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
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
www.wri.org
www.embarq.org
www.thecityfix.com