PwC’s Richard Abadie on Closing the Green Infrastructure Gap

Originally published at Richard Abadie is the Global Leader, Capital Projects and Infrastructure, Partner at PwC UK. PwC is a Hall of Fame company.


The urgency of mobilizing private finance to decarbonize infrastructure worldwide is well understood. After all, energy, industry and buildings are responsible for more than 70% of global greenhouse gasses (GHGs); and as we have written before, public funding alone will not be enough to pay for what is now estimated to be a US$93.2 trillion transition at the scale and speed that is needed to meet the Paris Agreement goals limiting global warming to 1.5°C by 2030. Less clear is how private financiers, asset owners and policy-makers can work together to move from the current position, in which private capital principally flows to developed nations — largely into assets that are already generating predictable revenues — to a future position in which money also flows to what is often perceived as riskier and less stable opportunities in under-financed emerging and frontier markets.

These trends are reinforced by proprietary PwC research that found that private capital continues to heavily favor mature markets, i.e., high-income nations buttressed by membership in climate-conscious international organizations such as the OECD and the European Union (EU). Our study of 61 countries and territories — representing 83% of the world’s population, 88% of global GDP and 83% of the world’s CO2 emissions — indexed whether certain countries are significantly more attractive for private finance seeking exposure to green infrastructure than others, looking specifically at big-ticket items such as renewable power, electrification of transport, waste management and support for the circular economy. 

As a rule, countries that have a more stable macroeconomic profile and a healthy financial market tend to be more attractive to banks and institutional investors. Crowded markets, such as Australia, the UK, Canada, the US and Sweden, scored significantly higher in our survey than less developed countries across Asia, South America and Africa when we plotted financial and macroeconomic factors against green growth, regulation and broader commitments to decarbonization.