SUSTAINABILITY
be providing grants or donations – rather than just loans – to companies that are developing mass-market renewable technologies , like longer-lasting lithium batteries or cheaper solar panels ? After all , it would surely accelerate the transition towards net-zero . Penrose believes that banks and FIs should look to offer more favourable loans and credits terms , as well as other equity products , to renewable projects – but stops short of categorising the renewable energy sector as a philanthropic endeavour . DAI Magister ’ s Marc Deschamps , meanwhile , argues it isn ’ t necessary to think of renewables as a form of altruism .
“ Financing for renewable energy needs to generate incremental , higher profitability for financing providers . For better or worse , we cannot expect lenders to back sustainable projects for altruistic reasons , and so those investments need to be at least as profitable as climate-damaging financing . The good news here is that , through a combination of growing incentives and maturation of renewable energy technologies , there are more profitable financing options available for lenders worldwide .
“ One of the areas however where financial institutions can ‘ up their game ’ is differentiated sector expertise . The reason is that many valuable and climate-positive projects tend to be smaller , or on a regional or local scale , where more local or national financing is most appropriate . Many of these ( generally smaller ) financing sources do not have nearly as much expertise in assessing risk in these projects as the larger global lenders .
“ This expertise gap can be profitably filled by mid-size and smaller financing sources staffing up with more experienced sector professionals – and the payoff already available is sustainably higher-margin , climate-positive lending .”
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