Occupied by Wall Street: World Leaders Grapple with Clean Energy Finance, Growth at Copenhagen Summit
by Jim Lane (Biofuels Digest) World leaders say new structures, public-private partnership, required to unlock clean energy, unleash economic growth. Free-flowing discussion in Copenhagen shows directions that reform of clean energy finance might take.
…That UN Secretary Ban Ki-Moon reiterated that sustainable development is the top priority for his next term at the United Nations. He said, “We need a different path. A sustainable path…Because we live in an era of three Fs: crises on Food, Fuel and Finance. So we need to enhance the three Es: the Economy, the Environment and global Equity…The old economic models are not working for the countries and companies that embraced them.”
…And, as global leaders grapple with the fact that the style of climate negotiations — the we-governments-and-select-NGOs-will-decide-on-climate-and-inform-you-insignificant-private-sector-people-later approach — has failed.
…If the best that the current system of evaluating and spreading risk can do is foster recession and prevent the deployment of advanced technologies that can restore growth – reform is necessary. Think of it as a genteel version of “Occupy Wall Street”.
…There is a clear sense that clean technology is finding capital, and working through its scale-up, but that the pace of market forces (and fostering clean tech) is going to produce change at a rate far behind what is required for the material job growth and material carbon remediation that the industrial democracies and developing nations are seeking.
Specifically, there are discussions regarding technology risk insurance funds – operating like insurance rather than the project-picking, sovereign loan guarantee system, which has been subjected to charges of crony capitalism, widespread concern about speed-to-scale, and is expensive at a time of tight public purses.
…Unlike green banks – which essentially are vehicles for directive state investment – these technology risk funds would, after appropriate due diligence, insure projects in order to reduce the cost of financing. Since not all projects fail, insurance (like loan guarantees) foster more projects per dollar than direct investment.
Unlike loan guarantees, such a system would be based in public-private partnership – that is, potentially sovereign governments could help to capitalize the privately-held, privately managed funds.
How is this different from troubled institutions like Fannie Mae? First, by ensuring that government ownership does not man government control. This isn’t Private Money + Government Management, but rather Government Money + Private Money + Private Management. In other words, government sweetens the technology risk insurance pot to the extent that it wants to accelerate development. Sweeten very little, some projects get through. Sweeten more, more projects get through. READ MORE