International public financing for green energy

• Florence School of Transnational Governance
• EUI Climate Workshop
• STG Climate

Financing for the environment (FFE) stands for funds needed and directed towards the achievement of global environmental objectives. The development of green energy is an important instrument in their pursuit, and public money provided by governments to other countries (international public FFE) plays a crucial role in the transition from traditional to green energy.

International public FFE represents the flow of resources across borders. Governments allocate a portion of national budgets to support green energy abroad, mostly through bilateral channels but also through multilateral mechanisms such as international organisations (the Green Climate Fund and the European Bank for reconstruction and Development among them). The management of international public FFE by such multilateral mechanisms has been met with waves of criticism about the money not being spent well, not being allocated enough or allocated for something which should not be financed at all (in simple words, wasted) or should not be financed through public money.

This research proposes to study the governance of FFE using a perspective based on elements of the public financial management (PFM) theory and case studies of Egypt and Kazakhstan. It is assumed that multilateral FFE functions similar to any process of management of public money. The PFM discipline can provide a helpful map for where to look for critical power struggles and nodes of power and how to assess the current governance given the concern for the appropriate use of public money. By translating the PFM objectives into specific decision-making choices and locating who and how ultimately makes those choices, it is possible to assess how the respective objectives are being achieved in relation to public money in the global context. By re-imagining multilateral FFE as one or several conflicts between sides with opposing views on spending and determining the conflict-resolution techniques which apply in each case, it is possible to assess whether the process lacks necessary safeguards or whether specific actors act in a way which unjustifiably delays or otherwise impairs the process. A more comprehensive picture of the governance of multilateral FFE which thus emerges could be a key to unlock the hidden potential for approaching the known criticisms towards FFE.

Session as part of the EUI Climate Workshop, a forum that brings together members of the EUI community from all departments working on climate-related issues from across the institution. Find out more about the workshop and the upcoming sessions here.