes hold or stalls.
- Investment at the scale the transition requires. Grant funding is finite while commercial capital is not. The Mitigation Action Facility’s role is not to fund the transition directly, but to make it investable by absorbing early risk so that far larger volumes of private finance can follow.
- Business models that survive contact with the market. A technology that only works while subsidised has not been transformed into a solution. Projects must demonstrate a viable commercial logic — for the operator, the manufacturer, the lender and the end user alike.
- Market creation where none yet exists. In many partner countries the barrier is not technology or ambition, but the absence of a functioning market: no pipeline of bankable projects, no track record for lenders to price against, no established demand. Creating that market is often the intervention.
- Technology, supply chains and local capability. Sustained decarbonisation depends on domestic manufacturing, servicing networks, trained technicians and reliable parts supply. These are private-sector assets, and they take deliberate cultivation.
- Uptake that outlasts our funding. The measure of a Facility project is what continues after it closes: replication by competitors, capital that keeps flowing, standards that hold, markets that keep growing on their own momentum.
Embedded across the Mitigation Action Facility’s project cycle
Private sector engagement is not a component that projects add on. It is a thread running through the way the Facility designs its Calls, appraises applications and supports projects to maturity.
At the Call. Private financial institutions and commercial companies are eligible applicants in their own right, alongside ministries, development banks and NGOs. The Mitigation Action Facility requires every project to combine Technical Cooperation (TC) with Financial Cooperation (FC) and to show how the mechanism proposed will create favourable market conditions for further uptake and upscaling.
In the Concept Phase. Applicants are asked to demonstrate leverage: how the intervention will mobilise additional private and public financing, and how the technology or practice will be financed once it moves beyond the project.
During the Detailed Preparation Phase (DPP). This is where financial mechanisms are stress-tested. Over up to twelve months, the Technical Support Unit (TSU) works with applicants to refine instrument design, engage prospective investors and structure risk-sharing that commercial parties will actually accept.
In implementation and beyond. Projects deploy investment grants, concessional loans, guarantee funds and bankable pipeline development, complemented by advisory services, banking training and regulatory support. Lessons are then captured through the Facility’s role as a Knowledge and Learning Hub, so that what works in one market can inform the next.
Three from the portfolio
Moving private capital upstream — Multi-Country: SCAF III Across Sub-Saharan Africa and Southeast Asia, the scarcity of bankable clean energy projects is a binding constraint: developers lack the capacity and early-stage funding to bring projects to financial close, so commercial investors stay downstream where risk is lower. SCAF III, implemented by Frankfurt School of Finance and Management – FS impact finance, uses Facility funding as first-loss capital in a multi-layer debt fund, paired with capacity development for project developers. The objective is a demonstration effect: as projects reach financial close at a higher cadence, investor perceptions of upstream risk change — and capital moves to where it is scarcest.
De-risking lenders to unlock a market — Brazil: E-Buses Industry Buses carry the large majority of urban transport demand in Brazil, but cities and operators have struggled to access affordable capital to electrify. The EUR 80 million Brazil E-Bus Credit Enhancement Fund, announced at the COP30 Local Leaders Forum with Bloomberg Philanthropies, Brazil’s Ministry of Cities and Ministry of Environment and Climate Change, BTG Pactual, the Mitigation Action Facility and WRI Brasil, addresses exactly that. Facility support directed through WRI Brasil combines first-loss capital with technical assistance for policy frameworks and domestic manufacturing capacity, alongside an anchor commitment from BTG Pactual. The fund aims to mobilise around EUR 450 million in private lending and deploy more than 1,700 zero-emission buses by 2030 — with Rio de Janeiro, Salvador, Curitiba and Belo Horizonte among the first cities expected to benefit.
Standards that reshape an industry — Colombia: Domestic Refrigeration Working with manufacturers, technicians and the Ministry of Mines and Energy, this project supported a shift to low global warming potential refrigerants and informed the development of Resolution 40427, which updated the national energy efficiency labelling regulation (RETIQ). All national refrigerator producers now comply with the revised norm. The project has reduced 844,683 tCO₂e to date and is explicitly referenced in Colombia’s updated NDC — an illustration of how private sector innovation and regulatory advancement, pursued together, lock in change that persists beyond a project’s lifetime.
Looking ahead
Closing the climate finance gap is not only a question of how much public money is available. It is a question of how effectively that money changes what private actors are willing and able to do. Over the coming weeks, we will look more closely at how Facility projects are working with investors, developers and industry including the instruments they use, the barriers they encounter, and what it takes to build markets that keep moving on their own.
For regular updates on our portfolio, publications and events: