3 February 2016


Green Banks To Invest USD $40 Billion Over The Next 5 Years

Author: Jason Deign, Solarplaza

Bodies promoting renewable-friendly ‘green banks’ are increasing their focus on emerging markets with plans to establish a bank in a newly industrialised country later this year.

“We’re 100% focused on emerging markets,” said Jeffrey Schub, executive director at the Coalition for Green Capital, a Washington DC, USA-based non-profit whose mission is to establish green banks at state, federal and international level. “Our hope is that over the coming year we can identify and work with target countries [to develop a bank]. It’s not a fast process, but it’s definitely in the pipeline. If we had more money we would do more than one.”

Schub cited Chile, India and Mexico as possible target nations for the experiment. So far, most green banks have been set up in developed countries such as Australia, Japan and the US, with a remit to invest at regional or national level only. Two exceptions are a green bank in Malaysia and the UK’s Green Investment Bank, which has a special fund, UK Climate Investments, established to invest in renewable plants and energy efficiency projects in developing countries. The fund is a joint venture between the Green Investment Bank and the UK Department for Energy and Climate Change, with up to GBP£200 million to spend on projects in markets such as India, Kenya, Rwanda, South Africa and Tanzania.

More moves in this direction are emerging as the green bank concept gathers speed, said Schub. “We’re thinking about how to get green banks closer to emerging markets. Coming out of Paris, there’s a feeling of ‘how do we make this happen?’”

One of the building blocks was established during the Paris climate change talks, when a group of six green banks announced the formation of a network to increase the number of renewable energy funding bodies worldwide.

“Green banks can help stimulate the private investments necessary for nations to meet their commitments,” said the Natural Resources Defense Council (NRDC), which is working alongside the Coalition for Green Capital to promote the network. “The network will increase the global impact of green banks by enabling them to collaborate more effectively, share and leverage individual bank experiences, publicise achievements and grow the ranks of green banks worldwide.” Green banks have become an increasingly favoured way of mobilising capital for renewable energy investment.

At a summit in 2014, “green banks … said they collectively expected to deploy over USD$40 billion in capital for investments in clean energy and energy efficiency projects over the next five years,” reported the NRDC. However, Assaad Razzouk, group chief executive of clean energy project developer Sindicatum Sustainable Resources, said concept was less efficient than simply getting existing banks to adopt more renewable-friendly investment policies.

“All banks should be green,” he said. “All finance should be climate finance. All bonds should be green bonds. Slicing and dicing financial institutions brings no benefit I can see. Why not use the many, many institutions we already have?

Solarplaza will be exploring project development and investment opportunities in several emerging solar markets this year. Find out more about the 5-day trade missions to Vietnam and Thailand (April 2016), Argentina and Uruguay (June 2016), Colombia and Central America (November 2016).


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