Govts should attract clean energy investments: WB

The report titled Unlocking Commercial Financing for Clean Energy in East Asia said a low-carbon growth path was not only good for the climate, but also brought about domestic benefits in each country related to energy savings, improved local environments, enhanced energy security and more jobs.

In addition, as the lion’s share of financing is expected to come from the private sector, governments need to put in place policies conducive to private investment and use public funds to incentivise private investors in order to unlock commercial financing for clean energy. Delayed action will only increase the costs and difficulties of stabilising the climate.

“Effective policies are the essential driver to catalysing commercial investment in clean energy,” John Roome, World Bank director for Sustainable Development in the East Asia & Pacific Region, said in an official release.

“Once the right policy regime has been put in place, public financing mechanisms designed to mitigate risks and close financing gaps proved to play a major catalytic role in kick-starting substantial investments in clean energy.”

The report compares a range of policy options and public financing instruments for energy efficiency and renewable energy. 

It draws lessons from recent experiences in an attempt to address when and under what circumstances to use public financing instruments; which instruments to select; and how to design and implement them most effectively.

The good news is that many countries both developed and developing are taking action now. In East Asia, all middle income countries have national targets for energy efficiency and renewable energy, and some even have targets for carbon reduction.

“The selection of public financing instruments should be tailored to the market barriers, the targeted market segments, the regulatory environment, and the maturity of the financial market,” Xiaodong Wang, lead author of the report and senior energy specialist for the World Bank, said.

“Engaging domestic banks through credit lines and partial risk guarantees has had the greatest impact in unlocking private financing. Dedicated funds and mezzanine and equity funds are effective at increasing access to financing for small and medium enterprises and clean energy start-ups. The impact of public financing instruments can be substantially increased if they are packaged with technical assistance.”