CLIP partnered with R20, the University of Zurich, and the USC Schwarzenegger Institute for a breakout session on ‘Blended Finance and Sub-national Infrastructure’ held at the R20 Austrian World Summit on May 29.

 

Preparatory meetings of the cross-sector venture 'Infrastructure for Future' took place at the R20 Austrian World Summit, in the run-up to the UN Climate Action Summit to be held on September 23 in New York.

VIENNA, 8 JULY 2019 – CLIP partnered with R20, the University of Zurich, and the USC Schwarzenegger Institute for a breakout session on ‘Blended Finance and Sub-national Infrastructure’ held at the R20 Austrian World Summit on May 29. 

This session brought together a broad range of stakeholder groups to discuss ways to direct more capitals towards green projects. It also served as the kick-off to a wider research process that will be led by the University of Zurich over the coming months. As explained by its Vice-President, Professor Christian Schwarzenegger, the objective is to connect scientific analysis with practice to provide a better understanding of the barriers to deploying sustainable infrastructure at the sub-national level, and of the role of blended finance in addressing these. 

Preparatory meetings of the cross-sector venture 'Infrastructure for Future' took place at the R20 Austrian World Summit, in the run-up to the UN Climate Action Summit to be held on September 23 in New York.

Key takeways from the blended finance session

Thirteen speakers, solicited for their unique perspectives on implementation of sustainable infrastructure, on the Paris Climate Objectives and on the SDGs, participated in the discussion and provided key insights on: (a) the investment potential for mid-size infrastructure projects at the sub-national level, (b) the SDG impact potential of such projects as well as the role of sound impact measurement in mobilizing further support, (c) the role blended finance can play in accelerating the financing of project development and implementation, (d) the obstacles – institutional, technical and financial – met in blended finance today.

This breakout session showed the market potential for mid-size sustainable infrastructure is there. Local authorities from around the world are looking to build such projects, but access to finance remains difficult. “Most of our projects are small or mid-sized and they are struggling to access finance because, for institutional investors, projects under 50 million euros are usually not being considered for investment” (Eszter Mogyorósy, Climate Finance Manager, ICLEI). 

The few mid-size projects that do seem to be predominantly financed by DFIs, who, since the global crisis, have somehow filled the gap left by commercial banks. In that context, it becomes abundantly clear that creating new sources of capital investments is critical, and blended finance seems to offer a great solution. “There is a huge investor appetite for blended finance and when it works, blended finance works beautifully well because it strengthens the fiscal position of sub-national governments and improves the quality of the services” (Yannick Glemarec, CEO, Green Climate Fund). 

However, panelists agreed that innovation is still required for blended finance models to really accelerate the financing of projects at the sub-national level. Adopting a portfolio approach, rather than the traditional project by project approach, or associating blended finance with a side vehicle to address the technical assistance and capacity (technical, institutional, regulatory) issues, were some of the recommendations made. Participants also highlighted the need, and critical role, of consistent and sound impact measurement in stimulating the investment community to engage more actively in sustainable investments.

As Arnold Schwarzenegger pointed out: “this session is particularly important because, as I have often said, if you don’t have the money, you have nothing”. Connecting project holders with investors is key here he added. “I am normally the terminator but here I am talking as the connectator. Because to me connecting is the most important thing”. Read the summary of the breakout session

Infrastructure for Future

Preparatory meetings of the cross-sector venture 'Infrastructure for Future' took place at the R20 Austrian World Summit.

Today about 70% of global greenhouse gas emissions come from the construction and operations of infrastructure such as energy, water, transport, buildings, and telecoms. The world is on track to exceed its carbon budget and lock in a 1.5°C warming in fewer than 12 years, according to the latest IPCC report. When it comes to infrastructure, however, the window of opportunity for climate action is shorter. Once an infrastructure project is financed and built, its resulting emissions will be locked in for decades.

‘Infrastructure for Future’ is a cross-stakeholder initiative to drive infrastructure system change by 2030 for People and the Planet. This ground-breaking collaborative venture was launched at the Climate Infrastructure Forum 19 held on March 4-5 in Barcelona. It targets for transformative action areas: (a) unleashing the full potential of long-term investors, (b) replicating and scaling-up successful policy models and derisking solutions, (c) unlocking sub-national infrastructure investments, (d) anticipating disruptive technologies, cross-sector synergies, and business models.  

‘Infrastructure for Future’ will be submitted as a pledge for the UN Climate Action Summit to be held in New York on 23 September. Implementation of pilot projects is set to start in 2020. To learn more on Infrastructure for Future, click here.

Contact: media@climateinfrastructure.org

For more news and updates from CLIP, follow us on twitter @ClimateInfra or visit our website www.climateinfrastructure.org