Unlocking investment in clean energy, East Asia should act now, says World Bank

All countries in East Asia stand to benefit from following a low-carbon growth path says a new World Bank report that urges their governments to act now to unlock private investment in clean energy.

Apart from the benefits to the planet, national economies also benefit from adopting low-carbon growth. These include energy savings and enhanced energy security, improved local environments, and more jobs.

Many countries – both developed and developing – are already taking action.

All East Asia’s middle-income countries have set national targets for energy efficiency and renewable energy, and some have also declared targets to reduce carbon.

Clean energy needs effective policies

But they can’t attain these targets without considerable financing from the commercial sector, so governments have to put in place effective policies and public funding to attract private investors to put their money into clean energy.



 

The new report Unlocking Commercial Financing for Clean Energy in East Asia, compares a range of policy approaches and public financing options for encouraging commercial investment in clean energy.

It reviews what has been done recently and draws out some lessons, such as when and how to use public financing, which instruments to use, and how to design and implement them.

John Roome, World Bank Director for Sustainable Development in the East Asia & Pacific Region, says:

“Once the right policy regime has been put in place, public financing mechanisms designed to mitigate risks and close financing gaps proved to play a major catalytic role in kick-starting substantial investments in clean energy.”

Report lead author Dr. Xiaodong Wang, senior energy specialist for the World Bank, adds:

“The selection of public financing instruments should be tailored to the market barriers, the targeted market segments, the regulatory environment, and the maturity of the financial market.”

She says using credit lines and partial risk guarantees to engage domestic banks have had the most effect in unlocking commercial financing.

Dr. Wang also says that increasing access to financing for small and medium enterprises and clean energy start-ups is best achieved through dedicated funds, plus mezzanine and equity funds, and notes that:

“The impact of public financing instruments can be substantially increased if they are packaged with technical assistance.”

The report is in four parts. Following an overview, it looks at financing energy efficiency, then financing renewable energy, before finishing with some case studies on clean energy financing.

The World Bank believes we can end poverty globally by the year 2030.

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