The Black Carbon Finance Study Group report finds that existing funds are already in a position to finance businesses, activities, technologies, and policies that will contribute to cutting black carbon emissions, and that several black carbon-rich sectors are sufficiently mature to absorb finance. The report also outlines key strategies and steps needed to scale up black carbon finance over time.
The report recommends funding the development of black carbon performance standards so that investors can screen potential projects to ensure that activities are reducing emissions and achieving climate and health benefits. However, practical steps can be taken immediately in the diesel transportation and residential cooking sectors. In the transportation sector, the suggestion is for development finance institutions to use concessional loans and grants to incentivize diesel vehicle owners to transition to lower-soot or soot-free engines. Results-based finance instruments can be used to incentivize the adoption and continued maintenance of diesel abatement technology. In practice, funds could flow through designated national authorities to municipalities, private fleet owners, and other beneficiaries. The report also identified four additional black carbon-rich sectors that offer strong potential for impact and action in the near to medium term. These include: Brick kiln efficiency and the adoption of alternative materials, replacing kerosene lanterns, adopting alternative of agricultural residues to avert burning, and reducing emissions from oil and gas flaring.
Over the longer term the report recommends cross-cutting strategies like including black carbon in development finance investment decision making. Such a step could see development banks offer sovereign borrowers more concessional loan terms if they choose to follow a low carbon pathway, or offer loans and grants to finance transformation of a particular sector.