Abstract
Up to $61trillion of power systems investment is needed to fulfil the Paris Agreement. The mobilisation of so much capital is a huge challenge. As such, energy policy is changing to meet the needs of commercial finance. However, very little has been done to question the justice implications of this capital mobilisation, and what alternatives there are to commercially-oriented finance for low carbon energy systems. This paper uses a comparative analysis of two developed economies to explore how ‘alternative’ forms of finance operate in each nation’s energy investment landscape. We find alternative finance is often set in opposition to commercial capital. Alternative finance in both nations is motivated by financial justice outcomes that are poorly understood in current energy policy. Our findings suggest that 6 principles are key to ‘just’ energy finance: affordability, good governance, due process, intra-generational equity, spatial equity, and financial resilience. Energy policy that seeks to mobilise capital, should take account of all six principles.
Highlights
The scale of the low-carbon energy challenge is illustrated by global investment costs
We use Sovacool et al’s [3] eight principles of energy justice; availability, affordability, due process, transparency, sustainability, inter-generational equity, intra-generational equity, and responsibility. These principles are the indicators of ‘just’ energy futures which we apply to energy finance using two questions: 1, what are the implications of the current finance system on just energy transitions? And 2, what principles of justice could energy finance satisfy?
It is likely that various mixes of state, commercial, and ‘alternative’ money capital will be required for lowcarbon energy transitions
Summary
The scale of the low-carbon energy challenge is illustrated by global investment costs. ‘Institutions’ of finance can here be taken as the types of organisations orchestrating this activity These could be pension, insurance and wealth funds ( referred to as institutional investment), commercial banks, development banks, forms of crowdfunding (i.e. peer to business equity), venture capital etc. We use Sovacool et al’s [3] eight principles of energy justice; availability, affordability, due process, transparency, sustainability, inter-generational equity, intra-generational equity, and responsibility These principles are the indicators of ‘just’ energy futures which we apply to energy finance using two questions: 1, what are the implications of the current finance system on just energy transitions? These principles are the indicators of ‘just’ energy futures which we apply to energy finance using two questions: 1, what are the implications of the current finance system on just energy transitions? And 2, what principles of justice could energy finance satisfy?
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