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centivize, organize and then deploy all that capital. Right now it simply isn’t available. The second reason is that the capital that is currently available for clean energy investing is quite expensive in India. Right now clean energy loans, even those provided directly by government lending entities like IREDA cost greater than 10% interest rate. Lowering the cost of financing from 10% to 7% can immediately lower the price of solar electricity by about 25%. So India can rapidly make its own clean energy cheaper just by finding ways to lower borrowing rates. And the final reason there is great opportunity is that India is already comfortable with public banking. There is a robust and well-established system of finance in India that is directly owned or supported by government. In the U.S., government lending is far rare, and takes some convincing for policymakers to be comfortable using public dollars for financing. This kind of barrier would be lower in India based on the track record of public financing activity. ENERGETICA INDIA: How does the outcome of COP 21, Paris, impact the growth of Green Bank? MR. JEFFREY SCHUB: Ultimately, the debate in Paris over the last two weeks was not so much about whether or not something should be done about climate change. It was really about how we would pay for our efforts. Finance was entirely central to the COP21 agreement, and now that it has been signed, staggering sums of money need to be mobilized. The International Energy Agency estimates that $1.5 trillion of annual investment is needed for clean energy for the next 25 years in order to meet climate change goals. That is roughly 4 times greater than current annual levels. All of this means that new, dedicated clean energy financing institutions have never been more essential. Green banks can play a key role in mobilizing and deploying this capital around the world. Any country could create a green bank to serve its own local market needs, drawing up private investment sources from around the world. The global green bank community recognized the importance of Paris, and were excited to announce the formation of a new Global Green Bank Network, that will be formed over the next year to share green bank knowledge, data and best-practices with everybody around the world. CGC will be building the Network this year with our partner, the Natural Resource Defense Council (NRDC) and in conjunction with 6 existing green banks from around the world. The Network, which will be a central online hub for information and communication, will facilitate more efficient info-sharing between green banks; allow governments to teach about the concept, and show private investors how they could invest with green banks. And the Network will also provide direct support and consulting services for governments to directly support green bank creation in new countries. ENERGETICA INDIA: How important a role does finance play in the growth of global energy sector? MR. JEFFREY SCHUB: All energy by nature requires upfront investment. A large upfront expenditure is paid back over time with a steady flow of returns, either from the sale of oil, coal, electricity or from savings (energy efficiency). Given the upfront investments are relatively large, and the pay back periods are typically long, all energy projects rely on third-party financing from investors, who then require a return. In this sense, finance is essential for all energy deployment and provision all over the world. Today $1.5 trillion dollars are invested every year in fossil fuels - the exact number that must be invested in clean energy. Somehow as a globe we have to instantly redirect every one of those dollars investing in fossil fuels toward clean energy. The challenge is that the global financial system is full of institutions (both public and private) that are well-practiced at providing cheap capital to the fossil fuel industry. There is tremendous need for institutions that aim to do the opposite - which in turn can help show the existing set of institutions how and why to invest ‘Green banks can play in clean energy rather than fossil fuels a key role in mobilizing and deploying this capital around the world. Any country could create a green bank to serve its own local market needs, drawing up private investment sources from around the world’ ‘The Network will facilitate more efficient info-sharing between green banks; allow governments to teach about the concept, and show private investors how they could invest with green banks’ ’The challenge is that the global financial system is full of institutions (both public and private) that are well-practiced at providing cheap capital to the fossil fuel industry. There is tremendous need for institutions that aim to do the opposite - which in turn can help show the existing set of institutions how and why to invest in clean energy rather than fossil fuels RENEWABLE ENERGY 54 energetica INDIA · JAN | FEB16


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