The Green Climate Fund: Options for mobilizing the private sector
The Green Climate Fund: Options for mobilizing the private sector / Katherine Sierra, Senior Fellow, Global Economy and Development. Washington : Brookings Institution, Dec. 2011, 47 p.
There is a strong case for the Green Climate Fund to support private sector investment in the move towards a low carbon, climate resilient – or ‘climate compatible’ – future. To have a chance at maintaining the climate at two degrees over pre-industrial levels, economies will need to transform. This implies significant investment in both mitigation and adaptation to help move countries onto climate compatible pathways. The public sector has a critical role in setting goals, building the enabling environment, and investing in research, development and public infrastructure in ways that support the transition. But businesses and households will be responsible for the bulk of the investment needed, and will need access to finance.
Private sector investors will deploy their capabilities and capital on low-emission investments only to the extent that risk-adjusted returns are positive and competitive. Investors look to countries with good investment climates and well-developed capital markets where the regulatory environment and pricing signals are clear and stable. These elements are not in place in many developing countries where country and currency risks, uncertain sector regulations, execution risks, capacity and knowledge gaps deter investment. Even if these barriers to investment can be addressed through risk reduction mechanisms, technology cost gaps between high and low-emission alternatives remain in many sectors, particularly in the absence of a price on carbon… (more on http://www.brookings.edu/reports/2011/1206_green_climate_fund_sierra.aspx)
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