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Clean energy infrastructure: Raising the capital

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E3G had the pleasure of co-organising an event at European Parliament last week (Wednesday 31st of August) in collaboration with GLOBE EU and GLOBE International on the topic of boosting the clean energy infrastructure pipeline 2020-2030 and the role of National Capital Raising Plans.

It was very encouraging to see MEP’s like Sirpa Pietikäinen and Seb Dance engaged on the topic. Sirpa highlighted the importance of having a long term road map for finance and priorities in sectors to be taken at each Member State level with a holistic approach “the financial architecture is essential for sustainability like blood circulation”.

It was pleasing to bring E3G’s experience on considering National Finance Strategies in Mexico and Chile and see there are many similarities around the need of having National Finance Strategies or national Capital Raising plans which are different sides of the same coin. Similarities in the challenges they face include the need to identify priority sectors and project pipelines with a strategic approach to build investor confidence, the need to make efficient use of public resources to leverage private capital, and to have an iterative stakeholder engagement process with public and private actors to define priorities and work to overcome finance related challenges.

The European Fund of Strategic Investment (EFSI) has an important role by investing in more difficult areas and creating aggregation platforms for small projects. However, the EFSI needs to invest in bankable projects and are facing similar challenges on getting that demand or project pipeline from member countries, “the need for quality projects” as EIB described it, the advisory hub that provides technical assistance could help countries with that task. Similarly the Energy Union requires €2.3 trillion to 2030 having a gap of €100 billion annually of which the majority, some €70 billion are related to energy efficiency.

We had a great presentation of the investor perspective on capital raising plans from the Green Infrastructure Investment Coalition highlighting “the need to overcome the pipeline barrier” as it is a vicious cycle within investment banks. If low carbon infrastructure projects are not there, teams need to be restructured or less investment flows towards decarbonisation. There’s been very positive news in low interest rates encouraging investment, commitments made at the Paris Summit of allocating around $43 trillion USD to sustainable finance, the growth of the green bond market and the G20, central banks and insurers taking a more active role. However investors still need to see the alignment of policies and “green” to be incorporated in long-term infrastructure plans to boost confidence to invest along with the design of public-private instruments that provide manageable risks. Capital raising plans can help achieve this.

Globe International also highlighted the important role that legislators have had in advancing climate change related regulation and how they are important actors in ensuring that climate and energy commitments are met through connecting policies with the politics. They will be key actors in pursuing this agenda and getting the finance needed to meet the 2C goal set by the Paris agreement.

We had excellent feedback from participants. The discussion was both informative and direct as there were a plethora of perspectives in the room which helped join the dots between public and private finance and infrastructure. Apparent from the discussion was that the National Energy and Climate Plans (NECPs) could be an avenue on starting a process of National Capital Raising Plans for member states. The idea of having Capital Rising Plans ‘has legs’, which is great. The question is what next? We will be organising a webinar to discuss this further.

This project has received funding from the European Commission through a LIFE grant. The content of this section reflects only the author’s view. The Commission is not responsible for any use that may be made of the information it contains.

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