CPI identifies five steps that could help unlock institutional investment capital for renewable energy projects, some of which may be challenging to implement:
1. Fix policy barriers that discourage institutional investors from contributing to renewable energy projects.
2. Improve investment practices, including the building of direct investment teams and improving evaluation of investor tolerance for illiquid investments. However, such changes can run counter to the culture of the organization and require careful consideration.
3. Identify and improve any regulatory constraints to renewable investment that can be modified without negatively impacting the financial security, solvency or operating costs of the pension funds or insurance companies.
4. Develop better pooled investment vehicles that create liquidity, increase diversification, and reduce transaction costs while maintaining the link to underlying cash flows from renewable energy projects.
5. If the concern is raising enough finance rather than its cost, regulators and policymakers could shift from a project finance model to a corporate model for building renewable energy. Institutional investors could then increase investment in renewable energy through investment in utility and corporate stocks and bonds.
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Climate Policy Initiative (CPI)
is a global policy effectiveness analysis and advisory organization. Its mission is to assess, diagnose, and support nations' efforts to achieve low-carbon growth. An independent, not-for-profit organization supported by a grant from the Open Society Foundations, CPI's headquarters are in
and regional offices are in
Rio de Janeiro
SOURCE Climate Policy Initiative