Foreword
This report aims to provide policy makers with a comprehensive examination of “project pipelines”, a common concept in infrastructure planning and investment discussions. It is structured around some basic but important guiding questions, including: What is meant by project pipelines? How can we characterise them? What concrete approaches and actions can governments and other public institutions take to develop project pipelines and mobilise private finance into these projects? Answers to these questions suggest that a pipeline can only be as robust as the investment-ready and bankable projects that constitute it, as effective as institutions that deliver it, and as ambitious as the objectives to which it is linked.
Developed by the Secretariat for the Working Party on Climate Investment and Development of the Environmental Policy Committee, the report has linkages to previous and ongoing OECD work on improving policy frameworks for scaling up investment in low-carbon and climate-resilient infrastructure. At the centre of the OECD’s work are governments and other public institutions. This report is no exception; these actors can greatly influence the development of project pipelines through, for instance, the numerous actions, policies and institutions at their disposal to: 1) emphasise specific and upcoming investment opportunities in their countries; 2) fast-track valuable projects; or 3) support certain projects to overcome barriers to their development. This report focuses on actions to develop low-carbon project pipelines but incorporates important, and widely applicable, lessons from other sectors that are fundamental to climate and sustainable development objectives, such as water management.
The report is timely since reference to the term “pipelines” is widespread and has become a focal point in countries’ efforts to implement their climate commitments, including the Nationally Determined Contributions and the broader Sustainable Development Goals. Meeting climate mitigation objectives, for instance, requires the successful implementation of many new low-carbon infrastructure projects constituting a pipeline of projects, delivered at the right time, providing the right level of service, and involving the right institutions. All infrastructure will also need to be resilient to future changes in environmental conditions. The scale of this infrastructure investment is far beyond what is done today; the OECD estimates that meeting these objectives needs infrastructure investment of USD 6.9 trillion per year globally until 2030, perhaps double current figures. Encouragingly, however, strong climate action offers a great many co-benefits, in addition to less carbon-intensive economies, and will very likely trigger massive investment opportunities.
Investment currently falls short of what is needed not because of a lack of capital, but because there are not enough identifiable, investment-ready and bankable projects. As noted in recent OECD work, G20 countries’ infrastructure project planning is characterised by a lack of detail and inadequate links to climate policy and the broader development goals. Crucially, this comes at a time when we need clarity on what and where project investments are needed, when they should be built, how to finance them, and if they are sufficient to meet long-term objectives. This information is essential if governments are to put forward robust infrastructure plans that align with their long-term climate objectives.
Through a series of in-depth case studies, this report therefore focuses on the concrete actions needed to develop low-carbon project pipelines, including: what constitutes good practice in infrastructure planning; what it means for governments to build robust project pipelines; and what is being done to strengthen them. The report highlights that while governments and public institutions are already taking actions to develop robust pipelines in a range of country settings, they nevertheless need to be strengthened significantly to meet long-term climate mitigation objectives. Good practices pioneered by the countries and actors in the case studies can provide models for governments to adapt and bolster their own efforts.
Rodolfo Lacy, Director, Environment, OECD