For the world to transition to a low-carbon future, substantial investment in the form of 'green finance' will be necessary. Michael Nelson looks at the importance of green financing and highlights some of its achievements to date.
According to the G20 policy brief on fostering sustainable global growth, countries face an enormous investment gap in funding projects designed to fuel a revolution in green technology. Research suggests that the cost of investment required in infrastructure for energy, transport potable water supply, and sanitation, as well as telecommunications over the next 15 years could be as much as $90 trillion.
With available public spending not being sufficient to drive this change, focus is turning towards those in the private sector who seek to support investments that are aligned with positive environmental impacts. This is known as green finance, which includes schemes such as the issuance of bonds by public and private sector borrowers whose proceeds are deployed in environmentally beneficial projects, direct investments in green infrastructure, and venture capital investments in new, clean technologies.
"Few new products are launched today without the manufacturer exhibiting greater resource efficiency, reduced energy consumption, and improved recyclability," says Ian Thomas, managing director at Turquoise, an investment company focused on energy and the environment.
One such venture capital fund is Low Carbon Innovation Fund 2, which invests in innovative, low-carbon technologies in the UK. Several investments have already been made in the last year via this fund, which Thomas says highlights the breadth of opportunities available in the sector.