Opportunity to Accelerate Private Sector Investment in Climate Solutions

There is an opportunity to accelerate private sector investment in solutions that mitigate or adapt to climate change (Climate Solutions).  This opportunity has emerged due to the synergy created by several different developments that have occurred simultaneously.  The first, and possibly the most important, is the significantly increased concern by very wealthy investors about climate change.  For example, the 2018 Global Investor Statement To Governments On Climate Change, which has been signed by 421 investors representing more than US$32 trillion in assets, strongly urged all governments to implement the actions that are needed to achieve the goals of the [Paris] Agreement, with the utmost urgency.  

Along with this increased concern by investors, there has been considerable development and growth of several initiatives that facilitate investment in Climate Solutions.  These initiatives include online platforms, project facilitation services, project aggregation, and financial incentives.  All of these initiatives can be considered components of an ecosystem that can facilitate increased investment in Climate Solutions by investors concerned about climate change.

One key component that is making this opportunity possible is access to online platforms that function as 24 / 7 global marketplaces between project developers and investors, such as the International Renewable Energy Agency’s Sustainable Energy Marketplace and ClimatePlace Association’s ClimatePlace.  These platforms can facilitate the initial connection between a project developer and an investor.  Then a range of complementary services and financial incentives can help move a project forward and become funded.

Another important component is project aggregation.  Since very substantial sums of money are managed by large institutional investors that often do not have the administrative capacity to invest in smaller projects, aggregating smaller investments into larger ones is an important part of increasing investment in Climate Solutions.  Fortunately, some large impact investment funds do perform this type of service.

In addition, there has been considerable growth of organizations providing project and business facilitation services over the last several years.  They provide a critical service to project developers to help them develop “bankable” projects and obtain funding for them.

Finally, there is a growing range of financial incentives becoming available for Climate Solutions from Africa Development Bank and other public financing organizations.  These incentives can make investing in projects significantly more attractive to a private investor.

Since the cost of solar and wind energy has declined substantially and is now often less expensive to generate than energy generated from fossil fuels, one area of Climate Solutions that could receive the biggest growth in investment is renewable energy.

All these components, which facilitate private sector investment, and have proven track records, can be scaled-up substantially.  Together they create dynamic synergy.

One example of a way to accelerate investment in climate solution is the innovative “Sustainable Energy Finance (SEF) Program” by Climate Finance Advisory Services (CFAS), which is a division of SME Funds Capital.  It is currently operational in Nigeria and CFAS is now working to expand it to other countries in West Africa.

For more information, see:

  1. Presentation prepared by Paul Stevers about the Sustainable Energy Finance (SEF) Program: LINK.
  2. Proposed Plan to Accelerate Private Sector Investment in Climate Solutions
  3. Selected Online Resources for Project Developers
  4. De-risking Investment in Climate Solutions