Climate Finance
Unspoken and misunderstood assumptions stand in the way of building financial solutions for our climate challenges. While they are too numerous to address completely, some general ecosystem elements are worth addressing as we consider the topic of "Climate Finance".
The current industrial paradigm of energy and transportation requires grid-based utilities. These require scale and duration which force solutions into the hands of governments and massive corporations. If we plan to replicate the industrial (Western / Northern) grid paradigm, we will force ourselves into financing vehicles which have evolved in that context. And, if we're working to "reposition" or "retrofit" Western / Northern infrastructure, we are drawn towards using financial conventions familiar to these markets. These solutions include:
- Tax and government incentives and rebate programs that attempt to limit investment risk;
- Debt (in the form of bonds) which require established market buyers (these buyers are pension funds, banks, insurance companies and other asset holders who need long-term, fixed income products);
- Consolidated (urban) concentration of buyers of utilities and consumers of transportation efficiency.
Sean Kidney and his colleagues have been working to create financial products which are recognizable to established industrial market participants. Their work seeks to create immediately deployable solutions to support Climate Finance where the attributes above are prevalent or desired.
Similar to the telecommunications evolution in Southeast Asia, Africa, and South America where copper lines and land-line phones were pre-empted as obsolete by cellular technology thereby making communication more accessible to more people, many countries can innovate climate infrastructure without the grid and the financial products that serve its mandates. Decentralization of appliances and power are already transforming grid demands. From rooftop solar water heaters to in-home power systems, linking energy to appliance with the least possible transmission inefficiency provides considerable opportunity for new economic systems and finance. Climate Finance in formerly marginalized countries can richly benefit from:
Global Innovation Commons - the use of enclosure-based, proprietary technology, disclosed in patents, research materials, procurement requirements and specifications, etc for the benefit of small and medium sized business creation in climate aligned enterprises;
Abundant Enterprise Finance - the ability to link distributed energy and infrastructure assets to their future productivity (utility) in decentralized community interests which may or may not require monetary exchanges;
Trade Credit Offsets - unquestionably, the greatest untapped financial asset of most countries on Earth, Trade Credit Offsets are the contracted "rebates" created by governments purchasing goods and services from multi-national corporations (these offsets, typically >30% of the nominal value of the contract, require the multi-national to reinvest business, technology, or money in the purchasing country).
Gustavo Cortês and David Martin are actively deploying these models in Brazil in partnership with several public and private sector interests. This same work - pioneered by Martin's team over a decade ago - is integral to the successful development of economic systems in China, the Middle East, North Africa and others.
During the Climate Finance session, we will collaborate and co-create optimal solutions for Brazil and related countries, with respect to building a more Abundant economic future.
Climate Bonds Initiative:
Incentivizing Rapid Change:
- Sovereign Technology Credit Obligation (STCO) Finance Instruments
- Fundo Brasil for New Technologies: Climate-Transforming Capital Solutions
Financing with Property Equity:
Location
