Giles Dickson Vice President, Environmental Policies and Global Advocacy

19/03/2013

Mobilising Climate Finance

Alstom: 4 main activities

Equipment & services for power generation

ALSTOM THERMAL POWER

Equipment & services for rail transport

Equipment & services for power transmission

ALSTOM TRANSPORT

ALSTOM GRID

ALSTOM RENEWABLE POWER

Power: Present in all markets

Clean Power Day Thailand – Oct 2, Bangkok - P 3

GAS COAL OIL

HYDRO NUCLEAR (conventional island)

BIOMASS SOLAR

WIND

GEOTHERMAL

…FOR NEW PLANTS OR INSTALLED BASE

Grid

• Strategic offering including Power Generation and Transmission

• Among the Top 3 in Transmission business • Over 50 locations worldwide • Leader in key markets and fast-growing

technologies (disconnectors, GIS, HVDC…)

No 1 in urban transport (tramways, metros) No 2 in very high speed No 2 in signalling No 2 in maintenance

Trains Infrastructure Signalling Services Turnkey railway systems

Transport: designing fluidity

Our contribution to climate finance

Money

Investment $662m in emerging economies

2011/12

Experience in project financing in different markets

Expertise

Workforce 92,000+ in 100

countries

Measurement of CO2 savings and

environmental outcomes

Technologies

R&D $1bn in 2011/12

Worldwide references in

many technologies

Capacity building: skills & supply chains Supply chain support, S Africa

Presentation Title - Presenters Initials - dd mmm yyyy - P 7

Graduate induction, India

Lessons: Infrastructure investment attracts FDI and supports local skills & SMEs Encourage long-term investment & relationship-building

Market demand: domestic & export markets

Risks

• Public/ Private sector

• Private sector

• Public/ Private sector

• Public sector

Policy Capacity

Commercial Technical

Presentation title - 01/01/2007 - P 8

Allocate risks to those best placed to handle them

Critical Policy Fundamentals*

• Transparent legal system

• Strong economic and social policies to foster inclusive growth

• Fair and reliable taxation

• Safe business and working conditions

• Coherent, long term energy policies and frameworks

• Supportive financial instruments

* WEC survey of industry opinion for the 2012 World Energy Trilemma report

Presentation title - 01/01/2007 - P 9

Extra Risks for Clean Energy Projects

• Perceived technology risk

• Uncertain energy demand

• Regulatory stability

• Project development risk

• Market risk

• Scale issues

• Public resistance

Presentation title - 01/01/2007 - P 10

Extra risks for Lenders/Developers

• Banks face effects of recession and capital ratio regulation

• Pension and institutional investors lack expertise in the area, and can only invest in top rated securities

• Private equity funds may be unwilling to take project development risk, or face issues of scale

• Infrastructure funds face operation and construction risks and may be unclear on appropriate business models for some projects

• Utilities face increased competition, falling demand and weakened balance sheets

Presentation title - 01/01/2007 - P 11

Public interventions to contain risk

• Green banks: to fill gaps in investment that commercial lenders cannot serve

• Green bonds: structured with appropriate ratings to allow institutional investors to provide greater debt financing

• Public Private Partnerships: apply public finance to the riskier part of the financing structure, to leverage private finance

• Insurance mechanisms for policy/political risk

• Credit enhancement at the mezzanine debt level

• Loan guarantee programs

• Underwriting of PPA agreements Presentation title - 01/01/2007 - P 12

Some Helpful Policy Approaches

• Level the playing field for all energy technologies

• Price carbon emissions

• Reduce or eliminate fossil fuel subsidies

• Use other subsidies cautiously

• Build local capacity

• Create a stable environment for investment

• Work in co-operation with the private sector

Presentation title - 01/01/2007 - P 13

Facilitating tracking

• Count the finance awarded at project level

• Count the mitigation at project level

• Beware overlap between e.g. private funds and investment management assets

Presentation title - 01/01/2007 - P 14

Thank you!

www.alstom.com