Working PaperFinanceInfrastructure

Financing Change: How to Mobilize Private Sector Financing for Sustainable Infrastructure

Aaron Bielenberg, Mike Kerlin, Jeremy Oppenheim, Melissa Roberts

After the Paris agreement, many countries are looking to scale their investment in infrastructure that is socially inclusive, low carbon, and climate resilient. The huge quantity of investment required means that establishing the right conditions to attract private-sector investment is critical.

Authors

Aaron Bielenberg McKinsey Center for Business and Environment

Mike Kerlin McKinsey Center for Business and Environment

Jeremy Oppenheim McKinsey Center for Business and Environment

Melissa Roberts McKinsey Center for Business and Environment

Overview

Jan 2016

After the Paris agreement, many countries are looking to scale their investment in infrastructure that is socially inclusive, low carbon, and climate resilient. The huge quantity of investment required means that establishing the right conditions to attract private-sector investment is critical. In this paper by the McKinsey Center for Business and Environment, the authors highlight the major barriers that must be overcome and the ways to encourage more capital investment in sustainable infrastructure. The paper determines that a “muscular set of nudges and risk-sharing instruments are required”.

 

Associated graphics

Forty percent of foreign direct investment in new infrastructure flows to the home region of the investor

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With the participation of the full spectrum of actors, it is possible to reach $6 trillion a year.

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The largest gaps are in upper-middle-income countries and the power sector.

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Private institutional investors could fill up to half the financing gap.

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