Using Green Investment Banks to Finance Low-Carbon Pathways

Financing low-carbon investments is necessary to achieve the emissions reduction targets required to fulfil the Paris Agreement. Although carbon pricing has become the instrument of choice to reduce carbon emissions, concerns have been raised over its ability to achieve that goal, and it is politically contentious in some countries. These concerns have led to the search for other tools to reduce emissions. Green Investment Banks (GIBs) are financial entities that can mobilize financing towards low-carbon economic activity.

GIBs can play a complementary role to carbon pricing by reducing the financing constraints faced by low-carbon infrastructure investments. Examples of GIBs exist at the national, provincial/state, and local levels, but their application to Canadian municipalities has not been explored to a great extent. Canadian municipalities face financial constraints and draw on a limited range of tax bases. At the same time, they are fast confronting the consequences of climate change while trying to reduce their own emissions. In this context, GIBs could play a role in supporting key municipal investments.

On November 29, 2022. IMFG postdoctoral fellow Robert Stewart outlined the GIB model, described how GIB entities are being used across several countries to finance low-carbon economic activity, and discussed the potential application of GIBs as tools for Canadian municipalities to bridge low-carbon financing gaps.

Speaker: Robert Stewart is the 2022-2023 IMFG postdoctoral fellow. His current research focuses on climate financing and, in particular, tools to bridge the financing gap needed to accelerate low-carbon economic development.