COP28 and beyond: Private financing solutions illuminating the path to global energy transition

The spotlight has once again turned its attention to global deliberations on the urgent need to phase out fossil fuels and devise solutions to achieve ambitious net-zero goals at the annual United Nations climate change conference held in Dubai in 2023. A recurring theme featured this year is a call for greater collaboration to mobilize private capital, closing the investment gap and addressing climate challenges to transition towards a sustainable future at a much greater speed and scale.^[1]

Unlike preceding conferences, the COP28 presidency has uniquely positioned the private sector in climate talks. This deliberate move compels COP participants to confront the crucial issue of determining the role corporations can or should play in the global transition, with many views this as an invaluable opportunity to catalyze real economic change while addressing climate challenges.^[2]

Governments worldwide have placed a specific focus on securing essential capital as they ramp up initiatives to shift towards renewable energy sources. This emphasis extends to developed economies, influenced by high decarbonization cost attributed to the risk premium necessary for borrowing.^[3] According to the 2023 S&P Global Commodity Insights Inflections Reference Case forecasts, an estimated $700 billion per year of renewable energy investment is expected through 2050 to reach net-zero milestones.^[4]

Breakthroughs in technology are continually reshaping the renewable energy landscape. From more efficient solar panels to advanced energy storage solutions, ongoing innovation within the sector is opening new avenues for investment and project development. Recognition of renewables as a resilience strategy has grown exponentially as well, particularly in the face of extreme weather events and power outages, according to a 2023 Deloitte survey,^[5] underscoring their increasing investment potential.

Private capital fills the void in renewable energy financing

The prevailing high interest rates, implemented to curb inflationary pressures across various economies, have exerted an impact on financing volumes within the energy asset sector, widening the existing financial gap. Governments globally are employing a comprehensive strategy, including public and private funding, along with subsidies, to stimulate investment in renewables. In 1H 2023, private equity commitments to renewable energy companies reached $10.4 billion, a 25% increase from 1H 2022.^[6] Renewable energy projects of substantial value, particularly in solar – also a key driver of 1H 2023 financial performance, hold considerable potential for private capital participation, effectively filling the void left by traditional financing.^[7]

As renewable projects grow increasingly attractive and financially viable in the long run, supported by strengthened policies, technological advancements, and enhanced cost effectiveness, they present businesses and investors with an opportunity to mitigate financial risks and optimize capital deployment. A flexible capital solution, such as securities-backed financing from EquitiesFirst, can provide businesses and investors with the liquidity and stability needed to navigate the complexities of financing clean energy projects.

Leveraging securities-backed financing for strategic moves

For investors seeking portfolio diversification, securities-backed financing offers an efficient and cost-effective way to participate in the expanding renewable energy sector. It offers investors liquidity to diversify their positions, enabling strategic moves in a changing energy and economic landscape without sacrificing the upside potential of their underlying holdings. As the demand for clean energy financing grows, EquitiesFirst’s competitive non-recourse, non-purpose capital emerges as an efficient source of funding for those looking to contribute to and benefit from the global transition to sustainable energy.

By leveraging these financing solutions, businesses and investors can unlock the potential for substantial returns while simultaneously advancing the growth of sustainable energy initiatives. The benefits of private funding and the unique structure of securities-backed financing align with the dynamic nature of the renewable energy sector, fostering a more resilient and sustainable future for generations to come.

[1] https://www.cop-28.org/climate-action-innovation-zone/climate-action-needs-gender-focus

[2] https://time.com/6344322/the-role-of-business-at-cop28/

[3] https://www.reuters.com/sustainability/sustainable-finance-reporting/esg-watch-cop28-milestone-terms-ambition-falls-short-finance-2023-12-14/

[4] https://www.spglobal.com/en/research-insights/featured/special-editorial/renewable-energy-funding-in-2023-a-capital-transition-unleashed

[5] https://www2.deloitte.com/uk/en/insights/industry/renewable-energy/renewable-energy-industry-outlook.html

[6] https://about.bnef.com/blog/renewable-energy-investment-hits-record-breaking-358-billion-in-1h-2023/

[7] https://about.bnef.com/blog/renewable-energy-investment-hits-record-breaking-358-billion-in-1h-2023/

Disclaimer

Past performance does not guarantee future returns, and individual returns are not guaranteed or warranted.

This Document is intended solely for accredited investors, sophisticated investors, professional investors, or otherwise qualified investors, as may be required by law or otherwise, and it is not intended for, and should not be used by, persons who do not meet the relevant requirements. The content provided herein is for informational purposes only and is general in nature and not targeted to any specific objective or financial need. The views and opinions expressed in this Document have been prepared by third parties and do not necessarily reflect the views and opinions of EquitiesFirst. EquitiesFirst has not independently examined or verified the information provided herein, and no representation is made that it is accurate or complete. Opinions and information herein are subject to change without notice. The content provided does not constitute an offer to sell (or solicitation of an offer to purchase) any securities, investments, or any financial products (“Offer”). Any such Offer shall only be made through a relevant offering or other documentation which sets forth its material terms and conditions. Nothing contained in this Document shall constitute a recommendation, solicitation, invitation, inducement, promotion, or offer for the purchase or sale of any investment product by First Holdings, LLC or its subsidiaries (collectively, “EquitiesFirst”), nor shall this Document be construed in any way as investment, legal, or tax advice, or as a recommendation, reference, or endorsement by EquitiesFirst. You should seek independent financial advice prior to making an investment decision about a financial product.

This Document contains the intellectual property of EquitiesFirst in the United States and other countries, including, without limitation, their respective logos and other registered and unregistered trademarks and service marks. EquitiesFirst reserves all rights in and to their intellectual property contained in this Document. The Document should not be distributed, published, reproduced or otherwise made available in whole or in part by recipients to any other person and, in particular, should not be distributed to persons in any country where such distribution may lead to a breach of any legal or regulatory requirement.

EquitiesFirst make no representation or warranty with respect to this Document and expressly disclaim any implied warranty under law. You acknowledge that EquitiesFirst is not liable under any circumstances for any direct, indirect, special, consequential, incidental, or punitive damages whatsoever, including, without limitation, any lost profits or lost opportunity, even if EquitiesFirst has been advised of the possibility of such damages.

EquitiesFirst makes the following further statements that may be applicable in the stated jurisdiction:

The information contained on this Document is intended for persons located in Australia only and classified as a Wholesale Client only as defined in Section 761G of the Corporations Act 2001. The distribution of information to persons outside this criteria may be restricted by law and persons who come into possession of it should seek advice and observe any such restriction.

The material contained in this Document is for information purposes only and should not be construed as an offer or solicitation or recommendation to buy or sell financial products.

The information contained in this Document is intended to be general in nature and is not personal financial product advice. Any advice contained in the Document is general advice only and has been prepared without considering your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. You should seek independent financial advice and read the relevant disclosure statements or other offer documents prior to making an investment decision about a financial product.

Dubai: Equities First Holdings Hong Kong Ltd (DIFC Representative Office) at Gate Precinct Building 4, 6th Floor, Office 7, Dubai International Financial Centre (commercial license number CL7354) is regulated by the Dubai Financial Services Authority (“DFSA”) as a Representative Office (DFSA Firm Reference No.: F008752). All rights reserved.

The information contained in this document is intended to be general in nature, and, to the extent that it is perceived as advice, any advice contained in this document is general advice only and has been prepared without considering your objectives, financial situation, suitability of the financial products or your needs.

The material contained in this document is for information purposes only and should not be construed as financial advice, including an offer or solicitation or recommendation to buy or sell financial products. The information contained in this document is intended to be general in nature and any advice contained in this document is general advice only and has been prepared without considering your objectives, financial situation, suitability of the financial products or your needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. If you do not understand the contents of this document, you should consult an authorised financial adviser.

This document relates to a financial product which is not subject to any form of regulation or approval by the DFSA. The DFSA has no responsibility for reviewing or verifying any documents in connection with this financial product. Accordingly, the DFSA has not approved this document or any other associated documents nor taken any steps to verify the information set out in this document, and has no responsibility for it.

Hong Kong: Equities First Holdings Hong Kong Limited is licensed under the Money Lenders Ordinance (Money Lender’s Licence No. 1659/2024) and to carry on the business of dealing in securities (Type 1 licence) under the Securities and Futures Ordinance (“SFO”) (CE No. BFJ407). This Document has not been reviewed by the Hong Kong Securities and Futures Commission. It is not intended as an offer to sell securities or a solicitation to buy any product managed or provided by Equities First Holdings Hong Kong Limited and is only intended for persons who qualify as Professional Investors under the SFO. This document is not directed to individuals or organizations for whom such offers or invitations would be unlawful or prohibited.

Korea: The foregoing is intended solely for sophisticated investors, professional investors or otherwise qualified investors who have sufficient knowledge and experience in entering into securities financing transactions. It is not intended for, and should not be used by, persons who do not meet those criteria.

United Kingdom: Equities First (London) Limited is authorised and regulated in the UK by the Financial Conduct Authority (“FCA”). In the UK, this Document is only being distributed and made available to persons of the kind described in Article 19(5) (investment professionals) and Article 49(2) (high net worth companies, unincorporated associations etc.) of Part IV of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (‘’FPO’’) and any investment activity to which this presentation relates is only available to, and will only be engaged in with, such persons. Persons who do not have professional experience in matters relating to investment or who are not persons to whom Article 49 of the FPO applies should not rely on this document. This Document is only prepared for and available to persons who qualify as Professional Investors under the Markets in Financial Instruments Directive.