OECD Environment Working Papers

This series is designed to make available to a wider readership selected studies on environmental issues prepared for use within the OECD. Authorship is usually collective, but principal authors are named. The papers are generally available only in their original language English or French with a summary in the other if available.


Towards a Green Investment Policy Framework

The Case of Low-Carbon, Climate-Resilient Infrastructure

Achieving low-carbon, climate-resilient (LCR) development is a policy goal of many governments today, and investment in built-infrastructure – in the energy, transport, water and building sectors – is a central part of the challenge. In the face of growing infrastructure needs and fiscal constraints, such transformational change will require large-scale private sector engagement. However, there is little policy experience on how to integrate climate and other environmental policy goals into investment policy frameworks and infrastructure planning. While many studies focus on the role of environmental and climate change policies to support a transition to a low-carbon, climate-resilient (LCR) economy, this paper suggests that other factors play a critical role to achieve this transition. It starts from the premise that climate change policies and their effectiveness cannot be studied in isolation, but need to be considered in a broader national policy context, one that has the enabling environment for investment and development at its centre. This report aims to advise governments on how to create and improve domestic enabling conditions to shift and scale-up private sector investments in green infrastructure, to finance a transition to a LCR economy and greener growth. This report advances a “green investment policy framework” taking infrastructure investment as a starting point and looking only at climate change mitigation and adaptation. It highlights the significant opportunities and many challenges that exist today in both developed and developing countries to transition to LCR development through investment in both renovated and in new infrastructure. The report suggests it is possible to generate multiple local development benefits from LCR infrastructure investment. It presents a five-point policy framework to guide domestic reforms that can steer use of limited public funds while also enabling and incentivising private investment to support a transition across relevant infrastructure sectors to simultaneously deliver climate change and local development goals.


Keywords: climate change, finance, policy, risk, infrastructure, development, private investment
JEL: G11: Financial Economics / General Financial Markets / Portfolio Choice; Investment Decisions; Q54: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Climate; Natural Disasters and Their Management; Global Warming; G18: Financial Economics / General Financial Markets / General Financial Markets: Government Policy and Regulation; O44: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Environment and Growth; Q01: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / General / Sustainable Development
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