Green & Resilience Banks: How the Green Investment Bank Model Can Play a Role in Scaling Up Climate Finance in Emerging Markets

This November 2016 paper, authored by the Coalition For Green Capital, NRDC, and Climate Finance Advisors, shows how Green Investment Banks are succeeding in countries such as Japan, the United Kingdom, Malaysia, Australia, and the United States. Green Investment Banks are specialized public financing authorities set up to persuade private investors to increase and accelerate their investment in renewable energy and energy efficiency.

The paper also explores the potential of the Green Investment Bank model in emerging and developing economies. Emerging markets will need to leverage both public and private investment to address climate change. The paper notes that around the world, significant amounts of capital will be needed to finance the clean energy and other infrastructure projects required to meet the climate change mitigation and adaptation objectives of the Paris Agreement.  Most of this financing will have to come from private sources. By some estimates, the required investment in sustainable infrastructure globally is up to $6 trillion per year, or $90 trillion by 2030. These investments can also contribute to the United Nations Sustainable Development Goals, including those focused on increasing access to sustainable energy.

Existing green investment banks are showing success. As reported in the paper, after only a few short years of operation, existing Green Investment Bank institutions have mobilized US$22 billion in private capital by committing or investing only $6.2 billion of public money. The paper highlights how Green Investment Banks are well placed to make effective and efficient use of climate funds from international facilities such as the Green Climate Fund, the Global Environment Facility and the Climate Investment Funds.

In emerging and developing economies, Green Investment Banks could make a difference in countries’ efforts in achieving the climate goals articulated in their commitments under the Paris Agreement, serve as a locus of financial innovation in local markets, and blend and coordinate investments by diverse public, private, international and domestic investors.