How Can International Financial Institutions Support Cross Border Energy Projects in Emerging Market Economies?

Investments in clean energy, including geothermal and hydropower projects, are increasingly important to meet the growing energy needs in the world. A large part of clean energy sources in the world are located in emerging markets. Investors in those markets often face higher risks than those investing in high income economies. Higher risks in turn reduce capital flows to emerging markets. This article discusses cross border clean energy projects to emerging markets and the risk mitigation instruments offered by international financial institutions and export credit agencies. The article argues that IFIs should make more use of their guarantee powers to help mobilize private sector funding for clean energy investments to emerging markets.