Yesterday in San Francisco, global leaders in the field of innovative clean energy finance gathered in advance of the 7th Clean Energy Ministerial. The event brought together policymakers, practitioners and thought leaders on Green Banks and Green Bonds. The forum was hosted by the U.S. Department of Energy, and featured the Organisation for Economic Co-operation and Development (OECD) and the new Green Bank Network (GBN). Meeting participants shared best practices and identified opportunities to advance Green Bank and Green Bond solutions around the world.
This event could not have occurred at a more critical moment. As the energy ministers of the world’s largest economies gather today in San Francisco, the question they face is no longer “What commitments must we make to halt rising carbon emissions?” The question is now, “How are we going to pay for what we all committed to do last December in Paris?” And yesterday’s meeting on finance covered many of the approaches that will be a critical part of the answer.
Green Bank leaders from Japan, Connecticut, Hawaii, California, and the UAE attended to describe the new methods they are implementing to leverage limited public capital with greater private investment. And pioneers in the field of green bonds from Climate Bonds Initiative and IFC updated the group on the quickly growing industry and global landscape of issuances.
Green Banks and Green Bonds are two sides of the same coin – institutions designed to attract and deploy capital for clean energy projects; and a tried-and-true mechanism to raise capital from public markets for clean energy deployment. Many trillions of dollars must be mobilized to meet the Paris climate commitments. And achieving this goal will not be possible without a network of dedicated institutions around the world, and efficient means for drawing in capital for renewable energy and energy efficiency projects.
Highlights from the meeting include:
- The OECD released a first-of-its-kind publication on “Green Investment Banks”. It provides a comprehensive overview of the Green Bank concept and a survey of existing institutions. CGC was honored to support and provide content to the OECD in its efforts on this paper. This publication builds on years of prior OECD research and conferences on Green Banks.
- Participants were given a detailed update on the progress of the new Green Bank Network. Announced in December in Paris, the GBN will be a central global hub for best practices, data and know-how on Green Banks. Founded by Green Banks in Connecticut, New York, UK, Australia, Japan and Malaysia, CGC and NRDC are spending 2016 standing up the organization and building network capabilities.
- The OECD and the GBN together were pleased to announce that the next OECD Green Investment Finance Forum will take place in Tokyo on October 13-14. In only its third year, the GIFF has become a premier global event on innovative clean energy finance methods. The first two events in 2014 and 2015 were notably keynoted by Al Gore. This year’s GIFF will be preceded by an event hosted by Japan’s Green Finance Organisation, and will serve as a gathering for the Green Bank Network.
The Green Bank movement is at an inflection point. Only five years ago, the Green Bank concept was a small pilot in policy and financial innovation. Today, Green Banks have animated over $10 billion in clean energy investment. They are increasingly viewed as a critical lever for driving public and private clean energy investment and meeting national and sub-national level goals for clean energy deployment. As the world considers how to finance their new low-carbon futures, Green Banks will play a critical role. Events like yesterday’s and the coming OECD & GBN gatherings in Tokyo are essential, so that leading know-how can rapidly spread to new markets and ensure no nations are left behind in the clean energy transition.
Simon Upton, Environment Director of the OECD laid the problem out clearly: any dollar invested today in infrastructure that is not green is either locking us into climate damage, or locking us into economic damage through stranded assets. This means in order to meet the Paris commitments, all new investments in infrastructure moving forward must be clean, better and cheaper. We must mainstream clean energy investment. This is our challenge.
Green Banks help meet this challenge by entering markets where capital markets are slow to invest, where perceived risk, lack of scale, or lack of history limit private investment. As private bankers at the CEM event reminded us, there is plenty of capital waiting on the sidelines. And smart institutional investors are looking for long-term investments that are green, have cash generating fundamentals, and won’t become stranded. Green Banks help bridge the gap, and help individual projects and portfolios connect with the deep pools of capital necessary to meet our toughest infrastructure challenges.