B20 Sees Launch of $1T Green Investment Shortfall

A new partnership initiative to address the estimated US$1trn annual shortfall in green infrastructure investment was launched this week at the Business 20 (B20) Summit in Los Cabos, Mexico.

As a first step, the Green Growth Action Alliance (G2A2) said it would assist Mexico in unlocking private finance for investments in businesses and technologies that will help reduce greenhouse gas emissions by 30pc by 2020.

In partnership with the Mexican government, the alliance will identify critical green growth initiatives, design strategies to overcome these obstacles, and draw in private investment.

Designed in partnership with G20 governments, the group is calling for actions to be adopted in five target priority areas over the next three years:

·        Promote free trade in green goods and services;

·        Achieve robust carbon pricing;

·        End inefficient subsidies and other forms of fossil fuel support;

·        Accelerate low-carbon innovation; and,

·        Increase efforts to target public funding to leverage private investment.

Members – which include companies like Accenture, Samsung Electronics Company, KfW Bankengruppe, Bank of America Merrill Lynch, Deutsche Bank Group, Enel, and Vestas Wind Systems, as well as public bodies such as the World Bank Group, the OECD.  The  Overseas Private Investment Corporation (OPIC),  the  Climate Policy Initiative  (CPI)  and the United Nations Foundation – will focus on driving higher investments into clean energy, transportation, agriculture, and other green growth investments.

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According to the alliance, it will identify and deploy public money that can be used to unlock and utilize private sector investment, identify innovative financing and de-risking structures, support pilots testing new models and market frameworks, and feed results into crucial international processes.

“The G20 Mexican Presidency welcomes this initiative and supports its efforts to define the practical steps business can take, in partnership with government, to deliver the green growth agenda. The Alliance will also play an important role in tracking our progress in leveraging private finance for green growth,” said Mexico’s President Felipe Calderón.

“Each year, US$1trn is needed to deliver the necessary infrastructure to shift us onto a low carbon path,” said Ditlev Engel, chief executive officer of Vestas Wind Systems and co-chair of the B20 Green Growth Task Force. “Public finance is constrained or shrinking, and the only way to deliver this green infrastructure is to mobilize more than US$100trn in assets under management by the private finance community.”

“Sustainable growth generates multiple and mutually reinforcing benefits such as low carbon economy, accelerated job creation, healthier and wealthier populations, greater resource efficiency and biodiversity,  and expanded access to more secure energy supplies. Through a more unified, coherent policy framework, business will be able to make the necessary investments in new opportunities that the green economic transformation promises,” said Fulvio Conti, chief executive officer and general manager of Enel and co-chair of the B20 Green Growth Task Force.

Structured funds, such as the Global Climate Partnership Fund (GCPF), or products, such as the new feed-in-tariff insurance coverage being offered by OPIC, are examples of innovations the alliance will encourage to the scale-up public and private green investment.

To institutionalize the best models for attracting private investments for green growth, the alliance said it would work with existing initiatives, such as the United Nations’ Sustainable Energy for All action, the Green Climate Fund (GCF), and the International Development Finance Club (IDFC).

It said it will now begin a series of actions, including the development of the detailed work plan establishing roles and responsibilities, the identification of target countries to launch pilot projects and for the first time measure results in developing new financing and business models.

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