Abstract
Financial policy and sustainability can play a critical role in reducing the harmful effects of climate change and hastening the shift to a low‐carbon, more sustainable economy. Monetary policy can be used to encourage the creation of new technologies that can lower greenhouse gas (GHG) emissions, such as research and development (R&D) tax credits, government grants, and other types of financial assistance. These include targeted lending, green bonds, loan guarantees, weather‐indexed insurance, tax credits, feed‐in tariffs (FiT), national development banks (NDBs), national climate funds, and disclosure regulations. This evidence review examines the effects of financial policy on climate change and energy transitions. Careful design and implementation are crucial for the success of loan guarantee programs. Nations have used a variety of policy tools to support climate change and sustainable energy initiatives. The success of these programs must be understood to determine the best approaches for designing and implementing loan guarantee policies. The studies reviewed classified climate finance policies into seven categories based on their functions: regulation and guidelines, market‐based incentives, financial measures, information and capacity, de‐risking, domestic and international public finance, and other. National development banks have a clear public policy mission to support low‐carbon development in a particular nation.
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