A Comparative Study on the Role of Public–Private Partnerships and Green Investment Banks in Boosting Low-Carbon Investments

Abstract

Following the successful climate agreement in Paris, global attention shifted quickly to how countries will achieve their Nationally Determined Contributions. To achieve these goals, governments need to make full use of the private sector’s capacity to unlock much larger investment flows in low-carbon infrastructure. This chapter focuses on two different types of mechanism, Public–Private Partnerships (PPPs) and Green Investment Banks (GIBs). While PPPs are more practical for countries that have robust demand and are complemented by strong institutions and governance, protection of investments, and dispute resolution mechanisms, GIBs leverage public funding to mobilize much larger pools of private capital using innovative transactions, risk reduction structures, and market expertise. Although their common objective is to scale up low-carbon investment, both PPPs and GIBs have been established in a variety of national contexts to achieve a range of goals, including access to concessional capital with lower interest rates and longer tenures for green investments. This chapter examines the rationale, mandates, and financing activities of these two categories of financial architecture within the context of India and Japan. It takes stock of the actual and potential use of these two approaches and for strengthening bilateral cooperation between India and Japan.