Mitigating climate change whileaddressing development needs will involve a massive scale-upof investments in Renewable Energy (RE) and EnergyEfficiency (EE). Most of these climate investments will comefrom the private sector, which will be the main driver oflow-carbon growth in both developing and developedcountries, provided that countries have the right investmentclimate for climate investment. The enabling environment forclimate investment in each country depends on a variety offactors. These include macroeconomic determinants such as afunctioning bureaucracy and banking system; as well as anarrower set of policy determinants such as renewable energytargets, mandatory standards, preferential power tariffs,waiver of import duties, and other fiscal incentives. Whilethe exact mix of policies, regulations and incentives willdepend on country-specific circumstances, the fact that theyexist sends the right signal to climate investors, byproviding them with legal certainty and lowering their costsand risks. Policies, regulations and incentives also help tolevel the playing field for climate investors in the face ofmarket realities that tend to favor the continued use ofcarbon intense energy sources, such as support for fossilfuels and the high costs of renewable energy technologies.
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