National Green Banks in Developing Countries: Scaling Up Private Finance to Achieve Paris Climate Goals
The Coalition for Green Capital (CGC), with support from the Hewlett Foundation, published this July 2017 paper exploring how the Green Bank model can be implemented in emerging markets to help achieve national climate goals. The paper examines how Green Banks (either purpose-built entities or adaptations of existing institutions) can be effective in channeling investment from carbon to clean in emerging economies and in driving global clean energy investment to the scale required to achieve international climate goals.
With the Paris agreement in place, the burden of climate action has shifted from international discussion to nation-specific implementation. And with that shift it becomes clear that far more investment, primarily from the private sector, will be needed to meet local climate goals and Nationally Determined Contributions (NDCs). Existing climate policies and investment pledges are projected to yield far less global climate investment than what is needed to keep temperature rise below two degrees Celsius. There is a $27 trillion investment shortfall that must be filled. New approaches are needed to drive private investment at unprecedented scale, and quickly.
National Green Banks can be developed around the world to address critical market gaps and drive public and private climate investment. Green Banks are public-purpose finance institutions dedicated to green investment, embodying the pure focus and local market-oriented approach needed to fill the investment shortfall. In multiple countries, Green Banks have successfully driven investment into clean energy infrastructure in their local markets. Green Banks are designed to maximize total investment, using limited public funds to leverage far greater private investment. By developing innovative finance and market development solutions, Green Banks address barriers that currently restrict clean energy market growth.