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Mapping Channels to Mobilise Institutional Investment in Sustainable Energy

image of Mapping Channels to Mobilise Institutional Investment in Sustainable Energy

What are the channels for investment in sustainable energy infrastructure by institutional investors (e.g. pension funds, insurance companies and sovereign wealth funds) and what factors influence investment decisions? What key policy levers and risk mitigants can governments use to facilitate these types of investments? What emerging channels (such as green bonds, YieldCos and direct project investment) hold significant promise for scaling up institutional investment?

This report develops a framework that classifies investments according to different types of financing instruments and investment funds, and highlights the risk mitigants and transaction enablers that intermediaries (such as public green investment banks and other public financial institutions) can use to mobilise institutionally held capital. This framework can also be used to identify where investments are or are not flowing, and focus attention on how governments can support the development of potentially promising investment channels and consider policy interventionsthat can make institutional investment in sustainable energy infrastructure more likely.

 

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An integrated overview of channels and approaches for mobilising institutional investment in sustainable energy

This chapter provides an integrated overview of the structure of the report, which delves into the various channels (financing instruments and investment funds) and approaches (risk mitigants and transaction enablers) for mobilising investment by institutional investors for sustainable energy infrastructure. To assist policy makers in visualising investments and their defining characteristics, the chapter introduces a framework for understanding investment channels which includes a classification system (elaborated in Chapter 3). The chapter provides definitions for the key issues covered in the report and provides an introduction to a number of tabular and visual devices which are used to illustrate how the classification works for individual transactions and groups of transactions. It provides an introduction to the diverse actors involved in sustainable energy financing and concludes by proposing where in the broader literature the report makes its contribution.

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