Finance Guide for Policy-Makers: Renewable Energy, Green Infrastructure
The Paris UN Climate Agreement in 2015 refocused attention on the need to mobilize substantial private capital flows into climate solutions at the accelerated pace and at the required scale to combat climate change.
Implementation of national clean energy or ‘green’ infrastructure plans will require unprecedented levels of private investment, not only for climate reasons but also to deliver energy security and access to energy for those who lack them, as well as creating the conditions for sustainable development.
Now, more than ever, it is critically important for policy-makers and non-financiers to understand and interface with the financial community to establish effective conditions.
As a practical contribution, this guide provides a factual overview of the landscape of finance – sources of capital, what the capital markets do, how transactions work – and more broadly to set common finance terms in context.
The original guide was written in 2009. Since then evidence of climate change has continued to build, with successive temperature records broken. A substantive transition is now well under way in the energy sector and the economics of solutions such as renewable energy, energy efficiency have improved dramatically, and new low-carbon technologies are becoming ever more affordable.
This updated guide reflects changes in market conditions, financing structures and relevant policy debates. Topics covered include:
- How finance generally works, with updated finance variables;
- What the different parts of the finance sector do;
- What issues financiers consider when investing, including the role of policy and regulation;
- Capital markets and where, for example, ‘green bonds’ fit in an expanded section;
- The variables affecting finance decisions;
- Energy efficiency – an expanded section, and an update on issues relating to emerging or developing-country markets;
- A practical focus on ‘climate finance’, especially finance-sector-led
initiatives that are accelerating actions at both the low- and high-carbon
end of the spectrum.
The guide was endorsed by Christiana Figueres, former Executive Secretary of the UN Framework Convention on Climate Change: “As the world focuses on implementing the Paris Agreement, attracting scaled-up investment to climate solutions will be critical. For those of us who do not come from the finance world but need to understand it better – this Guide provides an excellent foundation to the key aspects of who does what and why in finance. It has become a favourite reference for me.”
The guide is published by Bloomberg New Energy Finance in collaboration with Chatham House and the Frankfurt School – UNEP Collaborating Centre for Climate & Sustainable Energy Finance. First published in 2009, this 2016 update was written and produced by Kirsty Hamilton who has been working with clean energy finance practitioners on the policy conditions for investment for over 12 years through Chatham House.