Copenhagen Climate Finance Meeting: Private money needs to be brought into play

By State of Green | [email protected]

28 October 2013

Energy consumption is increasing in many emerging and developing countries and big investments in infrastructure are needed in the coming years. Climate investments in renewable energy and energy efficiency is crucial.

At the COP in Copenhagen in 2009, developed countries committed to mobilise USD 100 billion per year from 2020. These funds should ensure – among other purposes – that emerging and developing countries limit their emissions of greenhouse gases, which is essential to keep the 2 degree celcius target in reach.

Public budgets are not able to deliver amounts at this scale, but the public can play a crucial role in mobilising far bigger private investments in climate initiatives in developing counties.

“At the meeting we heard about Morocco that have established long-term goals for renewable energy and created favourable interest rates for climate investments. That has led to massive investment in solar energy from the private sector – including a project in Ouarzazate that provides electricity for 160.000 households”, says Danish Minister of Climate, Energy and Building, Martin Lidegaard

Investing in climate and energy

The example from Morocco shows that the public – even with limited resources – can make a big difference by targeting their funds at specific instruments that can reduce the risks for private investors. In addition, the public can focus on creating a long-term enabling environment that makes it easier to invest in climate and energy – for example by removing subsidies for fossil fuels.

“The task we face is a common challenge. The private investors need to do their homework. Climate investments are not always as exotic as they are made out to be by some people. Many investments are in traditional sectors such as agriculture, infrastructure, and windmills”, says Martin Lidegaard.

Climate Investment can easily create profits for private investors. Therefore, it is important that politicians make demands to private investors and remind them that there are also risks associated with investments in fossil fuels. Donald MacDonald from the Institutional Investor Group on Climate Change admits that there is a need for greater understanding among investors about the emerging markets.

"Investors need to get used to the fact that climate investments are not necessarily associated with greater risks than traditional investments. Sometimes it is even the other way around. There is in investor circles a growing recognition that investment in coal and oil are also associated with significant risks, "says Donald MacDonald.

Source: Danish Ministry of Climate, Energy and Building

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