The Climatescope: A Market Based Approach to Climate Change

Published by: Guest blogger - Jun 12 2012

by Gregory Watson*

Climate change confronts Latin America and the Caribbean with a major challenge: the need to reduce greenhouse gas emissions and improve energy efficiency while at the same time providing citizens with more energy. The International Energy Agency forecasts that the region’s energy needs will be 75% higher in 2030, requiring as much as $1.8 trillion in new energy infrastructure. Needs are immense, as 45 million residents of the region lack access to electricity and approximately 83 million people still cook with traditional biomass.

Expanding access to energy in a low carbon world means greatly increasing the supply of clean and efficient energy – presenting the private sector with the opportunity to address an enormous public good. When seized, this opportunity will create new technologies, businesses, investments, products and jobs.

Make no mistake: addressing climate change will require new regulations. But it will be private incentives, capital, and skills that will ultimately deliver the innovation needed to provide more energy for the poor—while building more climate resilient, low-carbon economies.

What we believe at the MIF

• Small Actors Create Big Action: The MIF has a long history working with micro and small businesses, microfinance institutions, and venture capital funds. We believe that by reducing the emissions of many small emitters we can make a big difference.
• Private Initiative Matters: A private response to climate change will generate new small businesses, jobs, and products in areas such as energy efficiency, renewable energy, biofuels, sustainable forestry, green finance and green technology.
• Strategic Partnership Matters: A variety of skills, networks, instruments, and funds are needed in order to create multi-disciplinary solutions for complex problems.
• Demonstration, Scale, and Information Matter: Private sector awareness, knowledge, and technical capacity are low in the region, underscoring the need for demonstration of scalable models, communication about success stories, and new sources of information on the market for climate investment.

Introducing the Climatescope

Despite its bountiful natural capital and unique vulnerabilities to the effects of climate change, in 2011 Latin America and the Caribbean attracted less than 5 percent of the estimated $260 billion in new investments in clean energy projects and companies worldwide. Why is this the case? Our research and our own partners tell us that a lack of information keeps entrepreneurs, investors, and financial institutions from investing in clean energy in the region. Mmainly a few large, highly-visible projects have been able to access the small amount of clean energy finance in the region. Small and medium-sized enterprises find it difficult, if not impossible, to find information on available capital, value chain opportunities, and markets.

To fill the information gap, the Multilateral Investment Fund partnered with Bloomberg New Energy Finance, the leading climate investment experts, to conceptualize and develop the Climatescope. This annual report will objectively assess the “investment climate for climate investment” across the Latin American and Caribbean region. Climatescope ranks countries based on four broad categories: the enabling framework, clean energy investment and climate financing, low carbon value chains, and greenhouse gas management. It also provides analysis of the regional market, country profiles, and an online platform that allows the user to change the weights of indicators and access the full data set.

This index will be a critical tool for many audiences.

• Investors and entrepreneurs will use this report to discover places where value chains, finance, and market conditions combine to create new business opportunities.
• Governments intent on creating supportive enabling environments for climate investment will find the Climatescope a helpful tool in guiding their policy choices.
• Lenders can harness these data to identify promising new areas to support green lending.
• SMEs will be able to better identify market opportunities for their products and services, as well as financing for their businesses.

The Climatescope is much more than a report. It is a dynamic tool that provides an interactive dashboard, where interested parties can change the weights of each parameter to suit their needs. Users can also download complete data sets, country profiles, case studies, and contact information for financial institutions and venture capital funds. In the end, we hope that the Climatescope’s unique combination of information on finance, policy, and market opportunities will have a catalytic result in the region.

We will be releasing the Climatescope at an event we are co-hosting with Bloomberg New Energy Finance on June 19th during the Rio+20 environmental summit. If you will be in Rio de Janeiro and are interested in being among the first to see this groundbreaking report, please register here. And if you won’t be in Rio, visit FOMIN.org for full access to the Climatescope, beginning June 20.

Gregory Watson is a Team Leader in Environment and Clean Energy at the Multilateral Investment Fund. He re-joined the Multilateral Investment Fund in 2008, having previously worked there from 2004-2007. Greg serves as the team leader for the MIF’s environment and clean energy team, conceptualizing, overseeing, and implementing the MIF’s climate change projects, investments, and research in clean and efficient energy, natural capital, and adaptation.  He has recently developed projects on green microfinance, climate investment, Caribbean adaptation, and renewable energy.  Previously, Greg led the MIF’s remittance program for several years.