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What if the communities most vulnerable to climate impacts were also the ones best positioned to lead the energy transition?

Across North America, Indigenous communities are already living with the realities of climate change: disrupted power systems, rising energy costs, and increasing grid instability. And yet, most energy solutions brought to these communities are designed elsewhere, financed elsewhere, and ultimately benefit someone else. The result? An energy transition that risks leaving the most affected behind.

The Global Climate Finance Accelerator team set out to flip that script.

Our work to advance Indigenous-owned solar and battery energy storage systems (BESS), with financing built around long-term community ownership and control raised a larger question: If community-led clean energy holds so much promise, why isn’t it more common?

Our project explored what it takes to make these projects work, not just on paper, but in practice. 

The Opportunity

In his keynote at CIBC’s Electrification Summit earlier this year, Nat Bullard made clear where he’s placing his bets in the energy sector. The energy transition, he argues, isn’t political. Energy sources rise and fall as more effective, efficient, and affordable alternatives emerge. In addition to being more accessible for communities to understand and adopt, the shorter development timelines for solar, batteries, and wind mean they can be advanced more quickly. This makes them especially well-suited for the growth of distributed energy resources (DER), providing flexible, scalable solutions that can relieve pressure on centralized grids and meet rapidly growing energy demand. 

A Tale of Two Countries

Both Canada and the US offer direct pay tax credits for tax exempt organizations, allowing Indigenous governments and ventures to receive the credit as a direct cash payment. Canada pulls ahead in Indigenous investment attractiveness through game-changing financing support with the $10 billion federal loan guarantee, which is stackable with provincial programs, and concessional capital through the Canada Infrastructure Bank and Canada Growth Fund. Similar opportunities in the US are not as advanced, particularly as aspects of the IRA are being reconsidered. The country does, however, have a more active market for DERs, including solar-plus-storage systems and microgrids at the state level. While Canada has initiatives to support DERs, the market is more fragmented, and Indigenous participation has historically been concentrated in large-scale utility projects, including natural gas and hydro. This focus may limit opportunities for community-scale innovation and localized energy sovereignty for Indigenous Nations in Canada and may increase their exposure to the risk of stranded assets.

What We Can Learn from Global Energy Markets: Lessons in Participation

Ownership, Not Just Access: Germany’s clean energy story is as much about participation as it is about technology. Over the past two decades, energy cooperatives have allowed citizens to collectively invest in and benefit from renewable energy assets. Whether it’s a wind turbine or solar farm, residents share the risks and the returns. What sets this model apart is structure. The rules governing co-ops are built into Germany’s policy framework, making it easy for communities to form legal entities, raise capital, and interface with utilities. This kind of systemic design makes community participation the default rather than optional.

Building Trust Through Stability: Chile’s PMGD program (Pequeños Medios de Generación Distribuida) supports small and medium-scale energy producers by offering stable pricing mechanisms for power sold back to the grid. In a sector where volatility often deters participation, this price transparency builds confidence for smaller players, including community groups and local businesses. Although the program has its critics, it illustrates that good policy isn’t just about incentives, it’s about predictability, which builds trust.

Grassroots First, Infrastructure Second: Indonesia’s community-led clean energy models are among the most powerful in showing what real local ownership looks like. In Kedungrong Hamlet, a community-run micro-hydro project powers local homes through grassroots leadership. Programs like MENTARI and ACCESS go beyond electrification, supporting livelihoods like farming and food processing. 

Shifting Energy Into the Hands of Citizens: India’s clean energy transition is increasingly being built from the rooftops up. Through the PM Surya Ghar: Muft Bijli Yojana, households are offered free electricity up to 300 units per month for installing rooftop solar, essentially transforming every household into a potential energy producer. Instead of relying on large-scale infrastructure alone, this policy invites mass participation, backed by upfront subsidies and simplified application processes. PM-KUSUM, meanwhile, empowers farmers to solarize their irrigation pumps and feed excess power back to the grid, ensuring energy security while turning a cost center into a revenue stream. Together with the Production Linked Incentive (PLI) Scheme for solar PV manufacturing, India’s approach addresses both demand and supply, embedding trust by making the incentives direct, visible, and local.

Rethinking What Success Looks Like

Global examples offer a roadmap for shifting away from top-down energy systems toward models built on trust, participation, and shared benefit. Despite current headwinds, the opportunity for First Nations ownership in clean energy has never been stronger, especially when supported by renewable energy developers operating on both sides of the border who understand how to build meaningful, values-aligned partnerships with Indigenous communities. 

Opportunities are enabled by blended capital stacks that combine low-cost, concessional debt from catalytic philanthropic capital with tax equity structures that leverage direct pay Investment Tax Credits. Communities can unlock equity ownership while reducing financial risk. When layered with traditional debt to provide structure and scale, augmented by regional incentives and revenue from renewable energy credits (RECs), these structures help lower the cost of capital and support long-term wealth-building, energy sovereignty, and self-determined economically sustainable climate leadership.

Sunidhi Adiga combines her background in Electrical and Electronics Engineering with a passion for social entrepreneurship to drive sustainability-focused solutions. She has worked in technology consulting at Deloitte, where she led digital transformation initiatives. Sunidhi developed a tool to support investment decisions in renewable energy projects, offering real-time insights on key financial metrics, and is currently creating an AI tool to help companies convert their sustainability initiatives into strategic advantages. Currently pursuing her MBA at the University of Toronto’s Rotman School of Management, she focuses on integrating finance, technology, and strategy to foster sustainable change.

COP29 concluded on November 24, 2024. Referred to as the “Finance COP”, its central focus was on adopting a new climate finance target. Read on to explore the global progress made in climate finance.

This COP started strong, with three major advancements in climate finance negotiations:

• The “Baku Finance Goal” (BFG): A new commitment to channel $1.3 trillion of climate finance to the developing world each year to help address the negative effects of climate change
• Full operationalization of Article 6: Implementing cross border cooperation to reduce the costs of achieving national GHG emission reduction targets by up to $250 billion per year
• Full operationalization of the Loss and Damage Fund: Total pledged financial support now exceeds $730 million, with project financing to help the world’s most vulnerable countries respond to loss and damage starting in 2025

Breaking It Down: What Do These Developments Mean?

1. The Baku Finance Goal (BFG):

• The BFG contains a core target for developed countries to lead on mobilizing at least $300 billion annually for developing countries by 2035. 
  • As background, the previous climate finance pledge, made at COP15, committed to $100 billion annually by 2025. According to an OECD analysis, this goal was achieved for the first time in 2022.

  

• Additionally, Multilateral Development Banks (MDBs) announced the estimation of $170 billion climate finance annually by 2030. This includes $120 billion for low- and middle-income countries and $50 billion for high-income countries. In addition, each group has a target of mobilizing $65 billion annually from the private sector.
• Despite these efforts, gaps remain between the trillion-level goals and billion-level commitments. The COP Presidencies will lead the “Baku to Belém Roadmap to 1.3T” to make progress towards that aim in COP30 next year. Additionally, the Independent High-Level Expert Group on Climate Finance report highlights pathways to bridge these gaps:

2. Article 6 Operationalization: 

• The Paris Agreement’s Article 6 allows countries to collaborate on achieving Nationally Determined Contributions (NDCs) by establishing the framework for an international carbon credit trading marketplace.

  

  • To recap, Article 6.2 facilitates government-to-government carbon credit trading via Internationally Transferred Mitigation Outcomes (ITMOs), and Article 6.4 establishes an UN-backed carbon-crediting program. COP29 also concluded negotiations on Article 6.8 to facilitate internation cooperation through non-market approaches such as capacity-building and technical support.
  • The UN first approved Article 6.4 on day one of COP29, showing a strong signal to move forward and attract more capital. Trading in carbon credits could reduce the cost of implementing countries’ NDCs by more than half – up to $250 billion by 2030, while enabling the removal of 50% more emissions (about 5 gigatons of CO2 per year by 2030) at no additional cost. 
• Voluntary carbon markets may align with Article 6 standards, enhancing transparency and credibility while enabling  high-integrity carbon credits to trade under Article 6. This alignment leverages existing voluntary carbon market infrastructure and supports countries and the private sector in transitioning to Article 6 markets.
• Article 6 is far from perfect at this stage. Negotiations are ongoing, with the deadline to transition Certified Emission Reductions (CERs) from the legacy Clean Development Mechanism (CDM) to Article 6.4 set for 2028. Updates to Nationally Determined Contributions (NDCs) are expected in early 2025.
• While the details will continue to evolve, the uncertainty impeding action has ended. Article 6 now represents an important and tangible tool for scaling up climate finance in developing countries.

3. The Loss and Damage Fund:

• The Loss and Damage Fund is a climate finance mechanism designed to assist developing countries that are particularly vulnerable to the adverse effects of climate change.  It addresses losses and damages caused by climate-induced events such as extreme weather and sea-level rise. 

• Established at COP27, the fund saw $700 million pledged at COP28 and now exceeds $730 million following COP29.
• COP29 formalized critical operational measures, including the appointment of Ibrahima Cheikh Diong as Executive Director and an agreement between the fund’s board and the World Bank. Financing projects are set to commence in 2025.

What Is Canada’s Role in Climate Finance?

• Canada announced  the launch of GAIA during COP29: a US$1.48 billion blended finance platform supporting high-impact climate projects in up to 25 emerging markets and developing economies.

• 70% of the platform will support adaptation projects and 25% will invest in small island developing states and least developed countries.
• GAIA, co-founded by FinDev Canada, Mitsubishi UFJ Financial Group (MUFG), and the Green Climate Fund in 2023, exemplifies innovative financing. Structured to accelerate the availability and accessibility of long-term loans for climate projects, GAIA aims to demonstrate how a blended finance structure that combines commercial, concessional, and grant capital can catalyze private finance at scale to support projects aligned with the Paris Agreement.
• In 2021, Canada doubled its international climate finance commitment from $2.65 billion (2015-2021) to $5.3 billion (2021-2026), including 40% grant and 60% unconditional repayable contributions (akin to concessional loans). 

As COP29 concludes, the progress achieved sets a strong foundation for climate finance, although significant gaps remain. The Global Climate Finance Accelerator addresses these challenges by offering innovative and affordable capital solutions through customized collaboration between partners in business, finance, government, and academia to more effectively mobilize resources. 

Learn more about our work in global climate finance by visiting our Ocean Love project site. Ocean Love is pioneering sustainable and equitable growth in the blue economy by investing directly in the untapped carbon sequestration and biodiversity projection potential of local coastal communities in the Caribbean and East Africa.

Hao Tian is an independent advisor on blended finance solutions for the Global Climate Finance Accelerator. She has nearly a decade of experience in finance and sustainability across global banks and the World Bank Group. As a seasoned leader in finance and sustainability, Hao connects the dots between capital markets, VC, and the public sector across developed and developing markets by exploring collaborative pathways design and innovative blended finance solutions. Hao holds a Master of Finance degree and a Graduate Diploma in Social Responsibility and Sustainability from the University of Toronto, and a Bachelor of Economics degree from the Central University of Finance and Economics. She is a Certified Financial Risk Manager and owns IFRS (ISSB) FSA Credential.

Partnership was an underlying theme in every discussion last week on how to advance climate solutions and sustainable development goals. In his opening remarks, PRI CEO David Atkin emphasized one of the organization’s core principles: Cultivating collaboration among key stakeholders, including investor signatories, policymakers, and academics.

At the Sustainable Finance Policy Conference on October 8, the PRI introduced updates to its Policy Toolkit on sustainable finance policy reforms. The event, which convened policymakers, regulators, and investors, explored reforms that support sustainability goals while maintaining competitiveness and economic resilience. Discussions also focused on how to navigate political cycles to ensure long-term support for responsible investment initiatives.

Speakers from all regions – North America, Europe, Africa – advocated for a “whole of government” approach, emphasizing the need for comprehensive coordination across various government departments, agencies, and levels. Coordination ensures that all facets of policy, from environmental regulation to financial oversight, are aligned to address systemic challenges such as climate change. In resource-based economies, from Canada to South Africa, targets along the transition trajectory must include human rights; not just to address job joss, but also to crowd people into new industries.

Speakers in all regions also noted the need to work together in addressing what have become human rights trade-offs in the path to net-zero, primarily land acquisition for renewables. Speakers acknowledged that this remains a steep learning curve that must be solved through collaboration between the Global North and South alongside governments and the private sector.

Back on the ground following PRI, speakers from the electricity sector at the Smart Growth Symposium talked about the historic undertaking of doubling the electricity grid by 2050. They called for more strategic collaborations between universities, industry, and government with better linkages between ivory towers and the shop floor. 

The room took a moment to celebrate an initiative to emulate. The University of Toronto’s long-standing reputation as a global leader in AI research acted as a foundation for bringing together researchers, government entities, and private sector partners to create the Vector Institute for Artificial Intelligence in 2017. U of T’s expertise in AI, particularly through faculty members such as Nobel Prize winner Geoffrey Hinton, provided the academic credibility and leadership that helped position Toronto as a significant hub for AI innovation globally.

On the energy transition, the university recently announced funding to make its Grid Modernization and Testing Centre, a Climate Positive Energy initiative, a reality. Industry facing, this test centre will help address a market capacity gap related to technology testing and real time simulation of various grid models. 

The Global Climate Finance Accelerator is delighted to collaborate with Climate Positive Energy and Rotman School of Management on interdisciplinary research to investigate and deploy new financing strategies and tools to accelerate the energy transition.

The Global Climate Finance Accelerator convenes partnerships across business, finance, and government on strategies, policies, procedures, and tools to finance the deployment of technically viable climate solutions.

On October 9, 2024, the Government of Canada announced the advancement of the “Made-in-Canada Sustainable Investment Guidelines,” which included provisions for categorizing investments based on their contribution to the net-zero transition. It could take up to three years, however, to finalize discussions on incentives to support the development of green projects, hindering progress on incentive structures that are crucial for attracting investments into green infrastructure and projects.

The good news is that many organizations are (more quietly) soldiering on in the face of regulatory uncertainty and political backlash. As noted in an April 2024 issue of Time Magazine, BlackRock’s Larry Fink and JP Morgan’s Jamie Dimon “know that clean technologies are where the biggest growth opportunities remain.” 

Dimon is placing his bets: To directly impact the transition to a low-carbon economy and provide investment opportunities related to climate change, conservation and biodiversity, JPM Asset Management acquired Campbell Global, a forest management and timberland investing company. The acquisition gives the firm a strategic entry point into the global carbon markets, as well as investment opportunities in climate change, biodiversity, and conservation. To hedge carbon pricing risk, the firm built its own internal management strategy rather than relying on government backstops.

Interesting opportunities in the global middle market were also widely noted at PRI this year. These businesses, historically overlooked by large institutional investors, present unique investment opportunities due to their agility and potential for rapid adoption of sustainability-related technologies and initiatives. Sustainable investors can drive significant impact in the mid-market by funding companies that are ready to invest in climate-positive solutions but lack access to capital. The sector’s flexibility makes it an ideal testing ground for innovative financing mechanisms for the deployment of technically viable, but underutilized, climate solutions. 

Some of the best examples of Action came from the deep dive into the real economy at the Ontario Chamber of Commerce + Climate Positive Energy Smart Growth Symposium. Culminating with the wrap of PRI, the Symposium dug into the specific barriers companies face in decarbonizing their operations. Many of these obstacles aren’t financial. For Uber, it’s overcoming “car-based culture”, which they’re tackling through behavioural science research in Canadian and US cities. Green uber selections, which are pennies extra per person, create a significant incentive for drivers. For Purolator, it’s access to electricity to charge their e-bikes for last mile delivery in urban areas. Surprisingly, electricity access in the parking lots housing e-bike containers don’t all have access to power. In addition to advocating with utilities, Purolator is piloting alternative sources of on-site power generation.

The Symposium left this Call to Action with its attendees: “Prioritize trying things. Some will succeed, some will fail. Persevere through the hiccups.”

Check this space tomorrow for more of what we heard on the need for partnerships and collaborative action in solving these tough challenges.

The Global Climate Finance Accelerator convenes partnerships across business, finance, and government on strategies, policies, procedures, and tools to finance the deployment of technically viable climate solutions.

Although the future of capital markets will look vastly different from the past, many systems remain anchored in backward-looking frameworks. While ESG and sustainability continue to evolve, we understand which factors are material to investment decisions through the ISSB standards and regional taxonomies. The focus must now shift to addressing organizational barriers—societal constructs that hinder progress. How do we create the flexibility needed to overcome these obstacles and align capital with socially inclusive, net-zero goals? 

First, by leaning toward curiosity, not fear. There’s political theater at play, especially around anti-trust accusations and climate-cartel fears, but there’s little legal basis according to Faegre Drinker’s Tiffany R. Reeves. Most of it is noise that critics are using to stoke a different agenda. Fear-based decisions, however, can stifle progress. The net-zero transition is a massive disruption unlike anything we’ve ever seen. That does create risks, but also tremendous opportunities.

Second, by tackling legacy systems. PRI Chair Conor Kehoe provides the example of tracking an issuer’s stock price for 18 months after a change in capex allocation, essentially penalizing investments in the transition. It’s not just about diversifying asset classes and geographies, says CalSTRS’ Kirsty Jenkinson. It’s also about making lots of small bets so capital can find its winners because we can’t tell yet who the winners are going to be. To help enable these bets, regulatory bodies must create safe harbours so companies feel comfortable disclosing scenario analysis. Finally, positive lobbying (for climate and other sustainability-related outcomes) is still rare. Leaders who may genuinely want to advance climate solutions are expressing their views quietly says Climate and Nature Solutions CEO Catherine McKenna. This reticence makes it difficult for government to action their feedback compared to louder, more public views. We need an enabling policy environment to level the playing field.

Third, by framing the political rhetoric around ESG in the appropriate investment context. Pension funds have overwhelmingly long term time horizons; tune out the noise and stick to strategy. For example, Wellington Management’s Wendy Comwell believes the US Inflation Reduction Act, with its focus on job creation in waning industrial areas and tax credits that work for nuclear as much as they do for wind, is a difficult bill to repeal irrespective of election outcome.

Tune in tomorrow for more of what we heard in the Call to Action.

The Global Climate Finance Accelerator convenes partnerships across business, finance, and government on strategies, policies, procedures, and tools to finance the deployment of technically viable climate solutions.