This discussion paper has been produced as part of the South-originating Green Finance (SGF) initiative, and seeks to stimulate debate about, and highlight the key role, and potential for growth, of the evolving financial landscape originating from the global south. The drive for such an initiative comes from the urgent need to scale green investment, and the potential for national and international policies to accelerate its volume and enhance its impact. It is intended that this discussion paper will crystallise current knowledge, provide a framework for future discussion, offer initial policy reflections, and set out a policy-focused research agenda.
The paper begins by offering an introduction to SGF, including concepts and definitions, and an overview of the present green financial landscape. Up to $100 trillion dollars is estimated to be required for infrastructure investment globally between now and 2030, although higher up-front costs mean that an additional $700 billion is presently needed annually, thus making current spending woefully inadequate. This means that private capital will be essential in securing the scale of green funding required.
Next, trends are identified, including the large and growing status of SGF which contributed almost half (48.8 per cent) of global renewable energy infrastructure investment in 2012, up from 36.4 per cent the previous year (with the majority coming from China). Elements that set SGF apart from traditional finance models, and its use as a lever for sustainable development, are then discussed, including the observation that developing countries asses risk differently (with more on-the-ground knowledge), and may be more responsive to creating co-benefits such as job-creation.
Following this, the paper looks at how policy measures can increase the volume and impact of SGF, including the potential for more effective south-south cooperation in promoting public and private SGF. Finally, the discussion paper concludes with future research and policy needs, which indicates that the initiative will be exploring a more systematic appreciation of the contribution already being made by SGF, the opportunities it offers, and how to create the most effective domestic and international policy architecture.