9 December 2014: The International Emissions Trading Association (IETA) and the Global Environment Facility (GEF) organized a ‘High-Level Dialogue on Public and Private Green Financial Innovations’ on the sidelines of the Lima Climate Change Conference. The event brought together public and private sector leaders to discuss how to scale up innovative financial mechanisms for low-carbon investments.

GEF Chief Executive Officer (CEO) Naoko Ishii explained how the GEF has worked directly with the private sector to share the risk of investing in transformational change. As highlighted by Carolina España, Development Bank for Latin America (CAF), the GEF’s US$110 million non-grant pilot is intended to attract proposals from public and private sector stakeholders that demonstrate innovative financing mechanisms.

Christian del Valle said his company, Althelia Ecosphere, has made a €9 million investment in the long-term conservation of Peru’s natural forest, which has created an “economic buffer” around a reserve where smallholder farmers can intensify agroforestry practices and earn higher market prices for their products, while meeting broader conservation goals. He noted that the project is ready to feed into the national REDD+ programme.

Josué Tanaka, European Bank for Reconstruction and Development (EBRD), observed that innovation is a misleading concept as many instruments being used are not new. He said it may be more a matter of scaling up established instruments, such as bonds, and lauded the GEF’s record in leveraging such funding.

Vikram Widge, International Finance Corporation (IFC), highlighted Momentum for Change as a scalable business model for the commercial diffusion of solar technology and the China Energy Efficiency Project, which leveraged US$20 billion in GEF funding to raise more than US$800 billion in private equity for energy efficiency projects.

Kenneth Lay, Rock Creek Group, highlighted challenges in meeting strict fiduciary requirements of institutional investors such as pension funds. He advised using reputable multilateral mechanisms such as IFC and EBRD to do the “heavy lifting” needed to “match those who need the money and make them fit those who have the money to invest.”

During the discussion, participants proposed ways to make green projects more attractive to investors, such as: aggregating successful projects to decrease operational costs; mapping a green financing pipeline ahead of the Paris Climate Change Conference in 2015; and using impact investing, public procurement models, and resilience and catastrophe risk bonds. [IISD RS ENBOTS Coverage] [IISD RS Coverage of Lima Climate Change Conference] [GEF Event Announcement] [IETA Event Announcement]