Skip to main content

Thank you for visiting You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

  • Perspective
  • Published:

Nested barriers to low-carbon infrastructure investment


Low-carbon, 'green' economic growth is necessary to simultaneously improve human welfare and avoid the worst impacts of climate change and environmental degradation. Infrastructure choices underpin both the growth and the carbon intensity of the economy. This Perspective explores the barriers to investing in low-carbon infrastructure and some of the policy levers available to overcome them. The barriers to decarbonizing infrastructure 'nest' within a set of barriers to infrastructure development more generally that cause spending on infrastructure—low-carbon or not—to fall more than 70% short of optimal levels. Developing countries face additional barriers such as currency and political risks that increase the investment gap. Low-carbon alternatives face further barriers, such as commercialization risk and financial and public institutions designed for different investment needs. While the broader barriers to infrastructure investment are discussed in other streams of literature, they are often disregarded in literature on renewable energy diffusion or climate finance, which tends to focus narrowly on the project costs of low- versus high-carbon options. We discuss how to overcome the barriers specific to low-carbon infrastructure within the context of the broader infrastructure gap.

This is a preview of subscription content, access via your institution

Access options

Buy this article

Prices may be subject to local taxes which are calculated during checkout

Figure 1: The capital requirements of a high- and low-carbon scenario.
Figure 2: Scale of low-carbon infrastructure investment needs, 2015–2030 (US$ trillion year−1).
Figure 3: Venn diagram showing the nested barriers to infrastructure development.
Figure 4: Green bonds and YieldCos unlock institutional investment in low-carbon infrastructure.

Similar content being viewed by others


  1. Kennedy, C., Ibrahim, N. & Hoornweg, D. Low-carbon infrastructure strategies for cities. Nat. Clim. Change 4, 343–346 (2014).

    Article  CAS  Google Scholar 

  2. Clark, W. & Cooke, G. Smart Green Cities: Toward a Carbon Neutral World (Routledge, 2016).

    Book  Google Scholar 

  3. Pathways to a Low-Carbon Economy: Version 2 of the Global Greenhouse Gas Abatement Cost Curve (McKinsey & Company, 2009).

  4. Pye, S., Watkiss, P., Savage, M. & Blyth, M. The Economics of Low Carbon, Climate Resilient Patterns of Growth in Developing Countries: A Review of the Evidence (Stockholm Environment Institute, 2010).

    Google Scholar 

  5. Renewable Power Generation Costs in 2014: International Renewable Energy Agency (IRENA, 2015).

  6. Metz, B. in Climate Finance: Regulatory and Funding Strategies for Climate Change and Global Development (eds Stewart, R., Kingsbury, B. & Rudyk, B.) Ch. 3, 42–47 (New York Univ. Press, 2009).

    Google Scholar 

  7. Emerging Trends in Mainstreaming Climate Resilience in Large Scale, Multi-Sector Infrastructure PPPs (World Bank, 2016).

  8. Is it Time for an Infrastructure Push? The Macroeconomic Effects of Public Investment (International Monetary Fund, 2014).

  9. Better Growth, Better Climate (The New Climate Economy Report: Global Commission on the Economy and Climate, 2014).

  10. The Cost of Inaction: Recognizing the Value at Risk from Climate Change (The Economist Intelligence Unit, 2015);

  11. Stern, N. The Stern Review on the Economics of Climate Change (Cambridge Univ. Press, 2007).

    Book  Google Scholar 

  12. Adoption of the Paris Agreement (United Nations Framework Convention on Climate Change, 2015).

  13. Bhattacharya, A., Romani, M. & Stern, N. Infrastructure for Development: Meeting the Challenge (Grantham Research Institute on Climate Change and the Environment, 2012).

    Google Scholar 

  14. Drew, E. A Country Breaking Down The New York Review of Books (25 February 2016).

    Google Scholar 

  15. Making Public Investment More Efficient (International Monetary Fund, 2015).

  16. Gutman, J., Sy, A. & Chattopadhyay, S. Financing African Infrastructure: Can the World Deliver? (Brookings, 2015).

    Google Scholar 

  17. Bhattacharya, A., Oppenheim, N. & Stern, N. Driving Sustainable Development Through Better Infrastructure: Key Elements of a Transformation Program (Brookings, The New Climate Economy, and Grantham Research Institute on Climate Change and the Environment, 2015).

    Google Scholar 

  18. Mobilizing Public and Private Funds for Inclusive Green Growth Investment in Developing Countries (International Finance Corporation, 2013).

  19. Foster, V. & Briceno-Garmendia, C. Africa's Infrastructure: A Time for Transformation (World Bank, 2010).

    Google Scholar 

  20. Towards a Framework for the Governance of Infrastructure (OECD, 2015).

  21. Gennaioli, C. &, Tavoni, M. Clean or dirty energy: evidence of corruption in the renewable energy sector Public Choice 166, 261–290 (2016).

    Article  Google Scholar 

  22. Tanzi, V. & Davoodi, I. Corruption, Public Investment, and Growth (International Monetary Fund, 1997).

    Book  Google Scholar 

  23. Gilbert, P. Partnerships Help Bridge the Infrastructure Gap (Boston Consulting Group, 2013).

    Google Scholar 

  24. Verdoux, W., Uzsoki, D. & Ordonez, C. Currency Risk in Project Finance (International Institute of Sustainable Development, 2015).

    Google Scholar 

  25. Wells, J. & Hawkins, J. Increasing 'local content' in infrastructure procurement. Part 1 Proc. Inst. Civil Engineers Management Procurement Law 163, 65–70 (2010).

    Article  Google Scholar 

  26. India: Diagnostic Assessment of Select Environmental Challenges (World Bank, 2013).

  27. India: Green Growth is Necessary and Affordable for India, Says New World Bank Report World Bank (17 July 2013).

  28. World Energy Outlook 2014 (International Energy Agency, 2014).

  29. How Large are Global Energy Subsidies? (International Monetary Fund, 2015).

  30. Cervigni, R., Liden, R., Neuman, J. E. & Strzepek, K. M. (eds) Enhancing the Climate Resilience of Africa's Infrastructure: The Power and Water Sectors Conference Edition (World Bank, 2015).

    Book  Google Scholar 

  31. Unruh, G. Understanding carbon lock-in Energy Pol. 28, 817–830 (2000).

    Article  Google Scholar 

  32. Liu, L. & Waibel, M. in Macro Federalism and Local Finance (ed. Shah, A.) Ch. 6 (World Bank, 2008).

    Google Scholar 

  33. Mbeng Mezui. C. & Hundal, B. Structured Finance: Conditions for Infrastructure Project Bonds in African Markets (African Development Bank Group, 2013).

    Google Scholar 

  34. Micale, V., Trabacchi, C. & Boni, L. Using Public Finance to Attract Private Investment in Geothermal: Olkaria III Case Study (Climate Policy Initiative, 2015).

    Google Scholar 

  35. Hogarth, J. The role of climate finance in innovation systems J. Sustain. Financ. Investment 2, 257–274 (2012).

    Google Scholar 

  36. Colverson, S. & Perera, O. Harnessing the Power of Public-Private Partnerships: The role of hybrid financing strategies in sustainable development (International Institute for Sustainable Development, 2012).

    Google Scholar 

  37. Sarmenot, J. Do public-private partnerships create value for money for the public sector? The Portuguese experience OECD J. Budgeting (2010).

  38. Whitley, S. & Granoff, I. The Moroccan Agency for Solar Energy and the Moroccan Solar Plan (Green Growth Best Practice, 2014).

    Google Scholar 

  39. Annual Survey of Large Pension Funds and Public Pension Reserve Funds: Report on Pension Funds' Long-Term Investments (OECD, 2014).

  40. Kaminker, C. & Stewart, F. The Role of Institutional Investors in Financing Clean Energy (OECD, 2012).

    Google Scholar 

  41. Baily, B. An institutional truth: increasing institutional investor involvement in climate finance Georgetown Int. Environ. Law Rev. 27, 447–477 (2015).

    Google Scholar 

  42. History: Explosive Growth in Green Bonds Market (Climate Bonds Initiative, 2014);

  43. Green Bonds Attract Private Sector Climate Finance (World Bank, 2015).

  44. Berger, L. What you need to know about how clean energy yieldcos work. Greentech Media (10 July 2014).

  45. Roselund, C. Solar goes public: the rise of yieldcos. PV Magazine (August 2014).

  46. Croce, R. & Gatti, S. Financing infrastructure — international trends OECD J. Financ. Mark. Trends 2014, 123–138 (2014).

    Article  Google Scholar 

  47. Zuckerman, J., Frejova, J., Granoff, I. & Nelson, D. Investing at Least a Trillion Dollars a Year in Clean Energy Working paper (New Climate Economy, 2015).

    Google Scholar 

  48. Mandel, J. Solar Securitization. RMI Outlet (15 January 2014).

  49. State and Trends in Carbon Pricing 2015 (World Bank, 2015).

  50. Bast, E., Doukas, A., van der Burg, L. & Whitley, S. Empty Promises: G20 Subsidies to Oil, Gas and Coal Production (Overseas Development Institute, 2015).

    Google Scholar 

  51. Jakob, M., Chen, C., Fuss, S., Marxen, A. & Edenhofer, O. Development incentives for fossil fuel subsidy reform Nat. Clim. Change 5, 709–711 (2015).

    Article  Google Scholar 

  52. Pogue, M. A Discounted Rate? The Impact of Discount Rates on Infrastructure (Univ. Toronto, 2015).

    Google Scholar 

  53. Buchner, B., Trabacchi, C., Mazza, F., Abramskiehn, D. & Wang, D. Global Landscape of Climate Finance 2015 (Climate Policy Initiative, 2015).

    Google Scholar 

  54. Climate Risk Management in ADB Projects (Asian Development Bank, 2014).

  55. World Bank Policies Include Screening for Climate Risks (World Bank, 2014).

  56. Failing to Solve Energy Poverty: How Much International Public Investment is Going to Distributed Clean Energy Access (Sierra Club and Oil Change International, 2014).

  57. Scott, A. & Wykes, S. UK Support for Energy in developing countries (CAFOD; 2015).

    Google Scholar 

  58. Rydge, J., Jacobs, M. & Granoff, I. Ensuring New Infrastructure is Climate-Smart Working paper (Global Commission on Economy and Climate Change, 2015).

    Google Scholar 

  59. Morris, S. & Gleave, M. The World Bank at 75 Policy Paper 58 (Center for Global Development, 2015).

    Google Scholar 

  60. Global Infrastructure Facility (World Bank, 2015);

Download references


An earlier draft of this paper was written by the authors for an internal strategy meeting of the Global Green Growth Institute (GGGI). We would like to acknowledge GGGI's support for the project, as well as the support provided by our colleagues at the Overseas Development Institute.

Author information

Authors and Affiliations



I.G. conceived the project in consultation with GGGI. I.G., J.R.H. and A.M. jointly conducted the analysis and wrote the paper.

Corresponding authors

Correspondence to Ilmi Granoff or J. Ryan Hogarth.

Ethics declarations

Competing interests

The authors declare no competing financial interests.

Supplementary information

Supplementary Information

Supplementary Information (PDF 156 kb)

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Granoff, I., Hogarth, J. & Miller, A. Nested barriers to low-carbon infrastructure investment. Nature Clim Change 6, 1065–1071 (2016).

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI:

This article is cited by


Quick links

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing