When in October 2011 a group of 285 global institutional investors representing more than $20 trillion in assets under management issued a statement, the message was clear: private investors need the signal and the incentives for alternative energy investment from policy makers. The statement underlined the urgent need for policy action, which stimulates private sector investment in alternative energy solutions and creates jobs.
If NATO is serious about its energy security future, financing the alternative energy project has to move front and center in the security policy domain. Energy security, however, was missing from the NATO agenda.
NATO members on both sides of the Atlantic are increasingly realizing that business as usual may no longer be possible. The stress which Russian energy supply cuts periodically bring to European NATO members, coupled with the energy supply volatility of the Middle East, pressingly point to the need for an energy model shift.
Creating the policy framework for alternative energy financing is the key. The money will come from the private side and investors would play the alternative energy game only if holding assets in renewables makes sense commercially. What is needed is government definitions of clear short-, medium- and long-term alternative energy percentage objectives and targets, and comprehensive enforceable legal mechanisms and timelines; the creation of lasting financial incentives for the private sector that shift the risk reward balance in favor of assets in alternative energy; and the design of lasting and comprehensive policies that accelerate the deployment of energy efficiency and alternative and renewable energy.
The security and energy challenges before NATO members require governments to think with a mind open to the systemic security risk inherent in the current energy model. NATO’s energy security will not be possible without the creation of the private investment frameworks that necessarily would have to underpin any energy model shift. Something to think about for next NATO’s summit.
Iveta Cherneva is the managing editor of the upcoming edited collection The Business Case for Sustainable Finance (June 2012). Her career includes work for the United Nations, US Congress, Oxford GEG, and a number of think-tanks, in five of the world’s diplomatic capitals, including Washington DC, Geneva, New York, Stockholm and The Hague. Ms Cherneva is the Executive Director of ICWords Ltd., author of Trafficking for Begging (2011), and a co-author of Beyond Market Forces: Regulating the Global Security Industry (2009). She is also a member of the Atlantic Council’s NATO Young Atlanticist Working Group.
Photo by the United States Marine Corps.