Best Practice Report

Index

5.6.

Planning an exit strategy

Governments should develop from the start of any public finance program an exit strategy for public subsidies and public capital directed to encourage green growth investments. Such an exit strategy is necessary to free up resources for other public investment priorities as well as to facilitate a broader transformation of the economy to low emission and climate resilient development and economic growth. However, governments should also recognize that some of their roles in the market for green investments will likely to endure, such as enforcement, technical capacity building, and ‘green’ pricing signals.

In line with the principle of investment grade policy, governments should manage ’exit’ in the provision of public financial support in a way that ensures long-term capital is attracted at scale into green investments. This will signal the maturity of the green finance sector and ability for financing the scale of investment required to transition to green economies. However, in the absence of investment grade policy, and where various barriers and risks for green investments remain, public finance decision-makers will need to accelerate participation of long-term providers of capital to meet the required scale of investment.