Measures
Green financing
Accelerating green financing is critical to achieving the sustainable energy transition. Large capital investments in renewables will be required, but at the same time it will lead to even greater savings compared to fossil fuel-based generation. Policymakers need to work with central banks, regulatory authorities and investors to examine the possibility of developing a green finance policy and establishing a green finance bank or fund to help close the investment gap.
Renewable energy technologies have relatively high financing costs in developing countries, which reflects their unattractive risk/return profile. This is because of their long-time horizon, high initial capital costs, illiquid equipment and project risks. Policymakers can reduce high financing costs using two methods – de-risking and direct incentives. De-risking has two basic forms – policy de-risking instruments that reduce risk, and financial de-risking instruments that transfer risk. Direct incentives are direct finance transfers or subsidies for low carbon investments.
Accelerating green financing is critical to achieving the sustainable energy transition. Large capital investments in renewables will be required, but at the same time it will lead to even greater savings compared to fossil fuel-based generation. Policymakers need to work with central banks, regulatory authorities and investors to examine the possibility of developing a green finance policy and establishing a green finance bank or fund to help close the investment gap.
Renewable energy technologies have relatively high financing costs in developing countries, which reflects their unattractive risk/return profile. This is because of their long-time horizon, high initial capital costs, illiquid equipment and project risks. Policymakers can reduce high financing costs using two methods – de-risking and direct incentives. De-risking has two basic forms – policy de-risking instruments that reduce risk, and financial de-risking instruments that transfer risk. Direct incentives are direct finance transfers or subsidies for low carbon investments.
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Scenario