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Financing toward Low Carbon Investment~ Challenge of Transportation Sector ~
The Ministerial Conference on Global Environment and Energy in Transport (MEET)Follow-Up Meeting 17・18 June 2009, Hakodate-city, Hokkaido, Japan
Takashi HongoSpecial Advisor and Head of
Environment Finance Engineering DepartmentJapan Bank for International Cooperation
Public FI
Private FI
Investors
Public Institution
Government
MDBs Multilateral Finance
ECA Finance
Public Finance
Grant
ODA Loan
FDI( Direct Investment)
Private Finance
Share Holder
Ownership
Insurance/Guarantee Co-finance
Source of FinancingP
rivat
eM
ultil
ater
alB
ilate
ral
0
20,000
40,000
60,000
80,000
100,000
120,000
MDBs ODA Bilateral Private FDI CarbonFinance
USD million
Source: OECD(2006, net flow), World Bank(2007, contract amount)
Carbon Finance is 8% equivalent of FDICarbon Finance is
8% equivalent of FDI
Financial Flow to Developing countries
Multilateral
Bilateral Private
Environment Guideline・Pollution Control・Natural Environment・Social Environment
Equity Finance・Project・Fund( e.g.. PE Fund)
Lending ・Government・Corporate・Local Bank・Structured Finance
Modality of Finance of JBIC 1
Carbon Finance(Additional cash flow)
Government Policy
JBIC ProjectGovernment
Owner
FI
Investors
Contractor Operator
Project
Project
Project
JBIC
JBIC
JBIC
Government
Owner
Client/Citizens
Government Lending
Structured Finance
Local Bank Lending
Corporate Lending
Policy Talks
Repayment
Lending
Regulation / Support
Service
Investment
Modality of Finance of JBIC 2
On lending
Loan
Balance Sheet
Efficiency of Private sector
Structure/Procedure
Due Diligence Cost
Funding Cost
Public Project PFI
Off BalanceOn Balance
High
Low(/High) High(/Low)
low
Simple Complex/Long
Low
High
Advantages and Disadvantages ofStructured Finance/PFI
“LIFE” (Leading Investment to Future Environment) Initiative by JBIC
●The LIFE will …・support both public and private sectors,・co-operate with Multilateral Development Banks (MDBs) and mobilize private finances.
●The JBIC’s financial support under the Initiative will be around 5 Billion USD for the next 2 years.
4 Main targeted sectors of the Initiative are ...・Clean Power Generation (Solar, Geothermal, Wind Power, Clean Coal Power Plant, etc)・Energy Efficiency Improvement (Upgrading of Existing Transmissions and Distributions,
Modernization and Heat Recovery of Steel Furnaces and Cement Kilns, ESCO (Energy Service Company), etc.)
・Water (Water Purification and Supply, Sewage System, Wastewater Treatment, Desalination and Water Processing, etc)
・Urban Transportation (Modal Shift in Densely Populated Areas, etc)
Co-operation(Co-finance, Information Sharing, etc)
Loans /
Loans, etc
Catalytic Role
Loans, etc
MDBs(ADB, World Bank Group, etc)Private Financial
Institutions
J B I C
Equity Investment
Voluntary Energy Efficiency Targetand
Environment Finance
~ JBIC’s Proposal ~
1st stepMethodology for measurement of energy efficiency(CO2 emission per production/Efficiency indicator)
2nd stepSpecification of technology for transfer globally(Bilateral / Multilateral technology cooperation)
3rd stepVoluntary Target or Voluntary Standard by private initiative
(Global De Fact Standard)
Voluntary Standard by Private Initiative
Measurement methodology by IISINext ; Date gathering BAT list by APPSteel
Cement
Appliance
Automobile EU, USA and Japanese standardNext ; local to global
Measurement methodology On going by IEA and others
Measurement methodology by WBCSDNext ; Data gathering
EU, USA andJapanese standardNext ; local to global
De Fact Standard(Hybrid / Diesel)
De Fact Standard (Heat recovery unit)
<Measurement> <Technology specification> <Target/Standard>
Ship Building
Energy Efficiency Design Index(Japanese proposal)
Progress of Voluntary Standard Setting
Design Index
Environment Finance Initiative( Message)
Criteria for prioritized projects( Soft Commitment)
Guiding Principle for financing
Voluntary Standard Setting Initiative
( On-going )
Specification of BATTransfer of BAT
Voluntary Target
Voluntary Standard
Endorse
BAT List
Finance
Finance / No Finance
Guidance
Industry & Technology Track Finance Track
Financing to Low Carbon projectsreduce long term risk
Voluntary Standard and Environment Finance
Company
Japanese Company
Private Financial Institutions
MDBs
LIFE ( March 2009 )(Leading Investment to Future Environment)5 billion USD for 2 years.Target Sectors : Clean Power generation, Energy
Efficiency, Water and Transport( Steel : CDQ, Heat Recovery, Regenbarner, etc.)
JBIC
Clim
ate Security / E
nergy Security
Environmental Finance
Private Financial Institutions
Financial Institutions(Developing Countries)
MDBs
ECAs
JBIC
Catalytic Role
Co-operation
Loans / Equity Investment
For Scaling upStep1 Measurement methodologyStep2 Specification of BATStep3 Voluntary EE standard
Low Carbon Investment
Scaling up financing for Low Carbon Investment
EconomicCrisis
ClimateChange
Conclusions
Short-term challenge Medium and long-term challenge
Public- Private- Financial sector Partnership ( PPFP)New Market Mechanism for Climate Change with financing
Public Sector(Improvement of investment climate)
Private Sector(Driving force)
Financial Sector (Push last one mile)