Zero: The Climate Race How the financial system can work for climate, not against it: Moving Money
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Apr 10, 2025 Avinash Persaud, climate advisor to the Inter-American Development Bank and former economic advisor to Barbados, dives into how the financial system can better support climate action. He discusses the staggering gap in clean-energy investments flowing to developing countries. Persaud highlights the risks capital owners face when investing in these regions, from currency issues to political instability. He also emphasizes the need for tailored electrification strategies while exploring the broader implications of reserve currency status on global finance and fossil fuel subsidies.
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Cost of Capital's Relevance
- The concept of "cost of capital" is newly relevant to climate discussions.
- Negotiators often overlook this crucial factor, focusing on project specifics instead.
Negotiation Room Disparity
- A small European country's negotiator didn't see finance as a problem due to low borrowing costs (3%).
- Meanwhile, South Africa and Brazil faced much higher rates (12.5% and 13%), highlighting the disparity.
Capital Availability Disparity
- Developed countries have abundant, cheap capital due to high savings and lower investment needs.
- Developing countries face scarce, expensive capital from limited savings and high demand.