Felipe Calderón, Chair, Green Growth Action Alliance
Dramatic upgrades in technology, skills, policies and business models, along with an aligned public consciousness, are needed for the transition to a green growth pathway. Infrastructure investment required for sectors such as agriculture, transport, power and water under current growth projections stands at about US$ 5 trillion per year to 2020. This ‘business-as-usual’ investment will not lead to a stable future, however, unless it achieves environmental and sustainability goals. This development needs to be greened by re-evaluating investment priorities, building capacity, investment-grade policies and improving governance, among other activities. Additional investment needed to meet the climate challenge – for clean energy infrastructure, sustainable transport, energy efficiency and forestry – is about US$ 0.7 trillion per year.
Private financiers see these massive investment requirements as an opportunity. Today, we see major growth in clean energy investment, with financial flows worldwide approaching those in carbon-intensive energy sources. Further, developing countries are proving an increasingly important source of capital. Since 2007, clean energy investment originating from outside the Organisation for Economic Co-operation and Development (OECD) grew at 27% per year compared with 10% per year from OECD countries, albeit from a far lower base.
Yet today, despite signs of increasing private finance into clean energy and other green investments, there remains a considerable shortfall in investment. Closing this gap is our collective task and one that we cannot afford to fail.
Public finance, linked to smart, enabling policies, has a critical role to play. Given the scarcity of public funds, governments’ contributions to closing the gap will depend on their effectiveness in mobilizing private investment. Experience demonstrates this is possible when supported by targeted financing mechanisms and institutional arrangements that blend private and public interests, expertise and resources to reduce risk and address bottlenecks preventing private investment.
The Green Growth Action Alliance was created to accelerate this agenda at the 2012 G20 Summit in Los Cabos, Mexico. The Alliance’s vision, one that I share and actively promote as its founding chair, is to drive greater investment in green growth by unlocking potential sources of finance. Collaboration between business, governments, civil society and international organizations in overcoming barriers to and securing the benefits of green growth is the DNA of the Alliance’s approach.
The Green Investment Report is the first report of the Alliance. It aims to inform and inspire policy-makers and public and private finance providers to close the gap in delivering inclusive, sustainable growth. It is the first time that a number of important institutions have joined to deliver a powerful message about the scale of the green investment gap that must be filled, and to spell out the ways and means to address the gap in green infrastructure investment. I appreciate this collective effort and would like to thank, in particular, Bloomberg New Energy Finance, the Climate Policy Initiative, the Global Green Growth Institute, the International Energy Agency, the OECD, the United Nations Environment Programme, the World Bank Group and the World Resources Institute for providing data, analysis, case studies and other support that enabled us to produce this report. I would also like to thank and congratulate the World Economic Forum for coordinating the whole effort and producing this report.
The Green Investment Report is one of many ways in which the Alliance is advancing green growth. Its members are collaborating on initiatives that aim to prove the efficacy of financing green growth, from energy efficiency to renewable energy and climate-smart agriculture. It is, as the name states, an alliance for action. I invite G20 governments, public finance institutions, investors and policy-makers to read this report and join us in leading the way to making a difference.
Felipe Calderón, Chair
Green Growth Action Alliance