Funding environmental projects
Setting up a “green” bank
The widespread growth of interest to ecological problems has resulted in a growing demand for financial institutions capable to structure and direct investments to environmental protection. Global investment in renewable energy reached USD 243 billion in 2010. The number of institutions making long-term (more than 10 to 20 years) investments to environmental protection in Russia is insufficient.
Financial institutions investing in environment
- The institutions providing financing to environmental protection may operate in the form of funds (for example, the Investment Fund for Central and Eastern Europe) or banking organizations (for example, Green Investment Bank, KfW, Nordic Investment Bank);
- The institutions can be state-owned (budgetary or non-budgetary) or operate on Public-private partnership principles;
- Funding may be provided in the form of grants, loans(including loans with lowered rates and interest free loans), joint financing and financing of target oriented programs, including investment projects.
Key competitive advantages of a bank over an investment fund
- Independence and promptness when raising funds;
- Reduced dependence on state authorities;
- Focus on profit generation;
- Wide range of credit, investment and guarantee products and services;
- Stricter expenditure control system as compared with funds.
The main objective of setting up a “green” bank is to provide financing to the investment projects aimed at improving the environmental situation in Russia.