current public and private financial flows and role of climate finance in the transport sector -...

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Current Public and Private Financial

Flows and Role of Climate Finance

in the Transport Sector

Benoit Lefevre

Director, Energy & Climate, WRI Ross Center forS

ustainable Cities, WRIPresented at Transforming Transportation 2015

BENOIT LEFEVRE, PHDDIRECTOR ENERGY & CLIMATE, WRI ROSS CENTER FOR SUSTAINABLE CITIES, WRI

CURRENT PUBLIC AND PRIVATE FINANCIAL FLOWS

&ROLE OF CLIMATE FINANCE

IN THE TRANSPORT SECTOR

Transforming Transportation

Washington, USA – January 16th, 2015

WRI Ross center for sustainable cities

Finance-related activities:

1) Track financial flows + Investment needs :

big picture + detailed analysis (countries, private sources)

2) Increase, improve and popularize (climate)

finance options

3) Support developing countries & cities,

Highlight public instruments to mobilize funding

& INCREASESHIFT

Outline:

1.Landscape of current financial flows

2.Investments needs

3.Role of (public) climate finance

Current

public and private

financial flows in

transport ?

Financial flows to transport:

a Trillion Dollar Question

1. Global annual investment

2. Only capital assets (not

operational or consumer

spending)

3. All modes (i.e. land, air, & water)

4. Public and Private sources

5. Domestic and cross-border

How much is invested annually

in the transport sector?

$1.4 - $2.1 trillion

What portion is invested in

developing countries?

About 24%,

or $500 billion

What portion comes from

private investors?

About 58%

or $1 trillion

Is public or private investment

larger in developed countries?

Is public or private investment

larger in developing countries?

What portion of public investment

comes from domestic budget?

Investments needs

in transport ?

How much do we need to invest in

Transport?

$0

$20

$40

$60

$80

$100

$120

McKinsey: US$24 trillion

WEF: US$33 trillion (4DS) | US$36.7 trillion (2DS)

OECD: US$11.3 trillion

(trillion)

IEA: US$118.2 trillion (4DS) | US$ 98.2 trillion (2DS)

_____________________________Sources:1) Global Land Transport Infrastructure Requirements, International Energy Agency, 20132) The Green Investment Report, The ways and means to unlock private finance for green growth, World Economic Forum, 20133) Infrastructure productivity: How to save $1 trillion a year, McKinsey Global Institute, 20134) Infrastructure investment needs of low-carbon scenario, The New Climate Economy, 20145) Strategic Transport Infrastructure Needs to 2030, OECD, (2012)

NCE: US$13.67 trillion

Estimating Annual Investment Needs on

Transport

4DS (2015-2030): ~US$3.1 trillion / year

2DS (2015-2030): ~US$2.8 trillion / year

IEA

Sectors: Road and Rail

Range: 2010 - 2050

Climate Scenario: 4DS and 2DS (based on sectoral shift)

OECD Sectors: Airports, Ports and Oil & Gas (T & D)

Range: 2009 - 2030

Climate Scenario: Not specified

Based on our estimate of US$1.4 – 2.1 trillion spending; transport infrastructure will

remain underfunded by at least a TRILLION dollars.

What role for

Public Climate

Finance?

Role of International Public Climate Finance

GIZ sourcebook : Urban Transport & CC

Transport-NAMA database

Readiness for Climate Finance

Environmental/Climate Funds

Name AcronymYear

CreatedAdmin

Total

Spending

Total Spent on

TransportProportion

MULTILATERAL

Global Environment

FacilityGEF 1991 WB $4.5 billion $292.5 million 6.5%

Clean Technology Fund CTF 2008 WB $2.3 billion $361 million 15.7%

Global Climate Change

AllianceGCCA 2007 EC $368 million $10 million 2.7%

IDB Sustainable Energy

and Climate Change

Initiative

SECCI 2007 IDB $58.7 million $5.2 million 8.9%

ADB Climate Change

FundCCF 2008 ADB $43.3 million Unknown Unknown

ADB Clean Energy Fund

(Partnership Facility)CEF(PF) 2007 ADB $72.3 million $900,000* 1.2%

Partnership for Market

ReadinessPRM 2012 WB $5.25 million Unknown Unknown

BILATERAL

International Climate

InitiativeICI 2008 BMU $1.06 billion $20.49 million 1.2%

Japan Fast Start Fund

Initiativen/a 2009 JICA $13.2 billion Unknown Unknown

Environmental/

Climate Funds

*Estimated

International public climate

finance should offer leverage.

Public sector intervention to mobilize private investment

A Mix of Approaches:

- Policy instruments + financial instruments used in

coordination

- Market + project level intervention

WHAT CAN TRANSPORT CLIMATE FINANCE SUPPORT?

CTF GEF Japan FSF NAMA Private

Transport Mode

Road x x x x x

Rail x x x x x

Urban Public x x x x x

Non-motorised x x x x x

Type of Support

Concepts & plans x x x

Infrastructure x x x x x

Operations & Maintenance x x x x x

Technology Transfer x x x x

Capacity Building x x x

Support Instruments

Grant x x x x

Loan x x x x

Technical Assistance x x x

Who can access the funds?Environmental/

Climate Funds

NationalGovernment

Regional

Government Private SectorLocal

Government

Eligible World Regions:

Global Environment Facility (US$4.5 billion)

Clean Technology Fund (UD$2.3 billion)

International Climate Initiative (US$1.6 billion)

Sustainable Energy and Climate Change Initiative (US$58.7 million)*

Clean Energy Fund (US$72.3 million)

Climate Change Fund (US$ 43.3 million)

Global Climate Change

Alliance

(US$368 million)**

Fast Start Fund

Initiative

(US$13.2 billion)

* As of 2011

** Funds cannot be allocated to projects at the local level

Available

Climate

Funds

What is “Readiness”?

23

Climate Financiers

Recipient

Country/City

Status Quo

“Readiness”

Climate Financiers

Recipient

Country/City

Transport Readiness

Two sides to readiness (1 of 2)

Benefits to Donor/Lender Benefits to Local Objectives

1. Attract the

Private

Sector

2. Focus on

Institutional

Capacity

Meet the

requirements

for co-

financing

More

effective

compliance

reporting

Increase local

private sector

capacity

Develop long-term

skills

Leverage

more project

resources

Enhance

collaboration

among agencies

Manage

international

investment

Two sides to readiness (2 of 2)

Benefits to Donor/Lender Benefits to Local Objectives

3. Develop

Financial

Strategy

5. Gather

Good Data

Distribute

investment

risk

.

Create

defensible

carbon offset

credits

Reduce debt

obligation

Use data for

ongoing projects

Track co-benefits

Maximize

investment

impact

Strengthen MRV

framework to

verify results

4. Plan Early

& Upstream

Increased data

availability

More finance

opportunities

Clear project roles/

responsibilities

Any good news?

Good news: Development

banks are allocating more to

low-carbon transport

Source: ADB

Good news: Climate funds are

allocating more to transport.

0

5

10

15

20

25

30

2006 2007 2008 2009 2010 2011 2012 2013

CTF

GEF

GCCA

NDF

CEF

SECCI

CCF

PMR

FSF

ICI$23

PercentOf Fund Invested

in Transport

(Bubble Size is Millions of USD of Investment)

$370

$1270

$45.3

$3.0

$5.0$5.2

$10$0.9

Good news: private sector investment is

growing

MERCI !

Benoit Lefevre, PhDDirector Energy & Climate, WRI Ross center for sustainable cities

blefevre@wri.org

www.wri.org

www.embarq.org

www.thecityfix.com