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Nicholas Institute for Environmental Policy Solutions
February 2022

Catalyzing Climate Finance for Low-Carbon Agriculture Enterprises

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Despite minimal contributions to causing climate change, rural households working in the agriculture sector are disproportionately impacted by climate-related shocks and see it as one of the biggest risks to their livelihoods.

Climate finance presents a critical opportunity to bring investment and innovations that can drive the growth of new low-carbon development pathways and improve household and community resilience in agricultural settings. However, climate investment is currently not at the levels required to support the clean energy enterprises serving this sector, especially in terms of adaptation finance.

The Paris Agreement calls for an even balance between mitigation and adaptation finance provided by developed countries, but adaptation finance is lagging significantly. Channelling adaptation investment to the populations most vulnerable to climate threats is proving even more challenging, with just 3% of global climate finance flowing to Africa. Additionally, women-led enterprises face many of the same barriers in accessing climate finance as they do in accessing other forms of finance, which can stymy efforts by climate investors to incorporate an explicit gender lens into their efforts.

The James E. Rogers Energy Access Project at Duke University and RMI, with support from the Shell Foundation, are studying the climate adaptation impact of DRE solutions in agriculture and assessing the case for investment in this sector for climate-first investors. As part of this project, we spoke with executives from 32 SMEs in these sectors and climate-first investors. Climate mitigation impact, while relatively more suited for private financing to date, is less compelling for clean energy solutions in agriculture because the GHG emission reductions may be relatively small. The adaptation benefits the sector could provide in terms of improved food security and enhanced community resilience to climate shocks are potentially of much greater value from the perspective of climate finance.

For more information, see Catalyzing Climate Finance for Low-Carbon Ag-Tech from the Energy Access Project.

Related blog posts:

Climate Finance Meets Low-Carbon Ag-tech

How Finance, Ag-tech and More Can Speed the Energy Transition – 4 Experts Explain