An interesting Energy Collective article that looks at the challenge of how a massive $5.7 trillion climate financing as conceived at the Paris meet will be realised
In 2015, the private sector funded only $25 billion in project-level equity of the $391 billion in global climate finance. The balance either flowed through government budgets and the multilaterals that use these funds, or balance sheet financing, which tends to support the lowest risk investments.
This pales in comparison to the $5.7 trillion in investment needed to reach the climate objectives set out in the Paris Agreement. Specifically, this means transitioning the $5 trillion we currently spend on energy infrastructure to renewable or climate-friendly sources, while finding another $700 B to close the gap.
Many national governments cannot support this kind of investment. The funds needed are simply too large, and since government deficits are growing, fewer funds are available for direct financing
So, what indeed can be done?
The article provides some guidance:
Realists will agree that the primary way to address this challenge is to create an attractive risk/reward environment for private sector investors, while creating the right institutional environment that attracts capital. Investors need the returns, as well as a level of comfort that they will have the appropriate banking, legal, and risk management resources available to ensure the success of the investment throughout its life.
Read more from the Energy Collective web page.