Innovative Financing Options for Climate Change-relatedTransfer and Development of Technologies

Paul van AalstSeptember 27, 2004EGTT Montrealpaulvanaalst@planet.nl

EGTT - Montreal - 23 September 2004

Guten Morgen !E = mc2NO !YES !!Neue Kombinationen

EGTT - Montreal - 23 September 2004

ProgramIntroductionSecrets of Innovative FinancingKey WordsLinkagesLoud Long LegalBarriers and how to deal with themExamples and what YOU can doCases and how these applyTools to take away

EGTT - Montreal - 23 September 2004

Key Words for AccessAccess to financing depends on:Added value for stakeholdersTransparent, Accountable, CredibleSustainability: not just the environment

Nothing New; No SecretsNo rocket science

EGTT - Montreal - 23 September 2004

CC - Financing Characteristics

EGTT - Montreal - 23 September 2004

Adaptation

Mitigation

Scale

Very large (as of USD 5 million but often over USD 50 million)

Medium (USD 1-5 million) very large (over USD 50 million)

Term

> 20 yrs

5 25

Focus & revenue-basis

Costs, including R&D and capacity building and other expenses that may not lead directly to investment projects

Investments with no or little direct revenues, but sometime with opportunity for taxes and levies

Costs to prepare for start project-related investments

Investments with some or good opportunities for revenues from transaction benefits (e.g. Energy feed-in tariffs, toll, cost reduction) or from public sources (levies and specific taxes).

Parties involved

Driven by public sector, private sector subcontracts or implements.

Traditionally publicly financed and increasingly a role and opportunity for private sector.

Financing

Mostly public ranging from grants from multilateral funds, to national R&D budgets, to levies and specific taxes.

Varying from income self-financing through revenue streams via public-private partnerships to public financing.

Quantify Added Value

EGTT - Montreal - 23 September 2004

Accountable + Transparent Sustainability accountability and transparency in sustainable development performance.

stepping up the development of bank products addressing environmental, social and ethical issues;

validating the bank's sustainable development strategy through dialogue with both internal and external stakeholders.

actively support initiatives and businesses in clean or renewable energy technologies.

Source: ABNAMRO (leader in the Dow Jones Sustainability indexes. (Quotes from a one-pager)

EGTT - Montreal - 23 September 2004

Barriers

EGTT - Montreal - 23 September 2004

General financing instrumentsProject finance

Public Private Partnership (PPP)

BuildOperateTransfer (BOT)

Export Credit Agencies (ECAs)

Grants and subsidies

EGTT - Montreal - 23 September 2004

Climate change related financing Multilateral and Intergovernmental organizationsGlobal Environment Facility (GEF) Climate Change ProgrammeSpecial Climate Change Fund (SCCF)Least Developed Countries Fund (LDCF)Adaptation Fund (AF)World Bank - Carbon FinancingUnited Nations Environment Programme (UNEP)

EGTT - Montreal - 23 September 2004

Climate change related financing (2)Country-based instrumentsCarbon Trust (United Kingdom)Green Financing (the Netherlands)Energy for Rural Transformation (Uganda)Polish National Fund for Environmental Protection (Poland)

EGTT - Montreal - 23 September 2004

Climate change related financing (3)Other financing modelsE+CoREEEP

Deal brokers and market facilitators

Financing instruments under constructionJREC European Union-Patient Capital InitiativeThe Netherlands EBRD Carbon Fund

EGTT - Montreal - 23 September 2004

Cases:AT BiopowerPoland Efficient Lighting Project (PELP)Canada Biodiesel Project:Buses in TorontoGarbage trucks in WinnipegCruise boats in Montreal

EGTT - Montreal - 23 September 2004

Guidelines for innovative financing

Tool 1: Added value for stakeholders

Tool 2: Linkages to other themes

Tool 3: Loud, Long, Legal an effective policy framework

EGTT - Montreal - 23 September 2004

Danke sehr undauf Wiedersehen

EGTT - Montreal - 23 September 2004

Added value: see next sheet Stakeholders: re-define the traditional approach: break-down (define new stakeholders and better gear towards existing stakeholders)build up towards package

quantify or at least be expliciteach Phase can have more than one stakeholder: linkages show total project, which as such adds valueEach Return can be for several stakeholdersHigh risk requires high return to compensate: mitigate risks and explain return-numberBetter or Improved rather than NewPrivate sector:This is from hard boiled finance peopleThe external stakeholders = EGTT-membersDialogue implies that you can initiatePublic sector (subsidies and regulation):Polluter paysLevel playing fieldMacro: try to avoid via project definition Meso: try to get ownership (reg. framework) and be explicit in benefitsrefer to international examplesaddress in project designMicro: address in project design

Give examples from Background PaperForeign Direct InvestmentGive examples from Background Paper

Give examples from Background Paper

Give examples from Background Paper

Give examples from Background Paper

Repeat and summarize