Clean energy financing by the world’s development banks increased 19% last year to break through the $100bn-a-year barrier for the first time. The top three banks were Germany’s KfW, China Development Bank and the Brazilian Development Bank (BNDES).
London – In 2012 development banks financed $109bn in renewable energy, energy efficiency, and electrical transmission and distribution, according to new research from Bloomberg New Energy Finance. The 26 institutions covered by the analysis have financed a total of $425bn in clean energy investment since 2007.
Abraham Louw, clean energy analyst at Bloomberg New Energy Finance, said: “This year we expect at least another 15% growth in development bank financing. There is potential for an even bigger increase in the longer term if other institutions – such as a possible BASIC-country development bank – become active.”
Clean energy financing by development banks has grown at a compound rate of 25% per annum over the last five years, estimates Bloomberg New Energy Finance. This trend is expected to continue, especially as the larger development banks such as the European Investment Bank and World Bank are scaling down their investments in coal projects, which should leave more of their finite capital available for clean energy projects.
The executive summary of the report containing this new analysis can be downloaded here: http://about.bnef.com/white-papers/development-banks-breaking-the-100bn-a-year-barrier/
The Bloomberg New Energy Finance analysis was based on some 2,000 transactions by national and multilateral development banks and export-import banks, each with cumulative investment over $50m. Bloomberg New Energy Finance defines large hydro as hydro-electric installations with installed capacity of over 50MW. North-South investment was calculated by tracking financing by development banks owned by OECD countries that invest in non-OECD countries. For multilateral development banks the proportion of investment in non-OECD countries that constituted North-South investment was calculated pro-rata to their shareholdings.
Development banks are financing institutions owned by governments with strategic economic objectives. Over the past decade development banks substantially increased their focus on financing clean energy.
Europe has seen the most investment from development banks since 2007, receiving roughly half of the global total ($217bn). Most of these funds came from KfW, the German development bank, and the European Investment Bank. Asia has seen 30% of total investment from development banks over the same period, mainly sourced from China Development Bank. This trend was also seen in 2012, though the gap between Europe (at $48bn) and Asia ($40bn) is closing.
Development bank investment between developing countries is close to reaching that from developed to developing nations. In 2012, North-South development bank investment amounted to some $10bn a year compared with a record $7.5bn of South-South flows – a 21% increase on the 2011 total. During the Copenhagen climate talks in 2009, developed countries committed to ensuring $100bn per annum of climate-related finance was invested in developing countries by 2020.
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