The Asian Development Bank (ADB) plans to launch a $2-$5 billion fund by the end of the year to channel pension fund investment into low-carbon infrastructure in Asia, said an investment officer at the bank.
“The initiative will mobilize large-scale private capital into low-carbon investment opportunities in Asia,” said Johanna Klein, speaking at a clean technology event in London late last week.
“The objective is to get to where the real money resides and that is with pension funds and sovereign wealth funds.”
In total, such funds control about $28 trillion but only 0.7 percent of that is directed at low-carbon investment opportunities, Klein said.
“If we can channel even a little bit of that money, it would make a huge difference to the market,” she said.
Currently, there is a gap for low-carbon infrastructure investment in Asia. Demand for low-carbon finance in the Asian region is about $100 billion a year, Klein said.
But only 17 specialist funds focus on clean energy, which have around $3.5 billion of assets under management in total and release about $1 billion a year.
“There is about $1 billion of investment into low-carbon infrastructure happening and about $100 billion a year which is needed so there is a really enormous gap,” Klein said.
Investors also still see clean energy as a very risky asset class for investment in Asia. They perceive political and regulatory risks to investing there and have concerns about market intervention, she added.
The bank is developing its so-called Climate Public Private Partnership Fund with the British government’s Department for International Development.
