CDKN attended the Global Green Growth Week was held in Jeju, Republic of Korea, 5-9 September. The is the first of two blogs reporting from the event, by Ari Huhtala, CDKN’s Deputy CEO for Policy and Programmes.

The Global Green Growth Summit, held in Jeju on 8 September and organised by the Global Green Growth Institute (GGGI) had chosen “Towards a green finance action agenda for 2017” as its topic. The leading question at the outset was “The world is awash with money, but where are the bankable projects for green investments?” [Editor’s note: While the word “bankable” is widely used in such discussions, it means different things to different stakeholder groups, but it generally means projects that are ready to be funded and implemented now.]

Dr. Susilo Bambang Yudhoyono, former President of Indonesia and current GGGI Council Chair, reminded us of the new consensus and political pull emanating from the milestone agreements in 2015 on financing for development (Addis Abeba in July), Sustainable Development Goals (SDGs; New York in September) and climate change (Paris in December). These political commitments, coupled with increased flows of private capital to and the rapidly decreasing cost of renewable energy technologies, provide a good platform implementing green growthbut the speed and scale of change are still low. The green finance community should simply become the mainstream financial community.

The new Executive Director of the United Nations Environment Programme (UNEP), Erik Solheim, made an inspiring intervention about the positive messages from the recent G20 meeting in Hangzhou, where China and the United State of America announced their ratification of the Paris Climate Agreement and green finance received unprecedented prominence. He outlined five key drivers for taking accelerated action:

• Mobilise political will and leadership
• Develop specific new tools and instruments such as green bonds
• Green the general investment markets through, i.a., regulatory reform
• Invest in “fin tech” for easy access to financial services by all
• Stop subsidising what we do not want and what works against sustainability, e.g. fossil fuels

Several panels examined whether the current green finance infrastructure is fit for purpose in meeting the needs of developing countries, the role of national green finance instruments, emerging trends in the supply of funds for green energy projects, and funding for green cities. Two particularly important conclusions emerged:

First, over US$ 90 trillion is needed for new infrastructure in the coming 15 years. The US$ 100 billion per year by 2020 pledged by developed countries to support climate mitigation and adaptation action in developing countries should help to ‘green’ that massive investment. It is not about millions or even billions, but about trillions of dollars. We should have a resolute focus on influencing the big money: private sector finance flows and tax revenues in public coffers.  development and climate funds to green them. Related to this, reflections on the challenges and possible responses on financing the transition to a low carbon and climate resilience pathways in CDKN’s book “Mainstreaming climate compatible development” can be found here.

Second, there is an obvious disconnect between the expectations of project developers in developing countries and potential investors. While there are undoubtedly capacity gaps -- particularly in smaller developing economies —in the ability to prepare green/climate investment projects that meet the very different requirements of various sources of funds, perception and limited awareness also play a role.

There were numerous calls for the simplification, harmonisation and standardisation of application procedures to improve particularly smaller and less developed countries’ access to the maze of funds.

“We are suffocating demand with complexity”, said one panellist. Sometimes the cost of project preparation is as high as the value of the project itself. How to alleviate this mismatch between the apparent oversupply of funds and lack of “bankable” projects? It often boils down to context, i.e. green/climate projects should sit firmly within national strategies and objectives, in others words policies and financial systems need to be greened. Technical assistance in project design and climate finance options was called for.

We at CDKN think that Nationally Determined Contributions (NDCs) are countries' expressions of ambition and need to contribute to the achievement of the Paris goals. Most of them are far from being a clear plan, and most developing countries will need urgent support in translating their NDSs into concrete investment plans and further into financeable, transformative projects. This does not happen overnight, but we should now focus on building on existing capabilities to ensure that the available climate funds are programmed in a way that catalyses significant volumes of other public and private finance for urgent climate action fully in line with national strategies for inclusive development. A related CDKN blog “Climate funds face tension between country ownership and pressure to disburse funding” can be found here.