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Collaboration to Promote Climate Friendly Development
N. Vijay Jagannathan Secretary General CITYNET
Outline
• Lessons Learned so Far
• Is there a New Paradigm?
• Priorities and Opportunities
Rapid Increase in Carbon Emissions is focusing attention on Financing Strategies
Local air pollutants will also double by 2030
CO2 emissions will double for all countries by 2030
0
500
1,000
1,500
2,000
2,500
2010 2015 2020 2025 2030
Indonesia
Thailand
Malaysia
Vietnam
Philippines
MtCO2
3
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2010 2015 2020 2025 2030
MtCO2
EAP5
China
China accounts for 85% of CO2
Technologies that abate Carbon are Costly + Have Upfront Costs
Energy efficiency makes the largest contribution
Major expansion of low-carbon technologies also needed
4
0
2
4
6
8
10
12
14
16
2009 2012 2015 2018 2021 2024 2027 2030
CO
2 e
mis
sio
ns
(G
ton
)
REF
Energy Efficiency
Low-carbon technology
SED
5
Cities have incentives to join Low Carbon Pathways
because of Pollution + Congestion
0
5
10
15
20
25
0 5000 10000 15000 20000 25000 30000 35000 40000 45000
CO
2 e
mis
sio
ns
pe
rcap
ita
(met
ric
ton
s)
GDP per capita (PPP, constant 2005 international $)
USA
Australia
Ireland UK
Japan
France Greece
Korea Rep.
Malaysia
Mexico
Brazil
Thailand
China
India
Russia
High Carbon Growth Path
Low Carbon Growth Path
Co-benefits is a Significant Part of the Narrative
Cities1 Land use2 Energy
Resource productivity
Innovation3
Infrastructure investment
Reduce Pollution, Lower Energy Costs
1 Includes urban transport 2 Includes forests 3 Includes economy-wide innovation
Wider economy
Growing middle class aspires for better infrastructural services
The urban poor demand improved living standards
The Good News
• Technology to tackle local air pollution also leads to GHG abatement
• Improved Water Management also insures against natural disasters
Local Air/Water Pollution have Global Consequences
Pollution Symbolizes Governance Failures
Particulate matter concentrations in air for selected cities Annual mean PM10 ug/m3
Chinese PM: “Nature’s red-light warning against inefficient and blind development” Indian PM: “We need more Governance and Less Government
0
20
40
60
80
100
120
140
WHO air quality standards
Outline
• Lessons Learned so Far
• Is there a New Paradigm?
• Priorities and Opportunities
Green Finance Externalities
The Analytical Framework
CDM,CTF etc. Viability Gap
Financing Local
Externalities
Global Externalities
Metrics, New Technology
EE Opportunities
Climate friendly technologies
Upfront Costs Leverage Private Finance
+
Policy Tools Technology Maturity and Costs Financing Instruments Tailored to Market Segments and Barriers
EE Market Segments Traditional bank
clients
Borderline (credit enhancement)
SMEs & Public Sector
Consumer long-term financing
RE Barriers
Long-term tenure
Technology risk guarantee
SME developers
Consumer long-term financing
New Tech Risks
Concessional loan
Technology risk guarantee
Venture capital
Credit Line
Guarantee
Dedicated Fund
Consumer Financing
Policy Tools •Regulations •Financial incentives •Institutional reform
•Feed-in Tariff or Renewable Portfolio Standard •Tax on fossil fuel
•Support for R&D •Financing incremental cost •Transfer technologies
Abatement cost
Abatement potential
Energy Efficiency Renewable Energy
New Technologies
0
Energy pricing reforms
Financing Instruments
New Model of Urban Development: The NCE View
Compact urban growth
Connected infrastructure
Coordinated governance
Strategic planning and regulatory reform
Subsidy reform and new pricing mechanisms
New financing mechanisms
Effective and accountable institutions
Managed expansion, mixed-use urban form, good quality urban design
Smarter transport systems, smarter utilities, smart grids
Integrated land use and transport authorities, integrated planning, PPPs
Invest in Smart Planning
• From Moving Cars to Moving People Efficiently • Re-develop Brownfield sites to Compact Low
Carbon Cities • Build PPPs
Outline
• Lessons Learned so Far
• Is there a New Paradigm?
• Priorities and Opportunities
Focus on Reducing Costs and Risks to Citizens
15
Renewable Energy
Emission Reduction
Energy Efficiency
Resilience to Climate
Risks
Waste Reduction
With Support from Green Finance
Low-Emission
Projects
Financially
Attractive
Other gaps – information and capital market gaps,
coordination problems, etc
Not Financially
Attractive
Financial viability gap – project deliver negative net
present value
Alternative investments more attractive – the risk-
reward profile is not financially attractive as that of other
investment options
So that short term Viability Gaps are bridged
making
• Rebalancing distortions
• Monetizing the externalities benefits
The goal of Green Finance’s is to bridge the financing gap and improve the attractiveness of low emission investments
Build in Objective Metrics
Overview
• Validate outcomes or observed changes in GHG Emissions, along with long term “lock-in” trends:
Construction practices and urban sprawl monitoring
By current energy users throughout the economy
BEIJING 1984
BEIJING 1999
Imperatives of a low-carbon economy
Why/ What?
• Local governments respond directly to indicators
• Identify appropriate carbon intensity indicators
• Include indicators in local government performance evaluations
Examples of Possible Indicators:
• Carbon Emissions: Emissions/ capita, emission intensity
• Energy: Energy consumption/capita, share of renewable energy
• Green Buildings: Energy consumption per m2 in commercial and residential buildings
• Sustainable Transport: Share of green transport mode trips
• Smart Urban Form: Population density and mixed land use
Set Indicators to Measure Performance
Summing Up: Link Finance to Sustainable Outcomes
Green
• Adoption of Low Carbon
Pathway
• Elimination of air, land and
water Pollution
•Universal Access to Basic
Urban Services
•
Dynamic
1. Job Creation
2. Affordable Housing
3. Culturally Vibrant
Resilient
Sustainable Management of
Existing & Future Risks
Vulnerable Populations
adequately safeguarded
Prepared for Cascading Failures
