A green finance gap means many projects fail to get off the ground for lack of funds while investors complain about a dearth of bankable projects, warned experts at the Global Green Growth conference on the South Korean island of Jeju.
“The general agreement is that money is there, but money is also scarce because you cannot get it in a simple way,” Shiferaw Teklemariam, Ethiopia’s minister for the environment, forestry and climate change, said at the conference earlier this month. “We need to simplify the processes and make them more accessible.”
The gathering was hosted by the Global Growth Institute (GGGI), set up by the United Nations in 2012 to chart and promote a socially inclusive and environmentally friendly path to development.
Shiferaw said Ethiopia estimates that it will need at least $7.5bn (£5.8bn) over the next decade in order to meet its targets on green growth. He emphasised that the “financial resources gap” was the biggest challenge to Ethiopia’s quest for growth that reduces poverty, increases social inclusion and promotes environmental sustainability.
Mahua Acharya, GGGI’s assistant director general, said that designers of development projects are not speaking the language that institutional investors want to hear. “The supply of capital is not a problem,” she said. “It is the moving of that money into a project.” She said financiers find many prospective projects either too risky or not rewarding enough: in 2014, out of trillions of dollars sitting in OECD countries, only $391bn was made available for green finance.
In a speech to open the conference, which gathered hundreds of delegates from 50 countries, GGGI’s president, Susilo Bambang Yudhoyono, called for the walls between available finance and unfunded green projects to be knocked down.
He said more money for sustainable development has become available from private investors and public donors, as the world has realised that modern economic growth – in Asia, for example – has come at a huge cost to the environment and has exacerbated inequality. In 2013, $193bn out of a total $331bn of climate finance flows came from private financiers, Yudhoyono said.
“Somewhat ironically, we still frequently hear of projects struggling to find finance, and financiers struggling to find projects,” said Yudhoyono, a former president of Indonesia.
Acharya said the GGGI has been working to set up an investment service, involving mainly people with banking backgrounds, to support countries to prepare projects that appeal to the private sector. In the pipeline are ventures in India, Mongolia, Vanuatu and Indonesia, she said.
According to officials from the Climate and Development Knowledge Network (CDKN), developing countries need help to translate their climate pledges under the Paris Agreement into action towards green growth goals.
“This does not happen overnight, but we should now focus on building on existing capabilities to ensure that the available climate funds are programmed in a way that catalyses significant volumes of other public and private finance for urgent climate action,” said Ari Huhtala, CDKN’s deputy chief executive for policy and programmes.
CDKN runs a dedicated website supporting the preparation of bankable projects.
Nevertheless, Mairi Dupar, global public affairs coordinator at CDKN, acknowledged that it may take a lot more to help countries whose human resources are already stretched. “That’s why there’s an acute need for external actors – sometimes the climate funds themselves … to provide governments with technical support for preparing proposals.”
This Article has been cross-posted from: https://www.theguardian.com/global-development/2016/sep/30/poor-countries-call-for-help-in-getting-green-stuff-into-climate-projects-conference-green-growth