Mobilising private finance to drive an energy industrial revolution

While uptake of renewable energies as a solution to climate change is widely discussed, the issue of public vs. private financing is not yet adequately explored. The debates over the Kyoto Protocol and its successor, culminating in the COP15 Climate Change Conference in Copenhagen in December 2009, maintained a strong preference for public over private financing. Yet it is also clear to most observers that the energy revolution will never happen without the involvement of private finance to drive private investment. In this article, the authors discuss the ways in which private financing could be mobilised to drive the energy industrial revolution that is needed if climate change mitigation is to succeed.

Key conclusions:

• there is an urgent need to reformulate the climate change mitigation problem in new and realistic fashion
• privately financed instruments (that may tentatively be termed Climate Bonds) will have to play a significant role in the transformations that lie ahead
• the efforts to date, in issuing so-called ‘Green Bonds’ must be seen as mere first steps when compared with the scale of the financing required to drive a real energy Industrial Revolution
• it is time to call a halt to the discussion over the ‘costs’ of climate change mitigation and put it instead in a new context of investment opportunities in renewable energy systems and low-carbon technologies.
  
• private financing should be viewed as an obvious resource in such a global project