Authors: Buchner, Heller, Wilkinson

Date: December 2012

(Full paper available here)

What is it about? The CPI paper, supported by findings by the San Giorgio Group, looks at empirical case studies to look at what has worked or not, and what lessons policymakers should draw from them. The case studies include a financing mechanism to support solar water heaters in Tunisia, a concentrated solar power plant in Morocco, and the largest offshore windfarm. CPI also looks at a study on investment risk and risk mitigation tools.

Why does CFAS recommend reading it? The paper highlights that public resources are making investments more consistent with low-carbon growth but more action is needed to overcome real and perceived risks – in other words, there is need for enabling environments. Among the lessons learnt: well-articulated public policies are necessary to start the transition toward low-carbon systems of production. All three case studies were developed with a strong public policy in the backdrop, and managed to shift away from fossil fuel subsidies and deliver net savings to the public purse. If well-designed, resource injections can alter investment risks and choices at an acceptable cost. CPI also highlights risk mitigation instruments (insurance, first loss protection and credit rating agencies) as key in reducing perceived or real risk of financial instability. CPI also suggests that green investments should focus on emerging economies, since that is where the energy demand is growing and infrastructure is needed, and the enabling environments most solid. In 2011, China, Brazil and India represented 33% of climate finance flows for mitigation. These case studies can feed into discussions on enabling environments at the LTF workshops.