5 December 2014: The Institute for Global Environmental Strategies (IGES) and the Organisation for Economic Co-operation and Development (OECD) organized an event examining how governments can signal a positive shift in the investment climate that will enable a transition to green technology. The event, titled ‘The Role of Domestic Policies in Mobilizing Climate Finance,’ convened on the sidelines of the Lima Climate Change Conference (UNFCCC COP 20), on 5 December 2014.

Noting the importance of tailoring policy responses to country-specific contexts, Geraldine Ang, OECD, presented the OECD Policy Guidance for Investment in Clean Energy Infrastructure. She said the Guidance addresses investment promotion and facilitation, competition policies and energy market design, and carbon-friendly technologies and policies, among other issues.

Christopher Kaminker, OECD, described an OECD report on mapping channels to mobilize institutional investment in sustainable energy. He called on governments to be specific when calling for private investment, noting the need for them to understand and address the risks, challenges and opportunities potential investors may face in the green infrastructure arena.

Yuqing Ariel Yu, IGES, noted that although “technology transfer” is a familiar term, it is a complex and challenging process, which requires financial and in-kind investment from both technologically-advanced and recipient countries. On financing costs for green technologies, she said challenges include competing with more mature technologies, and banks’ preference for lower-risk, high-carbon investments.

Addressing means to encourage investor confidence, Xuedu Lu, Asian Development Bank (ADB) called for governments to: formulate long-term goals on climate change mitigation; mainstream climate change technology into national development plans; enact credible procurement and market access policies; and legally define long-term carbon credit values.

Giles Dickson, Alstom International, stressed that institutional investors prefer refinancing to up-front financing, and proposed climate bonds and “sovereign climate bonds” for up-front financing of green infrastructure projects. He gave several examples of key domestic policy interventions that can help shift investments to green infrastructure, including: short- and long-term targets at the national level; financial support; carbon pricing; incentive mechanisms; investment in supporting infrastructure; and absorptive capacity in developing countries.

In the discussion, participants considered: demand for future investments; environmental safeguards that should guide investors; potential for self-sufficient crowd-sourcing opportunities; scale of investments; the role of education and innovation policies; need for public awareness on climate finance; and importance of community buy-in to enhance investment. [IISD RS Meeting Coverage] [IISD RS Coverage of COP 20] [IGES Event Announcement] [OECD Side Events]