Download or “Reduction”?

34th ADFIAP Annual Meeting April 20 to
23, 2011 Acapulco Beach Club &
Resort Hotel, Kyrenia, North Cyprus
PLENARY 1 – “Visioning the Strategic Role of DFIs”
Green Finance
~ Business Opportunities and Role of Financial Institutions
Takashi Hongo
Special Advisor and Head of
Environment Finance Engineering Department
Japan Bank for International Cooperation
Reduction Potential
World energy-related CO2 emissions savings in the 450 Scenario
compared with the Current Policies Scenario, by measure
Abatement
45
Gt
Current Policies
Scenario
40
2020 2030 2035
Efficiency
71%
49%
48%
34%
24%
24%
– End-use (indirect)33%
23%
23%
3%
2%
1%
18%
21%
21%
Biofuels
1%
3%
3%
Nuclear
7%
9%
8%
2%
17%
19%
– End-use (direct)
35
– Power plants
Renewable
30
25
450 Scenario
20
2008
2015 2020 2025 2030 2035
CCS
Total (Gt CO2)
3.5 15.1 20.9
Source: IEA WEO 2010
After 2020, the share of energy efficiency in total abatement declines,
while more costly options like biofuels and CCS increase their share
2
Reduction Potential of Proven Technology
（Commercially Viable Best Available Technology)
(‘000 ton/Y )
0
-50
-100
-150
-200
-250
-300
1.5 Billion ton CO2 saving per year >
1.3 billion ton CO2 emission a year in Japan
-350
-400
Steel
Industry
Cement
Paper & Pulp Refrigerator
Developed Countries
Air
Conditioner
Developing Countries
Source: IEEJ
CO2 emission reduction potential by using Japanese BAT
Lighting
Heat Recovery System of Cement Plant
Energy saving and CO2 reduction
18,410Kwh
120,000 ton/y
(China, 5000ton X2 units)
AQC Boile
PH
Boiler
Turbine / Generato
Building
Demineralizer building
Cooling
Tower
Source Kawasaki4
Billion dollars (2008)
Low Carbon Investment
1 200
Other Countries
1 000
Other Major Economies
OECD+
800
600
USD billion
400
Additional Investment Demand 2010-2030
3,500
200
3,000
2,500
0
2015
2020
2025
2030
Asean
India
China
2,000
1,500
1,000
500
0
Developing
Asia
Source IEA
US
Japan
Mission of Financial Institutions
Investment
Projects
Financial
Institutions
Investors
Affluent society
Mission of Financial Institutions
Financial Institutions should support economic growth to realize affluent society
under environment constraint.
Balancing economy and environment is crucial.
Role of Public Finance for Climate Change
Mobilizing private funding is a key role
Risk Mitigation
Guarantee/Insurance
Co-financing
Improve economic return
Low cost funding for co-financing
Mezzanine
Interest subsidies
Improve investment climate
Policy dialogue for incentive/regulation
Information service/business matching
Green Growth and Technology Cycle
Green Growth
R&D Investment
Economic Return
Commercialization
Diffusion
8
“Emission” or “Reduction”?
Reductions
Emission from
Existent facilities
Emission from
invested projects
Emission from
invested projects
Access to clean energy
ＵＳ
Japan
China
2007
1990
India
Electrification rate
Per Capita Energy Demand
90%
80%
Average electrification rate in developing countries = 72%
70%
60%
50%
40%
India
300+ million
30%
Asean
20%
10%
0
2
4
6
8
Toe
0%
0
Source IEA. ASEAN is 1980 and 2007
Malawi
Uganda
Burkina Faso
DR of Congo
Tanzania
Mozambique
Myanmar
Afghanistan
Kenya
Ethiopia
Angola
Cameroon
Sudan
Yemen
Bangladesh
Nigeria
Pakistan
Indonesia
India
Others
100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 11456
400
Population without access to electricity (million)
Green and ＬＩＦＥ
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 JMRV
Remarks
Japanese involvement is a
precondition
Government or financial
institutions shall be borrower
J-MRV
・Scaling up low carbon investment
・“simple, practical and internationally acceptable” guideline
・Following investor’s decision-making process
Reduction amounts =
Baseline emissions - Emissions from projects
Baseline amounts =
Emissions in the case without investment
Option of Baseline
a/ 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
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-MRV Methodology
- Rehabilitation of Coal Fired Power Plant (J-MRV002) CO2 emission amount
Reductions
Before Investment
After Investment
Taking into account of the capacity increase of the facility by the investment
In case of new facility, CO2 emission amount of new facility will be compared with the national average of the
same type of facility
J-MRV Methodology
- New Coal Fire Power Plant (J-MRV004) Principle
CO2 emission
Under
Constraint
Principle
Under
Regulation
Reductions
National
Average
Reductions
National
Average
New Plant
National New Plant
Average
National
Average
(Coal)
Regulation,
De facto standard
Taking into account constraints, such as energy security, supply and investment economics
Accepting and endorsing establishment of global de facto standard and regulation
Reductions
J-MRV Process
Project
Preparation
Construction
At Commissioning
For Financial Due Diligence
Retained
Consultant
JBIC
J-MRV
Advisory
Committee
Project
Implementation
Operation phase
( 1 year after commissioning)
Structure of Green Credit Line
J-MRV
CO2 reductions
Share of J-MRV
Opinion
J-MRV
Advisory
Committee
Finance
JBIC
Bank
Data
CO2 reductions
Data
CO2 reductions
Retained
Consultant
Finance
Data
(Planned and actual,
Energy consumption,
Power generation)
Project
15
Benefit of MRV for Financial Institutions
Preparation for regulatory framework
Future Carbon Market
Better Funding
Investment on the opportunities
Reputational benefit (CSR)
Green Finance Alliance
Voluntary Participation
Sharing Good Practice
MRV and Disclosure
Message to Industry and Regulators
New Market Mechanism
MRV as International Public Goods
Finance
Rating
Nov, 2010
Siam Reap, Cambodia
Policy
Industry
June, 2010 Tokyo, Japan
Stake Holder
Carbon Market
Dec, 2010 Cancun, Mexico
18
May, 2010 Cologne, Germany
Public Private Financial Partnership
Capacity of Our Planet
Change of Lifestyle
Use of Technology
Better investment climate, More investment
Public Sector
(Improvement of investment climate)
Private Sector
Financial Sector
(Driving force)
(Push last one mile)
19