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Mobilising private finance internationally
By: Gregory Barker

On the international stage, governments have committed to mobilise $100 billion per year by 2020 to support the low-carbon transition in developing countries.  Though some estimates set the true cost of moving on to a global low carbon pathway in the trillions.  This is clearly a massive challenge.

The Government is doing its bit, currently providing £2.9 billion via our International Climate Fund (ICF) through to 2014/15.  But we need the private sector to work with us if we are to mobilise finance at scale.

This is why I established the Capital Markets Climate Initiative in 2010, a forum where Government and the Investor Community come together to drive innovation and new ideas for action to mobilise private climate finance at the scale needed to tackle climate change.

CMCI has already helped develop a range of innovative and transformational projects, which we are taking forward using public finance from the UK’s International Climate Fund.  These include:

•  Get Fit Uganda: With £20m UK Contribution, Get Fit will support the development and completion of small-scale on-grid renewable energy projects in Uganda to both avoid an energy shortfall and promote private sector investment by topping up the existing Feed-in-Tariff for renewables and providing capacity building support to the Ugandan Energy Regulatory Authority.

•  CP3: The UK has invested £130m as an anchor investor into 2 commercially run private equity funds in partnership with the IFC (part of the World Bank Group) and Asian Development Bank.  Investments will be made in to renewable energy, energy efficiency and clean technology projects in developing countries across the world. We announced at Davos, that one of the funds – the IFC Catalyst Fund – has reached first close, with investment of over USD 280 million.

•  Green Africa Power: The UK will invest £98 m in GAP, to invest in renewable energy projects in Africa, by providing early stage capital and lines of credit to cover specific risks. It aims to demonstrate the long-term viability of renewable energy in Africa to attract private developers and investors and encourage future projects.

•  India Solar: The UK will invest £50m to support solar energy projects in India by providing a REC market guarantee instrument. The instrument will provide certainty about the revenue stream that projects can expect to generate using RECs.

•  We are also working to drive change in the deployment of climate finance through the Multi-lateral Development Banks, specifically encouraging greater use of instruments that enable private sector investment.

And just last month, I visited the UAE to speak at the World Future Energy Summit, where I extended the CMCI conversation to include global investors and sovereign wealth funds.

Together we identified concrete areas of opportunity for investment in developing economies and ideas on how to scale up finance for climate solutions with particular emphasis on advancing ideas on policy risk insurance as a means of tackling a major barrier to climate investment.

On top of this, I believe there is a real opportunity here for promoting British businesses as the commercial partner of choice.  I was doing just that last Autumn when I led the largest ever Green Trade Mission to visit Africa, comprising 30 British businesses across the renewable energy supply chain, visiting Tanzania, Kenya and Ethiopia and opening the door to more trade and investment opportunities for the UK’s low carbon energy, goods and financial services industries.

It is this relationship between Government and the private sector that CMCI will continue to cultivate, to help both meet Government’s policy aims and increase business opportunities for private sector around the globe.

For more information please visit the International Climate Fund pages on the DECC website.

Filed under: Climate Change
Tags: International Climate Fund
Comments: 5 Comments on Mobilising private finance internationally
Posted on: Feb 28 2013

5 Responses to “Mobilising private finance internationally”

1. Roger Parker says:

   March 2, 2013 at 5:13 pm

   I am struggling to grasp the implications for the UK re: this ‘Mobilising of Finance’ blog above. Our Minister can spent time and effort away from the UK off-the-job globetrotting around the world dispensing ‘loads of money’ whilst here at home the launch of the energy-efficiency flagship Green Deal Scheme has been lethargic, – a damp squid; its success seriously limited by the proposed high interest rate for fnance, and the whole Scheme in reality limited to only high energy users where sufficient Savings will cover Improvement costs. How is it that Ministers can tell and run other peoples business abroad but here at home make such a mess of things? – just fiddling while Rome burns. I don’t get it. God help us.

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2. Bill Parker says:

   March 1, 2013 at 2:59 pm

   Having made a complete mess of domestic energy policy; it appears our Government is donating £2,900,000,000 of our money, next year, to help developing countries develop ‘green energy’….
   …the cash will, of course, have to be borrowed and added to the National debt.

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3. Thomas Farquhar says:

   March 1, 2013 at 9:56 am

   This is further evidence of how much the UK is developing as a leader in new energy, showing that we recognise that investment has to be made in countries that need our support or our own efforts will be futile in the long term.

   Reply
4. Montagu Douglas Halls says:

   March 1, 2013 at 9:14 am

   Healthy trend but it would be good to see more investment in ‘on-site’ energy generation (rather than feed-in the loss-inducing grids). At present the UK DECC seems to underinvest in geothermal and photovoltaic energy generation technologies – - these would seem to offer a clean, renewable and almost unlimited energy source. In time, their use would pay for itself.

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5. Mobilising private finance internationally - Omnipower says:

   March 1, 2013 at 8:32 am

   [...] Living Blog Home » GREEN LIVING BLOG » Mobilising private finance internationally By Gregory Barker On the international stage, governments have committed to mobilise $100 billion per year by 2020 to [...]

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