Green Bank Design Summit: Developing nations join forces to explore green bank plans

A host of the world's largest emerging and developing economies are to jointly explore how dedicated green banks could help deliver billions of dollars of low carbon investment to support the national climate action plans they agreed under the Paris Agreement.

Officials from 23 countries, which together represent 26 per cent of global GDP and 43 per cent of global carbon emissions, will meet today in Paris at the inaugural Green Bank Design Summit.

The aim is to emulate the success of dedicated green banks in industrialised economies and explore how national green financial institutions could be established in emerging economies.

Government ministers and officials will be joined by leading private banks and development finance institutions who are also committed to mobilizing the $1tr of green investment that the International Energy Agency estimates is required through to 2050 to deliver on the goals of the Paris Agreement.

The Summit will see the announcement of a new global platform for green bank design and formation supported by governments, philanthropy, and the private sector.

"Time and time again, entrepreneurial and commercially minded green banks have accelerated private capital formation in the low-carbon economy in industrialised economies, maximising the impact of scarce fiscal resources," said Ilmi Granoff of ClimateWorks Foundation, lead sponsor of the Summit. "These institutions hold enormous promise in emerging markets, where every public dollar is even more precious, and the need for low-carbon development is just as pressing."

The 23 countries attending the Summit come from every major developing region and include both powerhouse emerging economies, fast growth developing nations, and some of the world's poorest countries.

The full list bring together China, India, Vietnam, Malaysia, Mongolia, Indonesia, Cambodia, Kyrgystan, Nigeria, Rwanda, South Africa, Egypt, Kenya, Angola, Uganda, Brazil, Chile, Colombia, Mexico, Peru, Lebanon, Turkey, and Ukraine.

As a group the countries represent approximately 56 per cent of the global population, 26 per cent of global GDP, 69 per cent of developing country GDP, and 43 per cent of global CO2 emissions from fuel consumption, as well as 71 per cent of developing country emissions, the Summit organisers said.

State-backed Green Investment Banks or development banks with a green remit have been pioneered in countries such as Germany, the UK, and Australia and have been widely credited with mobilising investment in emerging renewable energy technologies, tackling market failures in areas such as energy efficiency investment, leveraging in private finance, and curbing the cost of capital for low carbon infrastructure.

Paul Bodnar, managing director at Rocky Mountain Institute, a partner in convening this week's event, said green banks could play a big role in driving both decarbonisation and sustainable development in emerging economies.  

"Developing nations are getting serious about decarbonisation, but they need to maintain a strong focus on economic growth and broad-based development," he said. "Success depends on the ability to inject finance into the right kinds of investments quickly enough. This is why so many of them are exploring green banks as a means to supercharge that process."

The development of state-backed green banks could also present a major opportunity for the fast expanding private green finance sector.

Some of the world's largest institutional investors are set to attend this week's Summit, including HSBC, Mizuho Bank, and Macquarie, which acquired the UK's Green Investment Bank.

"As these countries know, governments can't do this work alone," said Douglass Sims, a director and senior advisor at the Natural Resources Defense Council, an organizer of the event. "Private investors want and need to be part of the solution, and green banks can bridge those partnerships to increase investment in clean energy and launch this paradigm shift."