Gallagher OpEd on Climate Finance for Latin America
Kevin Gallagher, Professor of Global Development at the Boston University Pardee School of Global Studies and co-director of the Global Economic Governance Initiative, published a new Op-Ed in Latin America Goes Global, the website of the new non-profit think tank Global Americans. Titled “Banking on Climate Finance for Latin America,” the Dec. 3 Op-Ed was published in the context of global climate negotiations (COP21) that began this week in Paris, France, and looks at the future prospects of climate finance or Latin America.
Gallagher points out that Latin American countries have arrived at Paris with ambitious targets, “but these promises and plans won’t come cheap. LAC governments will need to make significant financial investments to meet their climate change commitments.”
“Low-carbon investments require high up-front costs, though they are among the cheapest to operate in the long term. In a world where financial markets are still geared almost exclusively toward short-term profits, the private sector has been anemic when it comes to climate-friendly investment in the region. This is not only due to the longer-term structure of cost and benefit flows, but also due to the fact that prices for green technologies are comparatively expensive, especially given the high amount of fossil fuel subsidies and the (ill) perceived risk of investing in new technology.”
However, he points out that development banks operating in the region do not have a stellar record in financing for a low-carbon future.
“For Latin America to meet its climate change and sustainability goals it will need to scale up development bank finance for low carbon growth and safeguard all projects in a more socially inclusive manner. Development banks will need more capital, and to leverage the capital they do have in a manner that brings in significant private sector finance. In addition, they will need to re-evaluate the way they engage with local communities in order to strike a balance between inclusiveness and efficiency.”
Gallagher concludes that adopting a more environmentally sustainable growth could possibly also offer the region a way out of its immediate economic doldrums.
Read the full Op-Ed here. Read more on Kevin Gallagher here.