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Catalyzing Low Carbon Growth in Developing Countries: Public Finance Mechanisms to Scale Up Private Sector Financing

Sources:

United Nations

Authors:

John Ward

Sam Fankhauser

Cameron Hepburn

Helen Jackson

Ranjita Rajan

Date:

1 October 2009

This report identifies five obstacles to institutional investor engagement in low carbon growth in developing countries and proposes a package of public finance investments to address this. Obstacles are country risk, low carbon policy risk, currency risk, deal flow problems, and difficulty evaluating overlapping risks. Proposed public financing mechanisms are making country risk guarantees explicit to investors, offering low carbon policy risk cover, establishing currency funds offering foreign exchange hedging products, creating low carbon project development companies, and taking a “first loss” equity position in funds.