Groundbreaking international collaboration among public clean energy fund managers highlights the link between public clean energy spending and economic health.
OTTAWA, ONTARIO--(Marketwire - Aug. 13, 2009) - A new report detailing "Why Clean Energy Public Investment Makes Economic Sense - The Evidence Base" was released by an international coalition of public clean energy funds under the remit of the United Nations Environment Programme (UNEP). The group, called the SEF Alliance, represents a groundbreaking collaboration across borders in a field that is increasingly recognized as critical for securing emissions reductions otherwise unattainable through regulation.
In a comparison of policy options on a strictly economic basis, the report finds that green spending creates more jobs, per dollar, than most other types of stimulus spending; and 3 to 4 times as many jobs, per dollar, as tax cuts. Notably, the report further states that green investment is one of the most effective types of economic stimulus spending in terms of both job creation and economic growth, as well as providing various other economic and environmental benefits. Investments in clean energy and energy efficiency programs increase GDP, incomes, and jobs, reduce pollution and greenhouse gas (GHG) emissions, save energy, reduce energy costs, and reduce energy price fluctuations.
There is a growing consensus amongst key players, who recognize the need for targeted public financing of sustainable energy markets in addition to market-based regulatory mechanisms such as cap-and-trade. This is why UNEP as part of its decade long effort to promote clean energy has been working with leading public finance organizations that are developing and testing new approaches, many of which are now ready for scale-up.
"The topic of direct investment by governments in clean energy is increasingly recognized as essential for filling financing gaps, overcoming market barriers, and scaling up commercial investment in the low carbon economy," says Achim Steiner, Executive Director of the UNEP. The report's findings reinforce UNEP's call for a global green new deal in response to the financial and economic crisis. Clean energy can be a key driver in the transition toward a green economy.
The SEF Alliance is a main component of UNEP's work in this arena. It is a coalition of public clean energy funds launched by UNEP in 2008 together with the Oak Foundation and a core group of founding member organizations from the UK, Canada, Finland, Ireland and the United States. The aim was to provide clean energy public fund managers with an international channel for collaboration with each other. It is the first international platform explicitly dedicated to growing the expertise of public fund managers in the design and implementation of clean energy public financing mechanisms.
"We need a way of collaborating with our international peers," says Vicky Sharpe, President and CEO of Sustainable Development Technology Canada (SDTC), one of the founding SEF Alliance member organization. "With the SEF Alliance, we hope to collect our knowledge in a single point and communicate the results to policymakers."
In response to the global economic downturn, SEF Alliance members - including the UK Carbon Trust, Sustainable Development Technology Canada, Sitra, the Finnish Innovation Fund, and Sustainable Energy Ireland - commissioned an analysis of the connection between government clean energy spending and various measures of economic health. The report was prepared by Management Information Services, Inc. (MISI), an internationally recognized economic research firm based in the U.S.
In "Why Clean Energy Public Investment Makes Economic Sense - The Evidence Base", MISI has compiled and assessed the latest and most comprehensive evidence linking government clean energy spending with key indicators of economic health, such as job creation and growth. It finds that countercyclical investment in sustainable energy is a sound response to recession when economic factors are considered alone, independently from demands of the global ecosystem.
"The world recognizes the importance of clean energy technology and, in that regard, finance remains a high priority for realizing this societal opportunity," says Professor J. Owen Lewis, CEO of Sustainable Energy Ireland, one of the founding member organizations of the SEF Alliance. "That is why this economic impact study remains timely and significant."
The role of public fund managers is distinctly different from that of private fund managers. Whereas private funds are ultimately seeking a monetary return on investment, the goals of public funds are much more complex. They aim to complement the private sector without crowding out commercial investment, to fill financing gaps and to overcome niche market barriers that the private sector cannot or will not address - all while demonstrating the best value-for-money to the sponsoring government according to its various policy goals.
"Clean energy public fund management is a very important field of competence in the world today," says Jamie Brown, who manages the Secretariat of the Alliance from its main office in Basel, Switzerland. "It's also relatively new and experimental. Fund managers are still learning and discovering the best ways to accelerate the development of clean energy markets from a public interest perspective."
The Alliance is governed directly by its member organizations. Aside from the latest report on the economics of green stimulus spending, the group has also completed a range of investigations looking in-depth at the various financing options available to governments to accelerate the development of clean energy markets.
The report is available on the SDTC website(http://www.sdtc.ca/en/knowledge/other_reports.htm).