PLENARY 1 – “Visioning the Strategic Role of DFIs”
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Transcript of PLENARY 1 – “Visioning the Strategic Role of DFIs”
PLENARY 1 – “Visioning the Strategic Role of DFIs”
Takashi HongoSpecial Advisor and Head of
Environment Finance Engineering DepartmentJapan Bank for International Cooperation
Takashi HongoSpecial Advisor and Head of
Environment Finance Engineering DepartmentJapan Bank for International Cooperation
34th ADFIAP Annual Meeting April 20 to 23, 2011 Acapulco Beach Club & Resort Hotel, Kyrenia, North Cyprus
Green Finance~ Business Opportunities and Role of Financial Institutions
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Reduction Potential
After 2020, the share of energy efficiency in total abatement declines,while more costly options like biofuels and CCS increase their share
20
25
30
35
40
45
2008 2015 2020 2025 2030 2035
Gt
450 Scenario
Current Policies Scenario
202020302035
Efficiency 71% 49% 48%– End-use (direct) 34% 24% 24%– End-use (indirect)33% 23% 23%
– Power plants 3% 2% 1%
Renewable 18% 21% 21%
Biofuels 1% 3% 3%
Nuclear 7% 9% 8%
CCS 2% 17% 19%
Total (Gt CO2) 3.5 15.1 20.9
Abatement
World energy-related CO2 emissions savings in the 450 Scenariocompared with the Current Policies Scenario, by measure
Source: IEA WEO 2010Source: IEA WEO 2010
-400
-350
-300
-250
-200
-150
-100
-50
0
SteelIndustry
Cement Paper & Pulp Refrigerator AirConditioner
Lighting
Developed Countries Developing Countries
Source: IEEJ CO2 emission reduction potential by using Japanese BAT
(‘000 ton/Y )
Reduction Potential of Proven Technology( Commercially Viable Best Available Technology)
Reduction Potential of Proven Technology( Commercially Viable Best Available Technology)
1.5 Billion ton CO2 saving per year >1.3 billion ton CO2 emission a year in Japan
1.5 Billion ton CO2 saving per year >1.3 billion ton CO2 emission a year in Japan
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Energy saving and CO2 reduction 18,410Kwh120,000 ton/y(China, 5000ton X2 units)
Cooling Tower
PHBoiler
Demineralizer building
AQC Boiler
Turbine / GeneratorBuilding
Source Kawasaki
Heat Recovery System of Cement PlantHeat Recovery System of Cement Plant
0
200
400
600
800
1 000
1 200
2015 2020 2025 2030
Bill
ion d
olla
rs
(20
08
)
Other Countries
Other Major Economies
OECD+
0
500
1,000
1,500
2,000
2,500
3,000
3,500
DevelopingAsia
US J apan
AseanIndiaChina
USD billion
Source IEA
Additional Investment Demand 2010-2030
Low Carbon Investment
Financial Institutions
InvestorsInvestment
Projects
Affluent society
Mission of Financial Institutions
Mission of Financial Institutions
Financial Institutions should support economic growth to realize affluent society under environment constraint. Balancing economy and environment is crucial.
Risk Mitigation
Improve economic return
Improve investment climate
Role of Public Finance for Climate Change
Mobilizing private funding is a key role
Guarantee/InsuranceCo-financing
Low cost funding for co-financingMezzanineInterest subsidies
Policy dialogue for incentive/regulationInformation service/business matching
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Green Growth and Technology CycleGreen Growth and Technology Cycle
Green Growth
R&D Investment
CommercializationEconomic Return
Diffusion
0 2 4 6 8
Asean
India
China
Japan
US
2007
1990
Per Capita Energy Demand
Source IEA. ASEAN is 1980 and 2007
Toe0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1 400
Ele
ctrif
icat
ion
rate
Population without access to electricity (million)
MalawiUgandaBurkina FasoDR of CongoTanzaniaMozambiqueMyanmarAfghanistanKenyaEthiopiaAngolaCameroonSudanYemenBangladeshNigeriaPakistanIndonesiaIndiaOthers
Average electrification rate in developing countries = 72%
1456
Source IEA WEO2009
India300+ million
Access to clean energy
“Emission” or “Reduction”?
Reductions
Emission from invested projects
Emission from invested projects
Emission from Existent facilities
LIFE GREEN
Date March 2009 March 2010
Amount USD 5 billion (2years) USD 4 billion (3years)
Eligible area
・ Clean Energy・ Energy Efficiency・ Water Infrastructure・ Urban transportation
JBIC reviews the followings 1. Climate change policy of the host country 2. Technology to be used 3. Reduction amount by J-MRV
RemarksJapanese involvement is a precondition
Government or financial institutions shall be borrower
Green and LIFE
・ Scaling up low carbon investment・“ simple, practical and internationally acceptable” guideline
・ Following investor’s decision-making process
Baseline amounts = Emissions in the case without investment
Option of Baselinea/ Actual emissions before investment,
b/ Emissions from similar installations in operation in the country or in the region
c/ Emissions from similar installations recently invested in the country or in the region
Reduction amounts = Baseline emissions - Emissions from projects
Taking into account:・ investment climate such as economy, energy,
technology, regulation.・ availability and reliability of data
Sampling and theoretical value may be applicable
http://www.jbic.go.jp/en/about/news/2010/0730-01/100730_mrv_guideline.pdf
J-MRVJ-MRV
Reductions
Before Investment After Investment
Taking into account of the capacity increase of the facility by the investmentIn case of new facility, CO2 emission amount of new facility will be compared with the national average of the same type of facility
CO2 emission amount
J-MRV Methodology- Rehabilitation of Coal Fired Power Plant (J-MRV002) -
Reductions
National Average
New Plant
CO2 emission
National Average
J-MRV Methodology- New Coal Fire Power Plant (J-MRV004) -
PrinciplePrinciple
National Average
New Plant
PrinciplePrincipleUnder
ConstraintUnder
ConstraintUnder
RegulationUnder
Regulation
National Average
(Coal)
Regulation,De facto standard
ReductionsReductions
Taking into account constraints, such as energy security, supply and investment economicsAccepting and endorsing establishment of global de facto standard and regulation
ProjectPreparation
ProjectPreparation ConstructionConstruction Project
ImplementationProject
Implementation
JBICJBICRetained
ConsultantRetained
Consultant
Advisory CommitteeAdvisory
CommitteeJ-MRVJ-MRV
For Financial Due DiligenceFor Financial Due Diligence
Operation phase( 1 year after commissioning)
Operation phase( 1 year after commissioning)
At CommissioningAt Commissioning
J-MRV Process
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Structure of Green Credit Line
J-MRV
J-MRVAdvisory
CommitteeJBIC
RetainedConsultant
Bank
Project
FinanceFinance
FinanceFinance
DataDataData(Planned and actual,Energy consumption,Power generation)
Data(Planned and actual,Energy consumption,Power generation)
DataData CO2 reductionsCO2 reductions
CO2 reductionsCO2 reductions
OpinionOpinion
Share of J-MRVShare of J-MRVCO2 reductionsCO2 reductions
Benefit of MRV for Financial Institutions
Reputational benefit (CSR)
Preparation for regulatory framework
Better Funding
Investment on the opportunities
Future Carbon Market
Green Finance Alliance
Voluntary Participation
Sharing Good Practice
MRV and Disclosure
Message to Industry and Regulators
New Market Mechanism
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MRV as International Public Goods
FinanceFinance
Carbon MarketCarbon MarketStake HolderStake Holder
RatingRating IndustryIndustry
PolicyPolicy
May, 2010 Cologne, GermanyMay, 2010 Cologne, Germany
Dec, 2010 Cancun, MexicoDec, 2010 Cancun, Mexico
June, 2010 Tokyo, JapanJune, 2010 Tokyo, Japan
Nov, 2010 Siam Reap, CambodiaNov, 2010 Siam Reap, Cambodia
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Public Sector(Improvement of investment climate)
Private Sector(Driving force)
Financial Sector (Push last one mile)
Capacity of Our Planet
Change of Lifestyle
Better investment climate, More investment
Use of Technology
Public Private Financial Partnership