Scaling up finance for sustainable energy investments

Innovative financial mechanisms in four key areas have the potential to boost crucial investment in sustainable energy by some $120 billion a year in the near term, an expert report from the Sustainable Energy for All (SE4All) initiative shows. Investment from both the public and private sectors will need to triple to more than $1 trillion per year to meet SE4All’s ambitious goal of sustainable energy for all by 2030, according to latest estimates. Developing countries face particular challenges in mobilising finance, ranging from investors’ risk perceptions and an inadequate pipeline of bankable projects, through to weaknesses in the regulatory framework and other basic conditions needed to set the stage for investment. Even in the developed world, investors can encounter regulatory and policy challenges in financing sustainable energy. The report by the Finance Committee of SE4All’s Advisory Board, ‘Scaling Up Finance for Sustainable Energy Investments’, identifies four broad ‘investment themes’ where action could help drive increased investment: developing the Green Bond market; using Development Finance Institutions’ (DFIs’) de-risking instruments to mobilize private capital; exploring insurance products that focus on removing specific risks; and developing aggregation structures that focus on bundling and pooling approaches for small-scale projects.

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