Green Finance for Green Growth
~ Public Private Financial Partnership ~
17 November 2010
Takashi Hongo
Special Advisor and Head of
Environment Finance Engineering Department
Japan Bank for International Cooperation
Green Finance for Green Growth
1
Triple Threats
Economic Growth of Asia
Financial Crisis
Energy Constraint
Environment Constraint
Green Stimulus
Green Growth
Technology Driven
Private Driven
Market-base Mechanism
Level Playing Fields
Access to Clean Energy
2
Demand and低炭素社会実現のための追加投資
Supply
of
Additional
Investment
～資金需要と資金供給～
Billion dollars (2008)
1 200
USD billion
そOther
Additional Investment Demand 2010-2030
3,500
3,000
1 000
Emerging
2,500
Asean
India
China
2,000
OECD+
800
1,500
1,000
500
0
600
Source IEA
Developing
Asia
US
Japan
400
From OECD
to non-OECD
500
200
0
2015
2020
2025
2030
400
Supply from nonOECD
300
Supply
fromOECD+
200
Demad from
others
100
Demad of
Emerging
0
Demad
Supply
Demad of OECD+
Source IEA WEO2009
3
Copenhagen Accord
 Keep the increase in global temperature below 2 degrees.
 Emissions targets of Annex I Parties for 2020 are to be submitted
by 31 January 2010.
 Nationally appropriate mitigation actions (NAMAs) by Non-Annex I
Parties are to be communicated every two years. NAMAs seeking
international support are to be recorded in a registry.
 Crucial role of REDD-plus
 Additional funding to developing countries:
• USD 30 billion (2010-2012)
• Mobilizing USD 100 billion a year by 2020 (public & private, bilateral &
multilateral)
• Copenhagen Green Climate Fund
 Technology mechanism to accelerate technology development and
transfer
 Assessment of the implementation of this Accord is to be
completed by 2015.
Source: UNFCCC
4
Green Banking/Green Financing
Greening of Operation
3R, Low Carbon Operation
Greening of Finance
Minimum Requirement
Proactive Financing
Contribution for New Mechanism
Environment Guideline
-Commercially Viable BAT
-Measurement of CO2 Reduction (MRV)
Voluntary actions
-Carbon Offset
-Sustainable Forest Rating
-Weather Index Insurance for Agriculture
CSR to New Business Model
5
JBIC’s Green Finance
6
JBIC for Environment and Bio Diversity
(4 arrows approach)
JBIC
Finance
Organizational
Operation
Environment
Guideline
(Avoid, minimize )
Consideration
Finance
of
future system
Environment
Finance
( LIFE, GREEN)
Project
・3R
・CO2 reduction
plan
Negative impact
Project
Knowledge
contribution
・Study
・Proposal
Positive contribution
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“LIFE” (Leading Investment to Future Environment) Initiative by JBIC
●LIFE will …
・support both public and private sectors,
・cooperate with multilateral development banks (MDBs) and mobilize private financing.
●JBIC’s financial support under the Initiative will be around 5 billion USD for the next 2 years.
JBIC
Loans /
Equity Investment
Private financial
institutions
Loans, etc
MDBs
(ADB, World Bank Group, etc)
Catalytic role
Cooperation
(Co-finance, information sharing, etc)
Loans, etc
Four 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 companies), etc.
・Water
- Water purification and supply, sewage system, wastewater
treatment, desalination and water processing, etc
・Urban transportation
- Modal shift in densely populated areas, etc
New Financial Program (GREEN) and J-MRV
(Global action for reconciling economic growth and environmental preservation)
JBIC will review the followings
1. Climate change policy of the host country
2. Technology to be used
3. Reduction amount by J-MRV
JBIC
“GREEN”
Finance
J-MRV
・Scaling up low carbon investment
・“simple, practical and internationally
acceptable” guideline
・Following investor’s decision making
process
GHG emission
reduction projects
Deployment
Commercially viable
BAT
(best available technology)
Reduction amount
Dialogue
Ownership
・Industries
・Carbon Players
・Host Government
J-MRV
Share
Possibility
GHG emission
reductions
(MRV: Measurement, reporting and verification)
Future
carbon market
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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 of
・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
Reduction Potential of Proven Technology
(‘000 ton/Y )
0
-50
-100
-150
-200
-250
-300
-350
-400
Steel
Industry
Cement
Paper &
Pulp
Developed Countries
Refrigerator
Air
Conditioner
Lighting
Developing Countries
Source: IEEJ
CO2 emission reduction potential by using Japanese BAT
11
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
12
Source Kawasaki
Environment Guideline
・Sustainability of Projects (Risk Mitigation)
・Responsibility of Financial Sector
・International Standard and Custom Local Regulation
JBIC’s Environment Guideline
・Pollution control, Natural Environment, Social Environment
・Risk Analysis Department and Independent Third Party
・ECA Common Approach
・Alliance with more than 20 institutions
Equator Principle
・Project Finance in developing countries
・Around 60 institutions
13
Innovative Instrument
for Green Finance
14
Forest Eco Fund
Network
Businesses
Finances
Academia
Policies
Citizens
190 items
reviewed
Service
Contract
The Good
Bankers
Rating
Evaluation
Advisory
Forest Eco Fund
Management
Contract
Fund
Manager
Investment
Rating System
Advisory
Board
Reviewing Forest
Friendly
Activities of
companies
Stock Market
Source : The Good Bankers Co., Ltd.
Financial
Review
Investment
Fund
Institutional
and
Individual
Investors
Investment
Forest-friendly
Assets
15
Weather Index
Insurance for Agriculture (WIIA)
農業天候保険の仕組み
降雨量
Rain Fall
降雨量が契約以上
No
Insurance Payment
保険金支払いなし
Minimum Rain
最低降雨量
Fall (Contract)
（契約上）
Insurance Payment
降雨不足の場合
(Compensation of drop of income)
保険金支払い
降雨量
Rain
Fall
月 month
Monitoring Period
降雨量チェック
対象期間
Premium
Farmers
BAAC
Development of]
WIIA
Sonpo Japan
Payment
MOU
Participation
Host
JBIC
Study
（２００８）
16
Value of biodiversity
We enjoy biodiversity services.
・Many medicines originate through or were developed by
studying biodiversity services.
・Fishing and agriculture depend on biodiversity services.
We need to maintain biodiversity for future generations.
・They will need to use biodiversity services just as now,
such as genetic businesses developed through science and
technology.
Today we enjoy biodiversity freely because of its externalities, but
without sustainable usage it would be exhausted. Biodiversity
must be internalized to the economy
Biodiversity-Related Risk for Financial Institutions
Short term
risk
Risk Mitigation
Financial risk
Financial losses realized on projects
because of inadequate
management of biodiversity-related risk
Reputation and funding
risk
Loss of reputation and financial strength
through improper management of
biodiversity-related risk
Environmental due
diligence including
biodiversity
Proactive finance
for projects with
biodiversity
components
CSR activities for
biodiversity
components
Mission risk
Long term
risk
Failure to realize sustainable growth
through project
financing
Contribute to
mechanism for
BES
18
New Technology and Finance
Estimation of precipitation by the integrated satellite monitoring system
Can we use this system for dam operation or weather derivative?
19
New Technology and Finance
Biomass stock monitoring system
Can we use this for forest management and forest credit system?
20
Green Finance
Proposal
21
Green Finance
Awareness of Environment Constraint
Review of environment impact
Proactive Action
Risk Mitigation
Climate Finance (with MRV)
Water Finance
Environment Guideline (safe guard)
・Pollution control
・Natural environment
・Social environment
Green Finance Alliance
(consideration and proposal)
System
for the future
Creating new market
(Forest, Biodiversity etc)
22
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)
23