How Public-Private Partnerships Can Fund Long-Term Climate Solutions
The Long Now Foundation
In this five-minute Ignite talk for the Long Now Foundation, Elle Miller asks how the world can pay for climate programs that are expensive, risky, and slow to deliver returns. Miller's answer is public-private partnerships. In these arrangements, governments reduce the risk of a project so that private capital and expertise will come in. The talk makes the case through two examples: a debt-for-nature swap in the Seychelles and a wind farm at Lake Turkana in Kenya.
The Seychelles: Swapping Debt for Conservation
Miller opens with the Seychelles. Its waters hold valuable biodiversity but face coral bleaching, coastal erosion, and overfishing. According to Miller, the government did not have the money to deal with these threats. Its solution was to swap part of its national debt for conservation commitments. Miller describes this as effectively a refinancing, with the savings directed toward nature. This financing arrangement, Miller says, brought protection to 30% of the Seychelles' waters.
Miller presents the story as more than a local success. It shows what can happen when public and private institutions work together on long-term climate problems. Such programs, Miller notes, need very large amounts of money and often carry high risk and uncertain returns. That raises the question of how they can be funded at all.
Why Partnerships, and Why Demand Matters
Miller jokes that "public-private partnerships" is a tongue twister, and says the partnerships can be as hard to coordinate as the phrase is to say. Their value, in Miller's framing, is that they use the efficiency of the private sector to achieve goals that serve the public good.
Miller argues this approach is necessary, not merely attractive. Climate solutions require enormous funding. Miller points to a multi-trillion-dollar gap between public funding available for climate mitigation and what is needed to reach net-zero goals by 2050 and beyond. In Miller's view, cooperation between the sectors is the only way that gap will be closed. The practical question becomes how to create demand that draws the private sector in, because, as Miller puts it, anything you can demonstrate demand for, you can finance.
Blended Finance at Lake Turkana
To show this "blended finance" of public and private money in practice, Miller turns to the Lake Turkana Wind Farm in Kenya, described in the talk as Africa's largest wind farm. The Kenyan government wanted the project badly. Its goal was for 15 to 20% of the country's entire energy supply to come from renewables through this plant. That would let Kenya move away from heavily polluting oil-fired power plants, provide low-cost energy across the country, and improve energy security for its citizens.
The obstacle was cost, so the government partnered with private interests to gain scale and efficiency. Miller describes a division of roles:
- Government: built the power and transmission lines and the roads needed for construction, and signed power agreements that guaranteed long-term revenue.
- Private sector: once the project was de-risked, brought in $700 million of investment, along with the project management and expertise needed for a program of this size.
The revenue guarantees are the key to Miller's argument. By securing long-term income, the government lowered the risk enough for private investors to commit capital.
Reported Impacts
Miller reports that the project worked and lists its results. Replacing polluting plants with wind power significantly cut greenhouse gas emissions, and the project improved energy security across Kenya. On employment, Miller cites about 2,200 jobs created during construction and 200 permanent jobs at the wind farm. The government also receives $35 million a year. Miller adds that communities near Lake Turkana gained further benefits, including health care, education access, and better access to clean water.
Conclusion: Building Financial Infrastructure
Miller closes by returning to the tongue twister. The lesson of the Kenyan example, according to Miller, is that private investment combined with public support can produce impact at scale. The larger aim is to shape financial infrastructure so that capital can flow globally toward long-term, large-scale climate solutions whose effects will reach future generations.
The crystal clear waters of the Seychelles are home to valuable biodiversity, but underneath these waters is a pressing threat of coral bleaching, coastal erosion and overfishing, and the government didn't have the funding required to solve these problems.
Fortunately, they were able to swap a portion of their debt for conservation, in effectively a refinance that allowed the savings to go toward nature. And this innovative financing solution provided for a 30% amount of protection for the Seychelles waters. This is wonderful, but this story isn't just about the Seychelles. It's about the power of what can happen when public and private institutions come together to solve long-term climate change.
These programs require immense funding and often are high risk with uncertain returns. So how then can we address this problem? Public-private partnerships. What a tongue twister. They're as difficult to coordinate sometimes as they are to say, but what they do is leverage the efficiency of the private sector to accomplish goals for the public good.
This is highly desirable because we know that the climate solutions require immense amounts of funding, and the only way that we're going to get that funding for these long-term solutions to climate is with the partnership between these sectors. We know that there's a huge amount of gap, a multi-trillion dollar gap between how much we have for public funding for climate mitigation and what we need to reach our 2050 net zero goals and beyond.
So how then do we create demand so that the private sector can get involved to close that gap? Because we know anything you can demonstrate demand for, you can finance.
Let's take a look at this concept of blended finance between public and private at work at Africa's largest wind farm. The Lake Turkana Wind Farm was highly desired by the government. The Kenyan government wanted to see the power grid shift to have 15 to 20% of its entire energy supply come from renewables from this wind power plant, so that it can switch off of heavily polluting power plants running on oil, and so that it can provide a low-cost solution across the country for energy supply. And it also needed energy security for all of these citizens.
So how then to afford it? The Kenyan government partnered with private interests to allow for scale and efficiency of this project. The government participated. They provided the power lines, the transmission lines and the roads for the construction of the project, and they also provided power agreements to provide long-term revenue for this program so that it could be de-risked in order to interest the private sector, which brought in $700 million of investment. The private sector also offered the project management required and the expertise to implement such a large-scale program.
And it worked. Let's look at some of the impacts. They saw a significant reduction in greenhouse gases and emissions because they were able to rely on wind power instead of those polluting power plants, and it provided energy security across Kenya. Other improvements were to local employment: 2,200 jobs were created in the construction process, and 200 jobs were created full-time at the windmill. It also doesn't hurt that $35 million annually is going to the government. Auxiliary benefits included health care, education access and an increase to clean water access for the local communities bordering Lake Turkana.
So as we saw in this example, where we have private investment coupled with public support, we can get scaled impact. It's back to our tongue twister of public-private partnerships. Our goal here is to shape financial infrastructure so that globally we can unlock the flow of capital. We're looking to scale long-term, large-scale solutions to climate change so that we can impact generations to come. Thank you.
[Applause] [Music]
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