Political Economy of International Climate Finance: Navigating Decisions in PPCR and SREP

This working paper explores how countries can build their own 'climate finance readiness' by understanding their internal political economy and use that understanding to steer consensus-based decisions on climate finance investments. For climate finance to be effective, national leaders must build shared commitments. This involves considering the arguments, incentives and power dynamics at play to ensure priorities are more equitable and representative of a broader group of stakeholders. Doing so will also help to reduce the risk of implementation delays. This paper uses case studies from Bangladesh, Ethiopia and Nepal to explore how narratives and incentives within the political economy drive climate investment outcomes under the Pilot Programme for Climate Resilience (PPCR) and the Scaling up Renewable Energy Programme (SREP). It draws from broader analysis of the discourses around these investments, including 80 interviews with government; multilateral development banks (MDBs) and other stakeholders