In the past 10 years, annual global energy transition1 investment nearly doubled, from USD290 billion in 2011 to USD501 billion in 2020. High-income markets accounted for just over half of the total investment over those 10 years, at USD2 trillion. While between 2015 and 2018, emerging markets accounted for an increasingly large share of global investment, high-income economies have been pulling ahead once more since 20182. Private capital has an important role to play in accelerating the transition to a sustainable and inclusive global economy. In the recovery from COVID-19, there is an opportunity for emerging markets to put sustainability at the heart of their efforts to rebuild with support from business and international community to accelerate the investment in the transition to low-carbon economies. To realise this promise, public and private collaboration will be vital for creating investment friendly business environments and build pipelines of bankable sustainable infrastructure investment opportunities that will drive new capital flows.
The Climate Finance Leadership Initiative (CFLI), in partnership with the Association of European Development Finance Institutions (EDFI) and the Global Infrastructure Facility (GIF), set out to raise the profile of enabling environment priorities and convened an industry-led effort to identify factors that enable domestic and international private finance in emerging markets, facilitate collaboration between private and public finance and open new engagement channels with policy makers. In support of this, the CFLI launched the following report Unlocking Private Climate Finance in Emerging Markets: Private Sector Considerations for Policymakers, which has been supported by HSBC.
This report delivers a set of key considerations to strengthen enabling environments for private climate finance. It highlights the policies that governments in emerging markets can advance—with support from business and the international community—to mobilise private sector investment in clean energy, low-carbon mass transit, climate-friendly water and waste systems, green buildings, and sustainable land use. This report also provides success stories of countries leading the introduction of sustainable policies and guidance on best practise in mobilising sustainable investment in infrastructure which accompany the key considerations.
1 BloombergNEF’s (BNEF) “energy transition investment” category includes renewable energy, carbon capture and storage (CCS), electrified transport, hydrogen, electrified heat, and energy storage.
2 Emerging markets refer to all upper-middle, lower-middle, and low-income markets, whereas developed markets refer to high-income markets, as per the World Bank Country Classification, 2021.