Rintaro TamakiDeputy Secretary GeneralOECD

Brussels, March 2013

The Role of International Agencies in Financing Clean

Energy

Why expanding green, low-emission finance and investment matters? Closing the financing gap

Infrastructure needs to 2030 (annual, in USDtn illustration)

Source: OECD illustration, based on estimates from WB, WEF, OECD and Kennedy and Corfee 2012,”Mobilizing private sector investment in low carbon infrastructure”

?

0

0.5

1

1.5

2

2.5

3

Actual spending in infrastructure

Infrastructure needs

Mitigation and adaptation needs

Scale-up public and private sources of capital – to “build more” Shift sources to green, low-carbon and resilient – to “build right”

Gap Gap?

3

1. Mobilising private investment: Help governments strengthen domestic policy frameworks in support of clean energy infrastructure

2. Tracking of climate finance to and in developing countries to build trust through transparency and accountability

3. Scaling-up institutional investors participation

What role does the OECD play to help developing countries fill the financing gap?

Source: OECD Global Pensions Statics and Institutional Investors Databases 4

Institutional Investors as a source of non-traditional private financing

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Other (1)Other (1)Other (1)Other (1)Other (1)Other (1)Other (1)Other (1)Other (1)Other (1)Other (1)Other (1)Other (1)Other (1)Other (1)Other (1)

Investment fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

fundsInvestment

funds

Insurance companies

Insurance companies

Insurance companies

Insurance companies

Insurance companies

Insurance companies

Insurance companies

Insurance companies

Insurance companies

Insurance companies

Insurance companies

Insurance companies

Insurance companiesInsurance

companies

Insurance companies

Insurance companies

Insurance companies

Pension funds

Pension funds

Pension funds

Pension funds

Pension funds

Pension funds

Pension funds

Pension funds

Pension funds

Pension funds

Pension funds

Pension funds

Pension fundsPension

funds

Pension funds

Pension funds

Pension funds

USD

bil

lion

s

$20.2 tn

$24.3 tn

$28.8 tn

Other $1.8 tn

$75.1 tn

With USD 75tn in assets, Institutional Investors Potentially have a role to play

Potentially ‘win-win’ situation: • low interest rate, financial turbulence, etc • increased demand for asset class that delivers steady, preferably inflation adjusted income streams

Pension fund participation in clean energy asset financing deals (USD Millions, 2004-2011)

$12,041

$8,113

$4,532

$3,581

$3,734 $3,618

$116 $194

Total Clean Energy Investment

Total Wind

Onshore Wind

Offshore Wind

Total Solar

Solar STEG

Solar PV

Biomass

Source: Kaminker, C. and F. Stewart (2012), “The Role of Institutional Investors in Financing Clean Energy”, OECD Working Papers on Finance, Insurance and Private Pensions, No. 23, OECD Publishing.; Author’s analysis based on BNEF database

Less than 1% of the $30 trillion in OECD pension fund assets is allocated to infrastructure … and even less to green

Thermal PhotoVoltaic