Low Carbon Finance: Conditions to Mobilise Investment

The importance of mobilising investment into clean energy is centre stage as the world seeks to implement the Paris Agreement and deliver clean, secure access to energy.

This three-phase project aims to close the gap between policymakers seeking to unlock private finance and the finance practitioners expected to invest in green finance. The focus at the outset in 2004 was to bring an evidence-base from financiers on what is needed from government, with energy policy a core driver for the renewable energy investment just taking off at that time.

Phase One: Unlocking finance – ‘investment grade’ policy

Executed through direct engagement between the leading transactions-focused financiers and senior policy counterparts to unpick the components of ‘investment grade’ energy policy, set within the context of wider investment conditions.

Taking that ‘bottom up’ approach, linking to live energy policy debates, and synthesising the factors relevant for the international debate (including input into the UNFCCC’s early work on investment, and contributing to the IPCC process) was a key objective.

Phase Two: Low Carbon Finance Group

Following publications on unlocking investment for clean energy, emerging markets and the MENA region, and following the financial crisis, a practical second phase of work was developed supporting the establishment of the Low Carbon Finance Group and leading its policy work.

This was a pioneering, non-partisan group, founded in 2010 by leading financiers in London to help policymakers factually understand conditions to mobilise and attract capital at scale into the low carbon sector, bringing extensive renewable energy investment experience to the table.

The finance group focused on the UK’s Electricity Market Reform process and the EU 2030 package, plus the UNFCCC backdrop (2010-15), providing insight into how these different tiers of policy shape investment decisions. The group also produced a briefing for the Clean Energy Ministerial in 2012.

Phase Three: ‘Tools for the toolbox’ – lasting results

From 2016, the project is focused on creating enduring outcomes and tools from the body of evidence-based work to date. This third phase involves:

  • Helping policymakers set up effective, direct engagement with finance practitioners through, for example, Low Carbon Finance Platforms, which are linked to delivering policy and investment conditions at the right resolution of detail, for clean energy and infrastructure or NDC/climate outcomes. 

  • The development of practical tools for policymakers and non-financiers, including the publication, with Bloomberg New Energy Finance, of the ‘Finance Guide for Policymakers’ which is relevant for renewable energy and green infrastructure (original 2009 and its completely revised update in 2016). The guide covers the basics of ‘who does what’ and ‘how it works’ in the finance sector and is a factual, internationally relevant, ‘landscape view’ of finance which informs and builds capacity of policymakers and non-financiers.

  • Ongoing evidence-based work on ‘live’ policy and investment-relevant issues with the low carbon finance network of financiers from across debt and equity. This work focuses on two areas:

    • UK: the impact of the Brexit debate in the UK for low carbon investment, and

    • International: unpicking the post-Paris focus on the ‘green infrastructure’ pipeline, drawing on work to date with renewable energy financiers (forthcoming).