Action on climate change is a global challenge: we succeed or fail as one planet. Lack of sufficient progress on climate action forms a barrier towards achieving most other global goals. It will be increasingly difficult to achieve most of the global goals in a world with increased climate change.
Access to finance remains a critical barrier to accelerating deployment of renewables. There’s a need to engage a broad range of investors to increase the pool and reduce the cost of capital.
Scaling finance for renewable energy
On Energy Day at COP22 in Morocco, the World Business Council for Sustainable Development (WBCSD) announced the release of ‘Pathways to scale finance for renewable energy’.
The report details five key themes raised through dialogues between the industry and investment community. These include the importance of engaging new investors to the sector, the potential of new financing vehicles and the unique challenges and opportunities of emerging markets.
The report highlights a number of key takeaways identified in the discussions on scaling finance, including:
- The range of investor types active in renewable energy is growing, while there is a need to build and maintain the credibility of the sector;
- New financing vehicles, such as green bonds, are a key opportunity to scale finance for renewables. Recent growth is promising and there is strong demand from investors;
- A unique set of challenges and opportunities arises with developing and financing projects in emerging markets, where most future investment will be made. This shows that the role of multilateral development banks as a capital and risk intermediary is critical;
- We need to overcome the perceived disconnect between capital availability and project availability. Mutual education, de-risking of projects and greater disclosure of forthcoming pipelines will be beneficial.
The report is part of WBCSD’sREscalebusiness solution – designed to increase and accelerate the deployment of renewables. The REscale finance action plan brought together the renewable energy industry and the investment community in several meetings throughout 2016 to discuss and develop solutions to scale finance for renewable energy.
REscale consists of companies from different industries and markets. These includeABB, BT, DSM, CLP, CPFL Energia, DNV GL, EDF, EDP, Enel, Eskom, First Solar, Iberdrola, Nestlé, NRG, Schneider Electric, State Grid Corporation of China and Unilever.The International Finance Corporation and the Clean Energy Ministerial are REscale partners.
The report is availablehere.
Author:Bjørn Kj. Haugland, Executive Vice President and the Chief Sustainability Officer (CSO) in DNV GL Group