The amount of private capital being pumped into infrastructure projects remain unchanged despite rising levels of dry powder and the strong performance of infrastructure investments, according to a report by Global Infrastructure Hub (GI Hub).

GI Hub’s Infrastructure Monitor 2022 report showed that private investment in infrastructure projects is reducing in middle-and low-income countries where investment is needed most. While investment grew by 8.3% in high-income countries in 2021, it fell for a third year in middle-and low-income countries, by 8.8%.

Overall private investment in infrastructure projects is stagnant for the eighth year running, despite recovering to pre-pandemic levels, according to the report which used data gathered from its partners EDHECinfra and GRESB as well as information from MSCI and Moody’s.

Marie Lam-Frendo, GI Hub CEO, said dry powder – that is, available but uninvested private capital – has quadrupled since 2010, to $298bn.

“It is unacceptable that we aren’t investing in badly needed infrastructure when we have the capital, and we know investments in infrastructure exhibit strong performance compared with investments in other asset classes.” 

GI Hub said the report found a “green lining” in unprecedented levels of green private investment, largely in the renewable energy sector. However, green investment outside renewables remains low and needs to grow to meet climate goals.

“We cannot afford to ignore either the infrastructure investment crisis or the climate crisis. Through public and private sector collaboration, we can work towards solving both,” Lam-Frendo, adding that the immediate and absolute priority for the infrastructure community is to join forces and activate a massive surge in investment.

Infrastructure is responsible for 70% of global greenhouse gas emissions - emissions that occur in large part because of a lack of investment in technologically-enabled and environmentally sustainable infrastructure, Lam-Frendo said.

“It is therefore fair to say the infrastructure investment crisis is one of the biggest contributors to the climate crisis. The solution is for governments and investors to find compromises that create projects with risk profiles that work for both sides, to drive investment.

“In positive news for investment and the climate, green investment is now at a record-high 60% of all private investment in infrastructure. However, most of this is in renewable energy, and efforts to decarbonise infrastructure must extend beyond renewables and into other infrastructure sectors.”

To read the latest edition of the latest IPE Real Assets magazine click here.