CGC’s International Activity
Green Bank Network
CGC launched the global Green Bank Network in partnership with NRDC and six founding Green Bank members from around the world. The launch of the GBN at COP21 in Paris was particularity timely, as nations across the globe increasingly acknowledge the current clean energy investment gap, and are seeking ways to further “mainstream” investment in low carbon infrastructure. Green Bank are being recognized as a key tool to scale up climate investment. The GBN will serve as an important platform to share best practices, connect leading practitioners and drive further low-carbon investment via the Green Bank model.
Since the GBN launch in December 2015, CGC and NRDC have worked intensely on building the organization in coordination with founding members. In May 2016, at a White House-sponsored side event of the Clean Energy Ministerial (CEM) in San Francisco, the GBN announced the signing of a Memorandum of Understanding among founding member agreeing to principles and mission of the GBN. The GBN has hosted several high-level events, including the 2016 Green Bank Congress in Tokyo, Japan, the event “National Development Banks and Green Banks: Key Institutions for Mobilizing Finance” in Mexico City, in partnership with the OECD, the Inter-American Development Bank (IDB) and Banobras. The GBN also hosted the 2017 Green Bank Congress in New York City.
Green Bank Expansion in Developing Countries
With support from the Hewlett Foundation, CGC launched a Green Bank scoping project in 2017, exploring the opportunity for Green Banks (either purpose-built entities or adaptations of existing institutions) to be effective institutions 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 has become 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.
The study points to the viability of national Green Banks that can be developed to address critical market gaps and drive public and private climate investment. Green Banks, as public-purpose finance institutions dedicated to green investment, embody the pure focus and local market-oriented approach needed to fill the investment shortfall. In multiple countries already, 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.
Since initiating work on this scoping effort in January 2017, interest in the Green Bank model has grown and is seeing increased visibility as a promising option for expanding the climate finance architecture in developing countries. A promising cohort of countries is emerging as an early proof-of-concept opportunity for the Green Bank model including South Africa, Mexico, Chile, India, Morocco, the Philippines, Colombia, and others.
India Green Bank Development
As a small piece of the GBN project, CGC & NRDC have directly engaged with senior leaders of the Indian national government to explore national Green Bank creation. Working closely with NRDC’s finance team in India, CGC travelled to India to meet with the Minister of Power, the Secretary of New and Renewable Energy and the President of the Indian Renewable Energy Development Agency (IREDA) for direct discussion on Green Bank creation. CGC also helped run and organize a forum with other senior level government officials while in India to discuss potential Green Bank and green bond opportunities in India. The day after that forum, the President of IREDA publicly announced his intention to convert his institution into a Green Bank and expand its financing activity to generate more private sector leverage and support for distributed generation. CGC will continue this engagement with NRDC, specifically by drafting a cabinet note for the IREDA President to present to top ministers explaining the Green Bank rationale and opportunity.