As cities take centre stage in Paris, Regions of Climate Action group, founded by former US governor Arnold Schwarzenegger, is to argue seed funding body would 'jumpstart' green investment
Arnold Schwarzenegger's regional climate initiative, the Regional Climate Action Group (R20), has proposed the creation of a billion-dollar green investment accelerator to drive private investment in climate finance.
In a new report seen by BusinessGreen ahead of its official release tomorrow, R20 proposes a Green Investment Accelerator (GIAF) that would act as a seed fund to spur climate projects on to the commercial investment market.
The report suggests the GIAF would have a target fund size of $1bn, providing a dedicated source of seed capital for projects at the pre-investment stage to help them to reach the point where they become investable opportunities. It would also provide developers with financial and regulatory expertise to prepare them for seeking finance on the commercial market.
Founded in 2010 by former Governor of California Arnold Schwarzenegger, the R20 initiative is a coalition of partners led by regional governments that develop projects to support climate action at a local and regional level.
The proposed $1bn GIAF fund would be split equally across five regions: Sub-Saharan Africa, Mediterranean and Middle East, Asia-Pacific and India, North America and Europe, and Central and South America.
The report claims funding mechanisms of this type will help bridge the climate funding gap between public sector, which tends to invest in high-risk projects with below-market returns, and the private sector which tends towards low-risk, more familiar investment opportunities.
"The GIAF will act as an accelerator rather than the primary source of capital, helping to jumpstart transactions and unlock the main sources of capital," the report says. It describes the role of the GIAF as a kind of "marriage broker" that will help to scale up bankable technologies.
The report's release will follow a week of intense negotiations at the UN Paris summit where climate finance has been near the top of the agenda throughout. Earlier this week, China and India accused rich nations of trying to dodge their commitments to help poor countries pay the costs of coping with climate change, warning this could cause the talks in Paris to fail.
However, the UN's top climate official Christiana Figueres told reporters at the summit this week to expect a "rainfall" of financial commitments from governments as they work to reach an international deal.
Schwarzenegger's move to promote the importance of regional governments will also follow today's Cities' Day at the Paris Summit, which will see mayors and state leaders promote a host of initiatives to tackle climate change.
The day kicked off with a new report from the Cities Climate Finance Leadership Alliance (CCFLA), a coalition of over 40 banks, national governments and civil society organisations, which detailed a raft of proven urban policies that hepl to drive investment in climate-smart infrastructure.
"Major investment is urgently needed for climate action in cities," said UN Secretary-General Ban Ki-moon, "and the recommendations in this report, if put into place, can help unlock the capital needed. We know these solutions can work - they just need to be scaled up. I urge governments, banks and the international community to act on these practical recommendations."
Specifically, the report sets out a five point plan calling on cities to incentivise investment in low carbon infrastructure, take steps to put a price on carbon, develop investment-worthy climate-related projects, tap into international development finance, and create a network of labs to share best practices.
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