Transcript Clean Energy Development & Investment Framework

Investment Framework
on
Clean Energy & Development
Wim Jonker Klunne
Alois Mhlanga
Outline
1.
Background/context of Investment
Framework
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2.
The MDBs and the Investment
Framework
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3.
G8 Gleneagles Communiqué
Time frame
The MDBs response to G8
The ADB and the Investment Framework
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The role of the ADB
Conclusion and way forward
Slide 2
Background/context of
Investment Framework
Background of Investment Framework
G8 Gleneagles Communiqué (July 05)
Request to World Bank and RDBs to develop a
clean energy investment framework
Objectives of the Framework:
 increase the volume of investments on
renewable energy and energy efficiency
 assist regional member countries to identify less
greenhouse gas intensive growth options
 support private sector to develop and finance
cost-effective projects on energy efficiency and
low-carbon energy sources
Slide 4
Background of Investment Framework
G8 Gleneagles Communiqué (July 05)
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Focus on Africa and on Climate Change
Secure, reliable and affordable energy sources
are fundamental to economic stability and
development
Action has to be taken now to slow, stop and
reverse greenhouse gas emissions
 promote
energy efficiency
 conservation of energy
 improvement of policy-, regulatory- and financingframeworks
 accelerated deployment of cleaner technologies
Slide 5
Background of Investment Framework
G8 time frame
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July 2005: request by G8 to MDBs
November 2005: meeting with finance ministers
(London)
April 2006: World Bank reported at IMF Spring
Meeting
3rd / 4th quarter: MDBs expected to present IF
strategies / action plans to their Boards
G8 summit 2007 (Germany): report progress
G8 summit 2008 (Japan): report outcomes
Slide 6
The MDBs and the
Investment Framework
The ADB and the Investment Framework
MDBs response to G8
MDBs agreed to take a two pronged
approach to Climate Change:
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Clean energy and low-carbon economy
 Focus
on cleaner utilisation of fossil fuels
 Increased used of renewables
 Attention to increasing access to energy
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Adaptation to climate change
 Climate
proofing of investments
 Integration of adaptation into project cycle
Slide 8
Outline
 Clean Energy and Low-carbon Economy.
 Adaptation to climate change.
Slide 9
A - Clean Energy and Low-carbon Economy
Outline
1.
The Challenge.
2.
Strategies for Clean Energy Future
3.
Investment Needs and Sources
Slide 10
A- Clean Energy and Low Carbon Economy
1.The Challenge
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Double dividend in development.
Major energy challenges :
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improving energy services for economic growth and better quality of
life;
reducing environmental and human health threats from energy
production and use; and
strengthening energy security for macroeconomic stability.
Up to 2050, primary energy demand will increase, so will
GHGs since coal, oil and gas will be main sources for
energy.
CC major additional challenge to the poor.
Low carbon drive must not have additional cost on the poor.
Slide 11
A- Clean Energy and Low Carbon Economy
2. Strategies for Clean Energy Future
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Focus on clean energy for economic growth and
sustainable development.
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Criteria that focuses on low-cost and high-impact solutions.
changes in national energy fiscal and regulatory policies.
Non-regrets Investments: applying exiting technologies and
approaches that are viable financially and yield ancillary benefits.
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New Technologies : Focus on technologies that are
economically viable but not yet financially viable.
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Research and Development :
Additional measures to reduce GHGs and Low
carbon economy : aggressive program on efficiency,
renewables and fuel switching & adoption of policy targets
Slide 12
A- Clean Energy and Low Carbon Economy
3. Investment Needs and Sources
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Financing needs are enormous :
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300 billion US$/year for Clean Energy for Development.
 60 billion US$/year for GHG reduction and Low-carbon economy.
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Internal Cash generation, Private financing,
Public funding: national investment climate – policies, tariffs,
subsidies etc.
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IFIs – finance, policy and technical advice.
IFIs – need to expand existing risk management products,
mainstreaming carbon finance, accessing sufficient grants, enhance
country dialogue etc
Slide 13
A- Clean Energy and Low Carbon Economy
3. Proposed New Financial Instruments
Focus:1- buy down cost of investment. 2-mitigate technology risks. 3-fund
efficiency improvement of existing assets. 4- strategic research financing.
 Clean Energy Finance Vehicle (CEFV) : blend
grants, carbon finance and collateralize clean energy technologies
Power rehabilitation financing facility.
 Project Development Fund. Development of Bankable
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projects.
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Venture capital funds for technology adoption :
use dedicated venture capital to promote the adoption and penetration in
the marketplace of new technologies.
Slide 14
B -Adaptation to Climate Change
Outline
1. The Challenge.
2.
Strategies to Adapt to Climate Change.
3. Investment Needs and Sources
Slide 15
B -Adaptation to Climate Change
1. The Challenge
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1 of 2
Human-induced change: combustion of fossil fuels
& land management practices.
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All countries vulnerable :the poor are most
vulnerable, having the least means to adapt.
Long-term adaptation strategies
compatible with reduction of vulnerabilities
to immediate climates.
 Mitigation and adaptation major
challenges to Africa.
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Slide 16
B -Adaptation to Climate Change
1. The Challenge
Some Projected Impacts in Africa
 Decrease in water availability & quality.
 Risks of droughts and floods.
 Human health: Increased vector and water-borne
diseases.
 Food security : reduced agricultural productivity
 Infrastructure :economic and social infrastructure
Slide 17
B -Adaptation to Climate Change
2. Strategies for adaptation
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Development of Information & tools :reduce
uncertainties of threat and impacts; planning risk insurance and
disaster management.
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Disaster Preparedness : improve preparedness
through proactive actions.
Implementation of existing cost-effective
technologies and infrastructure.
 Research and Development.
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Slide 18
B -Adaptation to Climate Change
3. Investment Needs and Sources
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10- 40 billion US$ per year required: all
developing countries need finance and technical assistance.
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Public finance to be main driver :need to climate
proof development programs.
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Private finance threatened : improve private sector
capacity to deal with climate variability.
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Innovation : collaboration between private re-insurance industry
and IFIs in reducing risk to infrastructure investments and agriculture.
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Instruments similar to the clean energy
financing
Slide 19
The ADB and the
Investment Framework
The ADB and the Investment Framework
ADB strategy on IF
Proposed action plan - Clean energy
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Increasing access to energy (both rural
and urban)
Emphasis on hydropower, biomass, solar
energy
Integrate cleaner energy / renewable
energy in Bank’s projects
Energy policy / RE&EE strategy
 Analyse role of energy in Bank’s
 Stakeholder consultations
operation
Slide 21
The ADB and the Investment Framework
ADB strategy on IF
Proposed action plan - adaptation
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Mainstreaming in all ADB operations
 Country programming
 Integrate in Bank project cycle
 Update procedures / guidelines
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Training & capacity building (RMCs & ADB)
TA to countries on climate proofing
Research and Development
Slide 22
The ADB and the Investment Framework
Conclusion and way forward
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ADB to work in close collaboration with other
MDBs in developing the Investment Framework
Framework endorsed by Development
Committee
ADB to develop its own Action Plan with specific
issues related to our core mandate and African
needs
Present clean energy and adaptation action plan
to the Board by 4th quarter 2006
Slide 23