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Malawi is a Least Developed Country located in Southern Africa to the East of Zambia. Malawi has a low electrification rate of 9%. Furthermore, unreliable and inadequate power supply are estimated to reduce Malawi’s GDP by 7%-9%. These energy sector challenges diminish the country’s prospects for sustained growth, poverty reduction, and improved delivery of health and education services. Various studies have been undertaken to determine how Malawi can improve it's energy sector through the deployment of renewable energy. However, these studies have not specifically examined how climate change related financing mechanisms such as the Clean Development Mechanism (CDM) could be utilised to mobilise financing and capacity development for renewable energy deployment in the country. This is despite the assertion that developed countries are committed to jointly mobilising US$100 billion per year by 2020 to support climate change mitigation and adaptation activities such as renewable energy deployment in developing countries. Through the use of questionnaires, case study analyses, policy reviews, academic literature reviews and interviews, this research sought to determine Malawi’s regulatory and institutional challenges and prospects for enhancing renewable energy deployment through climate finance instruments.
Among some of the research findings was that Malawi has relied on external support in order to develop capacity in the field of climate finance, hence in the absence of external assistance there are limited opportunities to incentivise various stakeholders to implement projects and to enhance awareness about climate finance. The study also discovered that Malawi’s climate finance determinants resemble a non-market seeking Foreign Direct Investment profile, hence the presence of opportunities for cheap and abundant emission reductions could improve climate finance investment patterns rather than the opportunities for emission reductions and co-products such as electricity through renewable energy technologies. The study therefore recommended that Malawi should create a renewable energy and climate finance promotion agency to assist with soliciting funding for renewable energy projects from concessional and non-concessional sources and drafting and implementing renewable energy policies. Another recommendation was that the country must create a Renewable Energy Fund to reduce the funding constraints that the media, project implementers and financiers have in undertaking various roles related to enhancing renewable energy deployment. Lastly, the study concluded that Malawi’s prospects for accessing various forms of climate finance and deploying climate finance projects can be improved through improvements in Malawi’s renewable energy and climate change institutional framework, and the modifications of climate finance instruments and methodologies to encourage flexibility and reduce institutional constraints.