New publication on Financial Institutions & Climate Change

A new book by Dr. Hilmar Þór Hilmarsson Professor at the School of Business and Science University of Akureyri and former Advisor to Keilir Academy was published in New York in the Fall 2016. The book is entitled: International Financial Institutions, Climate Change and the Urgency to Facilitate Clean Energy Investment in Developing and Emerging Market Economies, see also introduction leaflet here

The book discusses how international financial institutions (e.g. the World Bank Group and Regional Development Banks) can facilitate increased investment in clean energy projects in developing and emerging market countries. In the coming years and decades most increase in the demand for energy is likely to be in those countries. Clean energy sources are also mostly located in developing and emerging economies. Investment in clean energy is often capital intensive, including for geothermal and hydropower projects, and with long repayment periods. Risk in developing and emerging countries, including political risk, is often high and international financial institutions can promote increased investment in cooperation with the private and the public sector with loans and grants, but more effectively with insurance and guarantee instruments, that they have been hesitant to utilize. In spite of the threat of climate change, energy challenges and environmental degradation, international financial institutions have so far done little to invest in clean energy projects. In this book Hilmar explains how international financial institutions can use their financial instruments to multiply the number of clean energy projects in the coming years and decades. Hilmar rote the book mostly while he was a Visiting Professor at Cornell University in the Fall 2015 and UC Berkeley in the Fall 2016.

In the introduction of the book the publisher comments as follows:

„Climate change is perhaps among the most serious challenges that humankind has ever faced and perhaps the greatest market failure the world has ever seen. At the same time, clean unutilized energy resources around the world are available that could help remedy climate and environmental problems while also improving people’s lives. It is likely that most of the increased demand for energy in the future will be in the developing and emerging world. This is also where most unutilized clean energy sources are located. The challenge of climate change requires strong comprehensive and firm action from the international community. Clean energy projects tend to be large, capital intensive and long term. They require long term commitment from all the players involved as well as mutual trust. International financial institutions (IFIs), including the World Bank Group and regional development banks can play a key role in promoting the use of clean energy sources by facilitating clean energy investment in developing and emerging markets. This book focuses on those challenges, mainly using geothermal energy projects as examples, but also by providing an example of a large hydropower project to illustrate how the funding and risk mitigation instruments of IFIs, as well as national agencies such as export credit agencies (ECA)s, have been used to mobilize funds in a difficult investment environment.“

The book includes comments from five reviewers from Iceland and also from emerging market economies including India, Latvia, Lithuania and Ukraine, see below.

“Developing and emerging economies are rapidly approaching the technological frontier through various structural changes, and huge increases in their energy requirements are foreseeable. In his new book, Professor Hilmarsson is concerned with ways to minimize the likely environmental damage and offers sensible ideas about ways to encourage a large-scale transition to clean energy sources, in particular how best to stimulate investments in geothermal and hydropower projects. He makes a well-informed and convincing case that international financial institutions, including the World Bank Group, in partnership with the private sector, should scale up their efforts and co-ordinate investment in clean energy infrastructures. In spite of alarming reports, the practical response of international financial institutions to the environmental crisis is lukewarm. Hilmarsson makes a valuable contribution by mapping the way ahead.” - Professor Thráinn Eggertsson, Institute of Economic Studies, University of Iceland and Hertie School of Governance, Berlin, Germany

"In this book Professor Hilmarsson, a World Bank Group insider for 12 years, offers an interesting and well-informed analysis of international financial institutions (IFIs) and how they can help solve one of the world's greatest problems - the transition to clean energy. Too often IFIs’ efforts are hampered by bureaucratic procedures that make them less effective and their clean energy portfolio in developing and emerging countries still remains small. In addition to funding and risk mitigation instruments, IFIs are particularly well placed to provide policy advice and technical assistance to governments implementing energy sector reform. This book is an important and timely contribution to the debate on clean energy and climate change." - Professor Dr. Erika Sumilo, Head of the Department of International Economics and Business, University of Latvia

"The utilization of clean energy resources in developing and emerging countries is among key challenges humankind is currently facing. Professor Hilmarsson offers a well-informed analysis on how international financial institutions can contribute more effectively to the transition to clean energy -- a critical component for success in the battle against climate change. This book is insightful and the analysis is sound as Professor Hilmarsson draws on his experience from the World Bank for 12 years in three different continents." - Professor Ligita Šimanskienė, Klaipėda University, Lithuania

"Clean energy investments, including geothermal and hydropower projects, tend to be large, with long repayment periods and often require cooperation between public, private and donor partners in emerging countries. Professor Hilmarsson shows how the funding and risk mitigation products of international financial institutions can be instrumental in mobilizing funds to make clean energy investments both possible and feasible. This is an important topic as vast clean energy sources still remain underutilized in emerging countries during a time of growing energy demand. Professor Hilmarsson also discusses Iceland’s transition to clean energy from which other countries may draw some valuable lessons. This is an important contribution that deserves attention and debate." - Professor Anatoliy G. Goncharuk, Head of the Department of Business Administration and Corporate Security, International Humanitarian University, Ukraine

"As Professor Hilmarsson highlights in this book, no institution supports cross border investments in a similar way that the World Trade Organization does for cross border trade. This failure traces its roots all the way back to the Bretton Woods conference and is an impediment for clean energy investments, especially in developing and emerging countries, during a time of great need for a transition to clean energy sources. In this book Professor Hilmarsson shows how international financial institutions can more effectively support clean energy investments in a world challenged by climate change. A timely contribution and an enjoyable read." - Dr. Sujit Kumar, Research Scholar, Jawaharlal Nehru University, New Delhi, and Assistant Professor, Sri Venkateswara College, University of Delhi, India