Public-private Partnerships Must Drive Global Green Growth
"If sustainable development is to become a reality, we need to unleash a wave of public-private partnership on a much bigger scale." -- UN Secretary-General Ban Ki-moon
The United Nations has been sounding the clarion call for private sector investment to combat climate change. The 2011 UN Environment Programme (UNEP) report "REDDy, SET, GROW, Part 2" called for private funding to finance international efforts to prevent a global surface temperature rise of 2 degrees Celsius, the agreed-upon target of the majority of the worldâs nations. One of UNEPâs main efforts is the forest conservation-based REDD+ program. According to the report, realizing the climate mitigation potential of the worldâs forests requires annual investment between USD 17 to 40 billion to meet the goal of halving carbon emissions from deforestation by 2030.
"Investment at this scale is highly unlikely to come from governments alone," states the report, which was issued in September. "umulatively available public funds from donor countries to date stand at approximately USD 7 billion...hence, investment from, and engagement of, the private sector -- including financial institutions (FIs) and financial intermediaries -- is essential, particularly for implementation activities."
INVESTING IN THE CLEAN ENERGY INFRASTRUCTURE
But it's not just the REDD+ program or the Green Climate Fund -- the operational financing mechanism of the United Nations Framework Convention on Climate Change (UNFCCC) -- that need financing. The switch to a low carbon economy means investing in renewable energy infrastructure. And in that regard the world is moving in the right direction overall. According to the 2011 Global Status Report of the Renewable Energy Network, renewable energy investment reached a record USD 211 billion in 2010, a 32 percent increase from the 2009 total of USD 160 billion, and an impressive 540 percent increase from 2004.
"The combination of government target-setting, policy support and stimulus funds is underpinning the renewable industry's rise and bringing the much needed transformation of our global energy system within reach," said Achim Steiner, the executive director of the United Nations Environment Programme. "Combining private sector financial flows and smart public policy will be a key to a low carbon, resource efficient 21st century Green Economy," he said.
PRIVATE FUNDING, MEET PUBLIC POLICY
Dominic Waughray, senior director at the World Economic Forum (WEF), which just finished its annual meeting in Davos, agrees with Steiner's assessment. "ublic finance alone (whether domestic or international) will not be able to fund the green infrastructure transition for most developing countries at the speed and scale required," writes Waughray in a recent article for the Guardian Professional Network. "The ability to leverage significant private investment into these new national green growth plans will be crucial."
While the private sector has the ability to fund the massive investments that need to be made in the global shift to a low carbon economy, public backing can help with risk allocation and can also provide a level of transparency through public accountability and governmental regulation. Waughray suggests that the currently insufficient private investment is "due to the range of perceived risks in developing countries and a sense of newness among the investor community about the market for these new technologies."
The delegates who will be attending the historic Rio+20 United Nations Conference on Sustainable Development in June have their work cut out for them. But whatever agreement is reached will need public-private partnerships to execute. As Ban told the UN Global Compact Board in December, "In Rio, business cannot and must not be sidelined -- it is a central partner."
United Nations News Centre. "Ban stresses role of business in advancing sustainable development agenda." December 16, 2011.
United Nations Environment Programme Finance Initiative. REDDy, SET, GROW, Part 2: Private sector suggestions for international climate change negotiations. September 2011.
Renewable Energy Policy Network for the 21st Century. Renewables 2011 Global Status Report. July 12, 2011.
United Nations Environment Programme and the Frankfurt School/UNEP Collaborating Centre for Climate and Sustainable Energy Finance. "Global Investments in Green Energy Up Nearly a Third to $211 billion." July 7, 2011.
UNEP-FI Global Roundtable, Washington DC, 19-20 October 2011.
Waughray, Dominic. "Davos hot topic: public-private partnerships with developing countries." The Sustainable Business Blog, Guardian Professional Network. January 27, 2012.
Image: mushin_schilling, Flickr Creative Commons