Source: GI Hub based on IJ Global data.
Note: Green investment in infrastructure means investment in environmentally sustainable projects that support the transition to net-zero emissions of carbon dioxide. Other Green includes investments in other subsectors such as EV charging infrastructure, Carbon Capture and Storage (CCUS) facilities, and electric transport (among others), or investments financed by a sustainable instrument.
The world’s climate future and ability to meet the goals of the Paris Agreement hinges on the infrastructure decisions being made today. This includes decisions on investing in sustainable infrastructure which has tremendous opportunity for positive change.
Encouragingly, global private investment in infrastructure projects is ‘greener’ than ever. In 2021, green private investment in infrastructure projects in primary markets reached a record-high share of 60%. This trend towards ‘green’ projects is evident across income groups, with another record-high of 65% in high-income countries (HICs) and 43% in middle-and low-income countries (MLICs).
Despite overall levels of private investment in infrastructure projects declining in MLICs for a third consecutive year in 2021, the share of green investment continued to increase. In other words, even though investment is falling in MLICs, the deployed investment is greener.
On a sector basis, renewable energy projects attract the overwhelming majority of green private investment. This is true for HICs and MLICs, with the sector accounting for 79% and 88% respectively of total private green investment in infrastructure projects in 2021. These current levels of investment are not sufficient to reach net zero targets. According to the International Energy Agency, wind and solar capacity additions must quadruple by 2030 to reach global net zero emissions by 2050.
Furthermore, levels of green private investment in sectors outside of renewables remain minimal, although it has started to emerge in more recent years and mostly in HICs. It is critical that green investment in other sectors accelerates for the world to meet its climate targets. One example is the transport sector which accounts for around a quarter of global carbon dioxide emissions and is expected to be the fastest growing source of emissions. Yet in 2021, only 7% of global private investment in transport projects were green (such as electric vehicle charging infrastructure or bus rapid transit systems). In addition, there is also limited green private investment within other sectors, such as water and waste.
Regionally, Western Europe and North America have historically dominated global green private investment in infrastructure projects, respectively representing 35% and 31% between 2010 and 2021. Nonetheless, Asia is swiftly catching up. In 2021, green investment rose to 60% from only 7% of total private investment in infrastructure projects in 2010. It saw the fastest ‘green’ growth over the past decade and is now the third most ‘green’ region, behind Western Europe and North America.
Most green private investment in infrastructure projects is financed by the private sector alone, without co-financing from public institutions such as multilateral development banks or government. This is true for both HICs and MLICs. In HICs, the share of green private investment financed by the private sector has remained at similar levels over the past decade, averaging around 68% of the total value. However, in MLICs, this share has increased, rising from 16% in 2012 to 59% in 2021. This suggests that the private sector has become increasingly confident in financing green projects (mostly renewables) in MLICs alone.
While it is encouraging that global private investment in infrastructure projects is greener than ever, the world is on a critical timeline to reach climate goals. International efforts must step up to accelerate green investment in infrastructure beyond the renewables sector.