October 2010: The International Energy Agency (IEA) and Organisation for Economic Co-operation and Development (OECD) have released a working paper titled “Money Matters: Mitigating Risk to Spark Private Investments in Energy Efficiency.”

Focusing on financial and risk barriers to investment, this paper addresses causes of and solutions to lagging investment in energy efficiency, which is widely understood to offer cost savings and climate change mitigation benefits yet remains widely under-funded and under-implemented. The paper focuses largely on emerging economies where efficiency gains have the most potential to affect energy demand, and it finds that targeting risk perceptions of investors through financial instruments can help overcome current barriers.

Based on its findings, the report offers four recommendations: inrceasing rapidly and exponentially data gathering, sharing and training programmes; using financial instruments such as loan guarantees to reduce perceived investment risks; creating an international monitoring and evaluation protocol; and establishing the best combination of instruments to reduce unrealistic perceptions of risk. [The Working Paper]