Impax Asset Management (Impax), a specialist asset manager investing in the transition to a more sustainable economy, has published a framework to help policymakers in middle-income countries mobilise the private sector investment needed to meet the climate goals of the Paris Agreement.Ahead of COP26 in November 2021, the attention of all governments will be focused on the challenge of how to attract investment into clean energy economies, the bulk of which will come from the private sector. Policy makers in fast-growing, middle-income countries face particular challenges compared to most OECD countries, who already have significant experience in developing clean energy markets and typically enjoy attractive investment climates.
Efforts to mobilise private finance in these countries have often been a cause of frustration – for investors concerned about the lack of project pipeline, for policy makers trying to attract capital at scale and for multilateral development banks who can provide advice and financial support but cannot provide 100 per cent of the capital required.
The Impax Clean Investment Roadmaps framework reflects 20 years’ experience of working on how to address these challenges by setting out five steps which policy makers in middle-income countries can take to attract private investment:
• Agree and publish clear sectoral objectives and investment requirements
• Build understanding within government of sector and project economics
• Implement investment-grade policy at all levels: sectoral, indirect and investment climate
• Provide implementation resources that address local circumstances and barriers
• Initiate a clean investment dialogue with private investors and other key stakeholders at the start of the process.
The framework summarises the investor perspective on each step, provides implications for policy makers and identifies examples of best practice from a range of international initiatives.
Chris Dodwell, Head of Policy and Advocacy at Impax, says: “Meeting the targets agreed in the Paris Agreement will require all governments to stimulate private investment into clean energy economies, in particular in fast-growing, middle-income countries. By developing Clean Investment Roadmaps, policy makers can reduce investment risks, thereby increasing their chances of attracting private investment and delivering their policy objectives. While initially focussed on energy sectors in emerging economies, we believe that the framework can be successfully applied to a much wider range of countries and sectors.”
Ian Simm, Chief Executive at Impax, says: “As specialist investors in the transition to a sustainable economy, the Impax team regularly engages with policymakers on the design and implementation of environmental policy. At a time when we must all redouble efforts to deliver the targets in the Paris Agreement, we hope that the policy and investment communities can use the Clean Investment Roadmaps framework to strengthen their collaboration.”
