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www.TransformingTransportation.org
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
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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
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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
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Outline:
1.Landscape of current financial flows
2.Investments needs
3.Role of (public) climate finance
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Current
public and private
financial flows in
transport ?
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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
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How much is invested annually
in the transport sector?
$1.4 - $2.1 trillion
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What portion is invested in
developing countries?
About 24%,
or $500 billion
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What portion comes from
private investors?
About 58%
or $1 trillion
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Is public or private investment
larger in developed countries?
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Is public or private investment
larger in developing countries?
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What portion of public investment
comes from domestic budget?
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Investments needs
in transport ?
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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
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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.
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What role for
Public Climate
Finance?
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Role of International Public Climate Finance
GIZ sourcebook : Urban Transport & CC
Transport-NAMA database
Readiness for Climate Finance
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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
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International public climate
finance should offer leverage.
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Public sector intervention to mobilize private investment
A Mix of Approaches:
- Policy instruments + financial instruments used in
coordination
- Market + project level intervention
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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
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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
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What is “Readiness”?
23
Climate Financiers
Recipient
Country/City
Status Quo
“Readiness”
Climate Financiers
Recipient
Country/City
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Transport Readiness
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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
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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
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Any good news?
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Good news: Development
banks are allocating more to
low-carbon transport
Source: ADB
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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
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Good news: private sector investment is
growing
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MERCI !
Benoit Lefevre, PhDDirector Energy & Climate, WRI Ross center for sustainable cities
www.wri.org
www.embarq.org
www.thecityfix.com