Strong and effective systems of governance are required to steer energy finance towards the fulfilment of policy goals around energy security, energy poverty and sustainability. This article assesses and explains the nature of the contemporary governance of energy finance. It first provides a typology and analysis of the different governance dimensions associated with: (i) the public governance of public finance; (ii) the public governance of private finance; and (iii) the private governance of private finance. It then identifies and seeks to account for key cross-cutting trends in these patterns of governance. Overall, while it finds evidence of significant activity in each of these areas, there remains a substantial imbalance towards governance for energy finance over governance of energy finance. This has important implications for constructing effective solutions to the multiple challenges that energy policy currently faces.
The tremendous proliferation in actors and institutions involved in the governance of energy finance has created significant challenges of coordination and policy coherence. For example, we see mandate convergence among organisations promoting renewable energy and tackling climate change and conflicts between and within institutions seeking to address energy poverty and climate change simultaneously.
There is an untapped opportunity for states and international institutions to integrate concerns with energy poverty and climate change into trade and investment agreements, as well as to use regulation, tax and other policy levers to promote lower carbon energy pathways.
Levering private finance to address energy poverty, energy security and climate change needs to be balanced with significant disincentives for business-as-usual investments in energy that undermine the achievement of these policy objectives. This implies a substantial, but gradual, shift of subsidies and support from the fossil fuel economy to a low carbon economy.
The procedural aspects of governance strongly affect the distributional elements of governance. Greater attention is therefore required to opening up energy policy making to a broader range of affected stakeholders in order to deepen deliberation around the complex trade-offs associated with different energy financing options.