Australia’s Climate Action Soars with Blended Finance: A Sustainable Partnership for Change

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As the global community grapples with the urgent need to combat climate change, Australia is taking a significant step forward by embracing blended finance as a crucial tool in its climate action toolkit.

Blended finance, the strategic combination of public and private sector funds to support sustainable development, has become a viable solution to bridge the funding gap required to achieve ambitious climate targets.

Australia’s commitment to ramping up its climate efforts comes at a time when the effects of climate change are increasingly evident, with bushfires, heatwaves, and rising sea levels threatening ecosystems and communities. In response, the Australian government has announced a comprehensive plan to reduce carbon emissions by 50% below 2005 levels by 2030.

During the May national budget release, the Australian government revealed intentions to increase the Emerging Markets Impact Investment Fund (EMIIF) limit from $40 million to $250 million. This marked one of the notable declarations within this year’s international development program budget.

Kristy Graham, CEO of ASFI, added, “The absence of a sustainable finance taxonomy in Australia has been a significant barrier to investment in climate solutions, including clean energy.”

Blended finance leverages public funds, often from international development organisations or governments, to catalyse private sector investments in climate-related initiatives. These initiatives span renewable energy projects, sustainable infrastructure, afforestation efforts, and more. By sharing the financial risk between the public and private sectors, blended finance encourages private investors to engage in projects that might otherwise seem too risky or unprofitable.

The Australian government’s commitment to blended finance is exemplified by its collaboration with international climate funds and multilateral development banks. These partnerships enable Australia to tap into a wider pool of resources, expertise, and knowledge, strengthening the country’s efforts to transition to a low-carbon economy.

According to Pat Conroy, minister for international development and the Pacific, “Last year we launched a development finance review to consider new forms of development finance to support Australia’s foreign policy, trade, security and development objectives by crowding in commercial and philanthropic capital.”

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