Zero: The Climate Race
How the financial system can work for climate, not against it: Moving Money
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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Quick takeaways
- High capital costs and perceived risks hinder investment in renewable energy projects within developing countries, perpetuating economic challenges.
- Alternatives to reserve currencies are being explored by emerging economies to reshape global financial relationships and enhance climate finance.
Deep dives
The Impact of Capital Costs on Renewable Energy Development
The cost of capital significantly affects the ability to invest in renewable energy projects, particularly in developing nations. While developed countries enjoy lower borrowing costs, developing countries face substantially higher interest rates due to perceived risks. This disparity can lead to a debt trap where borrowing increases merely to service existing debt, hampering growth. Understanding how to lower these costs is crucial for facilitating a shift towards clean energy in regions that need it the most.
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