Multilateral climate funds (i.e. participated by multiple national governments) are important vehicles of climate financing. The largest are the Green Climate Fund, the Adaptation Fund, the Climate Investment Funds and the Global Environment Facility (GEF). In 2016, these 4 funds approved US$2.78 billion to support projects. India was the country that received the largest total amount, followed by Ukraine and Chile. Tuvalu received the most funding per person, followed by Samoa and Dominica. The United States is the largest donor to these 4 funds, while the Norwegians contribute the most per person.[13]​ Most multilateral climate funds use a wide range of financing instruments, such as grants, debt, equity, and risk mitigation options. These instruments aim to encourage (crowd in, the opposite of the displacement effect) that other financiers, whether national governments, private companies or other donors, also invest in projects where climate funds have participated.

The Green Climate Fund is currently the largest multilateral climate fund, and both climate change and development professionals are focused on keeping these resources flowing.

Climate finance from the world's six largest multilateral development banks (MDBs) rose to a seven-year high of $35.2 billion in 2017. According to the International Renewable Energy Agency (IRENA), the global energy transition could deliver $19 trillion in economic gains by 2050.

Multilateral development banks also invest huge sums in climate change mitigation and adaptation. In 2015 alone, they allocated US$81 billion.[14]​.

Since 2012, the European Investment Bank has provided €170 billion in climate funds, which have financed more than €600 billion in programs to mitigate emissions and help people respond to climate change and biodiversity depletion across Europe and the world.[15]​[16]​.

National climate funds are not intended to duplicate financial flows, raise additional funds or increase donor effort.[17]​ Rather, national funds provide a mechanism to combine, at the project level, multilateral climate finance with other monies. Several developing countries have already established national funds that receive and channel climate finance from various donors. A 2011 OECD study suggests there are at least 10 national climate funds in Brazil, Indonesia, Bangladesh, China, Ecuador, Guyana, Maldives and Thailand. In many countries, UNDP acts as administrator of these funds, which has helped increase donor confidence that fiduciary standards will be respected.[17]​.

Although precise data on the capitalization of these funds is scarce, it is estimated that around US$1.3 billion have been pledged to such mechanisms.[17]​.

Public money has traditionally been a significant source of infrastructure investment. However, public budgets are often insufficient for the largest and most complex infrastructure projects, particularly in low-income countries. In some cases, infrastructures that do not cause greater greenhouse gas emissions (for example, a solar thermal power plant) are more expensive, have greater financial risk or higher initial costs than those that do (for example, a coal plant).[18]​[19]​ In other cases it is the other way around and climate-friendly technologies are cheaper[20]​ than harmful ones. If countries are to access the scale of finance required, it is essential to consider the full spectrum of finance sources and their requirements, as well as the different mechanisms available, and how they can be combined.[21]​ There is therefore growing recognition that private money will be needed to cover the climate finance gap.

Private investors can be attracted to sustainable urban infrastructure projects if a sufficient return on investment is anticipated, either through the revenue stream that the infrastructure generates when it operates, or because a solvent government commits to an appropriate payment schedule. The bankability of the project and the credit reliability of its promoters are therefore prerequisites for attracting private money. Potential sources of private climate finance include commercial banks, investment companies, pension funds, insurers and sovereign wealth funds. These different types of investors will have different risk-return expectations and investment horizons, so projects will need to be structured appropriately (for example with different debt return brackets depending on the term).

Governments have a wide range of financing mechanisms available to ensure profitability for private investors, such as equity, debt, grants or risk-reducing instruments, such as guarantees. Some of these mechanisms will be used by default as part of a government's funding base; others can be deployed to mobilize investment in a specific climate project.

Green finance (also called sustainable finance) is broader than climate finance[24]​ and encompasses it, that is, all climate finance is green finance, but not all green finance is climate finance. For example, investments to control industrial pollution, wastewater treatment or the protection of biodiversity are green financing, but not climate financing. On the other hand, investments in mitigation—which seek to reduce or avoid greenhouse gas emissions—or in adaptation—which reduce the vulnerability of people and goods to the effects of global warming—are both green and climate financing.

Climate World financial advisors define[25]​ green financing as any financial instrument that provides positive, real, verified and additional environmental externalities to normal business. While climate finance is a form of green financing referring to projects that help developing countries reduce greenhouse gas emissions or adapt to global warming.

Multilateral climate funds (i.e. participated by multiple national governments) are important vehicles of climate financing. The largest are the Green Climate Fund, the Adaptation Fund, the Climate Investment Funds and the Global Environment Facility (GEF). In 2016, these 4 funds approved US$2.78 billion to support projects. India was the country that received the largest total amount, followed by Ukraine and Chile. Tuvalu received the most funding per person, followed by Samoa and Dominica. The United States is the largest donor to these 4 funds, while the Norwegians contribute the most per person.[13]​ Most multilateral climate funds use a wide range of financing instruments, such as grants, debt, equity, and risk mitigation options. These instruments aim to encourage (crowd in, the opposite of the displacement effect) that other financiers, whether national governments, private companies or other donors, also invest in projects where climate funds have participated.

The Green Climate Fund is currently the largest multilateral climate fund, and both climate change and development professionals are focused on keeping these resources flowing.

Climate finance from the world's six largest multilateral development banks (MDBs) rose to a seven-year high of $35.2 billion in 2017. According to the International Renewable Energy Agency (IRENA), the global energy transition could deliver $19 trillion in economic gains by 2050.

Multilateral development banks also invest huge sums in climate change mitigation and adaptation. In 2015 alone, they allocated US$81 billion.[14]​.

Since 2012, the European Investment Bank has provided €170 billion in climate funds, which have financed more than €600 billion in programs to mitigate emissions and help people respond to climate change and biodiversity depletion across Europe and the world.[15]​[16]​.

National climate funds are not intended to duplicate financial flows, raise additional funds or increase donor effort.[17]​ Rather, national funds provide a mechanism to combine, at the project level, multilateral climate finance with other monies. Several developing countries have already established national funds that receive and channel climate finance from various donors. A 2011 OECD study suggests there are at least 10 national climate funds in Brazil, Indonesia, Bangladesh, China, Ecuador, Guyana, Maldives and Thailand. In many countries, UNDP acts as administrator of these funds, which has helped increase donor confidence that fiduciary standards will be respected.[17]​.

Although precise data on the capitalization of these funds is scarce, it is estimated that around US$1.3 billion have been pledged to such mechanisms.[17]​.

Public money has traditionally been a significant source of infrastructure investment. However, public budgets are often insufficient for the largest and most complex infrastructure projects, particularly in low-income countries. In some cases, infrastructures that do not cause greater greenhouse gas emissions (for example, a solar thermal power plant) are more expensive, have greater financial risk or higher initial costs than those that do (for example, a coal plant).[18]​[19]​ In other cases it is the other way around and climate-friendly technologies are cheaper[20]​ than harmful ones. If countries are to access the scale of finance required, it is essential to consider the full spectrum of finance sources and their requirements, as well as the different mechanisms available, and how they can be combined.[21]​ There is therefore growing recognition that private money will be needed to cover the climate finance gap.

Private investors can be attracted to sustainable urban infrastructure projects if a sufficient return on investment is anticipated, either through the revenue stream that the infrastructure generates when it operates, or because a solvent government commits to an appropriate payment schedule. The bankability of the project and the credit reliability of its promoters are therefore prerequisites for attracting private money. Potential sources of private climate finance include commercial banks, investment companies, pension funds, insurers and sovereign wealth funds. These different types of investors will have different risk-return expectations and investment horizons, so projects will need to be structured appropriately (for example with different debt return brackets depending on the term).

Governments have a wide range of financing mechanisms available to ensure profitability for private investors, such as equity, debt, grants or risk-reducing instruments, such as guarantees. Some of these mechanisms will be used by default as part of a government's funding base; others can be deployed to mobilize investment in a specific climate project.

Green finance (also called sustainable finance) is broader than climate finance[24]​ and encompasses it, that is, all climate finance is green finance, but not all green finance is climate finance. For example, investments to control industrial pollution, wastewater treatment or the protection of biodiversity are green financing, but not climate financing. On the other hand, investments in mitigation—which seek to reduce or avoid greenhouse gas emissions—or in adaptation—which reduce the vulnerability of people and goods to the effects of global warming—are both green and climate financing.

Climate World financial advisors define[25]​ green financing as any financial instrument that provides positive, real, verified and additional environmental externalities to normal business. While climate finance is a form of green financing referring to projects that help developing countries reduce greenhouse gas emissions or adapt to global warming.