Private climate finance in EMDEs meets only 14% of annual funding need: report

US$1t gap persists despite rising private flows.

Private climate finance for emerging markets and developing economies totalled US$332b in 2023, covering only 14% of the US$2.4t required each year to meet global climate targets by 2030, according to a report by KPMG and the World Economic Forum.

The shortfall leaves an annual external funding gap of about US$1t that must be filled largely by private capital.

The report said EMDEs are projected to mobilise about US$1.4t domestically, but structural barriers continue to deter private investors.

These include fragmented project pipelines, regulatory uncertainty, weak financial markets, and limited access to comparable data, which together raise risk and transaction costs.

International private climate finance to EMDEs increased from US$17b in 2021 to US$36b in 2023, but the report said this remains far below the scale required.

KPMG and the World Economic Forum estimate that private capital flows would need to increase about 28 times by 2030 to close the financing gap.

The report outlined six priority actions and sixteen strategies to mobilise private capital, including improving access to bankable project pipelines, strengthening policy and regulatory certainty, and expanding risk-sharing mechanisms such as blended finance and guarantees.

It said aligning public and private incentives remains central to scaling climate finance in EMDEs.