Ahead of next year’s UN climate change conference, specialist investor Impax has proposed a framework intended to bridge the gap between investors and policymakers when it comes to the financing of clean energy investment.

In a paper setting out this framework, the £14.4bn (€15.6bn) asset manager, which invests “in the opportunities arising from the transition to a more sustainable global economy”, said the private sector will need to provide the bulk of the investment into clean energy economies that will be needed to meet the targets agreed in the Paris Agreement.

However, efforts to mobilise private finance “have so far been a source of frustration”, wrote Ian Simm, Impax founder and CEO, and Chris Dodwell, head of policy and advocacy: “For investors concerned about the lack of project pipeline, for policy makers trying to attract capital at scale, and for multilateral development banks whose role is to bridge the gap between the two.”

They set out five steps policymakers “to guide policymakers in middle-income countries in their quest to catalyse pipelines of investable projects in the energy sector.”

According to Impax, the first step for policymakers wanting to build clean energy economies is to set clear objectives that “identify the real-world changes required at sector-level and nature of the investment required”.

Policymakers then need to “ensure they have a sound understanding of the sector and project economics in terms of revenue, costs and risks, best achieved through expert analysis coupled with dialogue with investment practitioners”.

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“Building understanding in governments of project economics is something that is really looking for a solution at the moment”

Chris Dodwell, head of policy and advocacy at Impax

Dodwell told IPE that “a focus on understanding how investment decisions are made” is at the heart of Impax’s framework.

“I think there is a lack of understanding that that actually is the job of a policymaker,” he added. “Building understanding in governments of project economics is something that is really looking for a solution at the moment.”

The other steps set out in Impax’s framework are for policymakers to:

  • Implement investment-grade policy at all levels: sectoral, indirect and investment;
  • Provide implementation resources that address local circumstances and barriers; and
  • Initiate a clean investment dialogue at the start of the process

According to Dodwell, Impax thinks its clean investment roadmap proposal is the first time that a private investor has pulled together the elements of previous success stories from an investor perspective to present them in a framework intended to be accessible to policymakers.

Dodwell said that even if the framework represented ground already covered “the key issue is that the time is now”.

“We’ve got a really good opportunity right now with those countries developing COVID[-19] recovery plans asking ‘hold on, shouldn’t we use this moment to support a greener recovery?’,” he said. ”And with the COP coming up next year, they will have the chance to incorporate these plans into updated, and more ambitious, Nationally Determined Contributions.

“We think this is exactly what is needed to accelerate the low-carbon transition globally.”

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