Global Green Growth Forum - Finance
The goal of green development requires substantially larger investments than is seen at present. Despite increases in investment flows to greening the economy a significant gap persists. A number of initiatives and partnerships are underway to address this shortfall of investments with the specific aim of unlocking substantial private finance for green growth. 3GF offers a platform for discussion and furthering of partnerships in this area with a view to bringing green investments to scale.
Greening investments at scale is a precondition for achieving sustainable green growth. The Green Growth Action Alliance has estimated that on top of the business as usual investments in infrastructure, water, telecoms, power agriculture, forestry etc. of USD 5 trillion per year to 2020, there is a need for an additional USD 700 billion a year to ensure that growth is sustainable and climate friendly.
This gap will have to be financed by private investors including institutional investors. The challenge is to create an environment where such funding will be forthcoming. At present investments are hampered by policy distortions favouring e.g. fuel options, policy risks and uncertainties as well as the reluctance of investors to take longer term views.
Public private partnerships appear to be the way forward. Issues worth exploring relate to how governments take leadership in ensuring a sound and safe environment for private investors to confidently take long term investment decisions. Furthermore, how commitments to abolish unsustainable fossil fuel subsidies can be speeded up to let the markets send the right price signals to investors or vice versa– how high and stable carbon prices can be ensured that lead to changes in behaviour.
Other issues are related to public financial institutions designing and demonstrating instruments that truly unlock private finance.
And finally, there are issues related to dealing with investors' perception of risk and the continued risk aversion even in markets where there are proven safe returns and known technologies.
A number of organisations and private-public partnerships are very actively engaged in addressing these issues including but not limited to the Green Growth Action Alliance, Climate policy Initiative, Global Investor Coalition on Climate Change, World Resource Institute, The World Bank, UNEP, UNFCCC and national government initiatives.
The 3GF convenes a select number of these partners to explore ways forward and showcase experiences all with a view to bringing investments to scale.