UK university expert urges private investors to invest in green 'technologies that we know work'

An Imperial College climate finance specialist has called on private investors to invest in proven green technologies.

Speaking at the UN’s climate summit in Marrakech (COP22), Charles Donovan, director of Imperial's new Centre for Climate Finance & Investment, said: “There’s a huge difference between technologies that are merely possible and the ones that are already economically viable. More effort needs to go into scaling up the technologies that we know work.”

More than 100 representatives from the private sector, governments and NGOs attended a panel discussion on how financial tools can encourage investment in low-carbon technologies, which was jointly organised by Imperial, led by the Grantham Institute - Climate Change and the Environment, the Institution of Chemical Engineers (IChemE) and the Natural Resources Defence Council (NRDC).

Question mark

In contrast, Donovan questioned the appeal to private investors of technologies that have yet to prove viable on a large-scale, like Bioenergy with Carbon Capture and Storage (BECCS) – a solution whereby the greenhouse gas carbon dioxide is extracted from the atmosphere by growing plant crops, which are then burned to generate energy, and the resulting emissions are stored underground.

“I can’t see a way that this technology could become acceptable to the private sector in the next two decades,” said Donovan. Although BECCS is widely considered essential to meeting climate targets, it is still in the early stages of development and no full-scale trial BECCS plants have yet been built, Donovan said.

Funding a low-carbon world

'Low-carbon technologies' that either reduce or produce less emissions of greenhouse gases will be instrumental in limiting global warming to less than two degrees Celsius, the target agreed by governments signing the 2015 Paris Agreement. However, experts agree that substantial financial investment will be needed to roll them out in sufficient quantity to have the desired effect.

Whilst governments around the world have committed to raising $100 billion (€94bn) every year to fund projects designed to avoid and adapt to climate change, it will come nowhere close to meeting the need for new climate-friendly infrastructure, Imperial College said in a statement.

According to the International Energy Agency, meeting the pledges set out in the Paris Agreement will come with a hefty price tag: US$13.5 trillion by 2030. Getting private investors on board is therefore critical.

‘We need trillions, not hundreds of billions’

“Private sector investment is vital: we need trillions, not hundreds of billions,” said Donovan, speaking at the UN event. “The challenge however lies in convincing investors that low-carbon projects can reap the same rewards as more traditional investments.

"Green projects are frequently overlooked by the private sector as they typically do not offer high returns and present uncertain risks. New financial mechanisms might, however, encourage investors to think again."

Green Investment Bank

One such example is the UK’s Green Investment Bank, which invests in infrastructure projects that are both green and profitable, Imperial College said. Since its inception in 2012, the bank has mobilised £11 billion from private investors.

Donovan was however keen to emphasise that for financial solutions to work, green projects cannot be sold purely on their environmental impact. “A financial injection alone can’t make up for a project that is deemed to be too risky,” said Donovan.