Transcript Demystifying

DEMYSTIFYING PRIVATE
CLIMATE FINANCE
Informing the international climate regime on the roles,
potentials, and needs of private finance for climate investments
Remco Fischer - Programme Officer - Climate Change, UNEP FI
1
Climate change, private finance, and the international
climate regime
•
Achieving a climate-compatible economy requires
rechannelling of finance at unprecendeted scale
 USD 1 trillion pa for decarbonizing energy
USD 400 billion pa for infrastructure resilience
 USD 50 billion pa for halting tropical deforestation

•
Less than a third of that currently flowing
•
Evident that the gap needs to be filled with private finance
•
In developed countries mobilization will be driven by
regulatory reform such as pricing carbon
•
In developing countries, international public finance will
be required to unlock private climate finance
UNEP Finance Initiative
2
The problem: the providers of public climate finance
often don´t understand private finance
‘Private finance’
What?
How?
For what?
Risk guarantees
Risk insurance
Carbon pricing
though Advanced
Market Ms
Bundling
Bundling
Junior co-financing
Market readiness
Incentives (FITs)
Institutional
readiness
Etc.
Mitigation / adaptation
UNEP Finance Initiative
3
UNEP FI helps structure a more nuanced and
conducive agenda on mobilising private climate finance
UNEP Finance Initiative
4
A nuanced and structured approach to mobilizing private
climate finance
For what?
Where?
HIGH RISK
LARGE SCALE
HIGH RISK
SMALL SCALE
LOW RISK
LARGE SCALE
Project finance
Project bond
Corporate loans
Etc.
What?
Listed equity
Barriers?
LOW RISK
SMALL SCALE
Private equity
Tech, market
risks
Mortgages
Political, country
risks
Lack of
readiness
Risk guarantees
Risk insurance
Carbon pricing though
Advanced Market Ms
Bundling
Junior co-financing
Market readiness
Incentives (FITs)
Institutional readiness
Etc.
How?
Large-scale, on-grid
renewable energy
For what?
Project loans
Project bonds
What?
Large banks
Barriers?
Uneven playing
field, capital costs
How?
Revenue support,
cost-sharing
Private equity
Project sponsors
Sponsor’s equity
Inst. investors
Lack of localcurrency financing
Currency risk hedging;
mobilising domestic inst.
investment
Investment
environment risks
Risk guarantees:
policy risk insurance
For what?
EE in operation and
production processes
Corporate loans
What?
Domestic banks
Barriers?
Lack of familiarity among
third-party financiers
How?
Own equity
Project sponsors
Incentives to FIs for
on-lending; promotion
of ESCOs
ESCOs
Behavioral barriers: revenuegeneration vs cost reduction
Increase the profitability:
negawatts
DEMYSTIFYING PRIVATE CLIMATE FINANCE
Three part series informs global climate community
on private finance
UNEP Finance Initiative
THANK YOU
Remco Fischer - Programme Officer - Climate Change, UNEP FI
9