Private finance for IGE

Question 1

The transition to IGE will be expensive…how expensive?

Answer 1

Estimated to cost 2% of global GDP to finance the transition by 2050

Question 2

To achieve IGE by 2050, the majority of investment must come from the public sector.

True or false?

Answer 2

False: the majority of investment needs to come from the private sector.

Question 3

How does public finance act as a catalyst to leverage private investment?

Answer 3

1. Public sector invests in R+D and demonstrates potential of new tech / practices
2. This encourages private sector to invest and facilitate deployment
3. New tech / service is deployed / diffused and private investors start earning returns
4. This attract more private investors so that gradually the need for public sector funding is phased out

Question 4

1. According to a study in 2013 by Kaminker et al., what was the combined asset value of OECD countries?
2. According to the World Economics Forum, what was the estimated investment gap to reach key SDGs by 2030?

Answer 4

1. 83 trillion USD
2. 2.5 trillion USD

THE CAPITAL EXISTS, IT JUST NEEDS TO BE DIRECTED APPROPRIATELY

Question 5

Why do we need economic policy to encourage investment into green business?

Answer 5

Because there is a misconception that green business models have higher real / perceived risks and costs to potential investors

Question 6

Give 3 ways in which economic policy can reduce the misconception around green business.

Answer 6

1. Provide investment frameworks
2. Share risk associated with green investment
3. Reduce the cost of capital for green economy projects

Question 7

Give an example of an investment framework for green business.

Answer 7

The Green Bonds Principles by the ICMA (International Capital Market Association)

It facilitates the issuance and assessment of green bonds.

Question 8

Green bonds are always for environmental causes. True or false?

Answer 8

True.

Question 9

Public entities can benefit from green bonds. Which was the first country to introduce a sovereign green bond?

Answer 9

Nigeria

Question 10

How might risk be shared for green business projects?

Answer 10

Through public-private partnerships

Question 11

Give an example of a public-private partnership that minimises risk for green business.

Answer 11

The Green Credit Fund in Mongolia is a partnership between the government and Mongolian Bankers Association.

It provides a reliable source of funding for the private sector to undertake green projects.

It also provides info on green investment.