Climate Change ConnectionClimate Change Connectionto Profitabilityto Profitability

Jitendra (Jitu) Shah, World Bank, July 15, 2009

Outline:Outline: Climate ChangeClimate Change

• High awareness – Responses to-dateHigh awareness – Responses to-date

Profitability AnglesProfitability Angles • Financial, Financial, Social Responsibility, Social Responsibility,

Environmental, Sustainability, etc.Environmental, Sustainability, etc. Examples Examples

• What has been done: success and profits What has been done: success and profits Role of the World BankRole of the World Bank

• How can we helpHow can we help ConclusionsConclusions

Responses To DateResponses To Date

Long term planning now usually includes CC Long term planning now usually includes CC New institutions New institutions (Climate Cord. Committee, Thailand (Climate Cord. Committee, Thailand

Greenhouse Gas Management Organization - TGO)Greenhouse Gas Management Organization - TGO) New energy conservation measures and New energy conservation measures and

promotion of Renewable Energypromotion of Renewable Energy Stabilized forest cover (in most areas)Stabilized forest cover (in most areas) Research on methane emissions, models, etc.Research on methane emissions, models, etc. CDM projects (10+ registered, 20+ submitted, CDM projects (10+ registered, 20+ submitted,

38+ approved)38+ approved) EE and RE project experience growingEE and RE project experience growing

Profitability Dimensions: Profitability Dimensions: Difficult Balancing Act?Difficult Balancing Act?

Net Profit

1

23

4

5 6

Political viability1

3

2

4

5

6

Financial feasibility

1

2

34

5

6

Social Responsibility

1

2

3

4

5

6

Pollution Reduction

Pro

fit

or

Eff

ecti

ven

ess ?

Business Opportunities in AsiaBusiness Opportunities in Asia

Clean mass transport systemsClean mass transport systems

Solar energySolar energy

Wind energyWind energy

Hydro-electricityHydro-electricity

Green buildingsGreen buildings

Energy Service CompaniesEnergy Service Companies

Climate proofed infrastructureClimate proofed infrastructure

Climate adapted crops and livestockClimate adapted crops and livestock

Methane capture from landfills and livestock operationsMethane capture from landfills and livestock operations

Recycling and re-useRecycling and re-use

Etc…..Etc…..

Example of Business Example of Business Opportunities in Asian Countries: Opportunities in Asian Countries:

Solar EnergySolar Energy Suntech Solar was founded in 2001 in Wuxi (China)Suntech Solar was founded in 2001 in Wuxi (China) It’s already a worldwide leader in solar energy:It’s already a worldwide leader in solar energy:

• Sales offices in North America, Europe, Asia, and AustraliaSales offices in North America, Europe, Asia, and Australia• 4 production sites4 production sites• 8,000 global employees 8,000 global employees • Revenues: USD 1,348 million Revenues: USD 1,348 million • Net Income: USD 171.3 million Net Income: USD 171.3 million • Net margin: 12,7% Net margin: 12,7% • Total Assets: USD 1,957 millionTotal Assets: USD 1,957 million• 364 MW installed, good forecast 364 MW installed, good forecast

Example of Business Example of Business Opportunities in Asian Countries:Opportunities in Asian Countries:

Wind EnergyWind Energy Suzlon began in 1995 with just 20 people. Suzlon began in 1995 with just 20 people. In a little over a decade has become a global leader:In a little over a decade has become a global leader:

• 5th World turbine manufacturer (market share of 10.5%)5th World turbine manufacturer (market share of 10.5%)• Asian leader (50+% market share in India).Asian leader (50+% market share in India).• Operations in 20 countries and Operations in 20 countries and manufacturing units across manufacturing units across

America, Asia, Australia and EuropeAmerica, Asia, Australia and Europe• Order book of $4,304 million (equivalent to 3,454 MW) Order book of $4,304 million (equivalent to 3,454 MW)

• Employees: nearly 14,000 Employees: nearly 14,000 • Revenues: USD 2,808 million Revenues: USD 2,808 million • Net Profit: USD 291.3 million Net Profit: USD 291.3 million • Net worth: USD 479.8 million Net worth: USD 479.8 million

Carbon Compliance MarketsCarbon Compliance Markets

Source: State and Trends of the Carbon Market 2008, www.carbonfinance.org

2008

Up 56%

World Bank Group’s Role World Bank Group’s Role

Multi-sectoral perspective;Multi-sectoral perspective; Financial resources and leveraging powerFinancial resources and leveraging power; ; Working with the private sector through IFCWorking with the private sector through IFC; ; Building partnerships with a wide range of Building partnerships with a wide range of

institutions and stakeholders;institutions and stakeholders; Knowledge base and policy adviceKnowledge base and policy advice;; Convening power, global reach, and local Convening power, global reach, and local

presencepresence; and ; and Fiduciary, environment, and social safeguards.Fiduciary, environment, and social safeguards.

Evolving New FinancialEvolving New Financial ArchitectureArchitecture

CurrentCurrent• IBRD, IDA, Investment GuaranteesIBRD, IDA, Investment Guarantees• Global financing mechanisms: GEF, CFGlobal financing mechanisms: GEF, CF• Bilateral TFs: e.g. AUSAid – Infrastructure for Growth TF; PHRD Bilateral TFs: e.g. AUSAid – Infrastructure for Growth TF; PHRD

Climate Change Window, TFESSD, ESMAP, EASTE…Climate Change Window, TFESSD, ESMAP, EASTE… New/plannedNew/planned

• Climate Investment Funds – UK, US, Japan, >$5 billion total Climate Investment Funds – UK, US, Japan, >$5 billion total capital for Clean Technologycapital for Clean Technology

• Carbon Partnership Facility ($5b/5yrs)—programmatic CF Carbon Partnership Facility ($5b/5yrs)—programmatic CF investmentsinvestments

• Forest Carbon Partnership Facility ($300m initially)—TA and Forest Carbon Partnership Facility ($300m initially)—TA and CF for REDDCF for REDD

UNFCCC Process (approved in Bali)- funds in GEF:UNFCCC Process (approved in Bali)- funds in GEF:• Technology Transformation Fund— focus in MICs, support of Technology Transformation Fund— focus in MICs, support of

low carbon economy strategies)low carbon economy strategies)• Adaptation Fund ($80-300m)— from 2% tax on CDM dealsAdaptation Fund ($80-300m)— from 2% tax on CDM deals

Leveraging: GEF, CTF, & CPF can Result in Leveraging: GEF, CTF, & CPF can Result in Transformation of a Clean Energy MarketTransformation of a Clean Energy Market

GEF

CTF

CPF

CC is a realityCC is a reality Thailand is going to be affectedThailand is going to be affected Think Big, Take Small StepsThink Big, Take Small Steps Actions to combat Climate Change can Actions to combat Climate Change can

be a profitable businessbe a profitable business

Concluding RemarksConcluding Remarks

The World Bank can helpThe World Bank can help We have to act now: the We have to act now: the

Green Planet is in our handsGreen Planet is in our hands

Thank YouThank You

For further information and suggestions For further information and suggestions contact:contact:

Jitendra (Jitu) ShahJitendra (Jitu) ShahCountry Sector Coordinator, EASES, SE Asia Country Sector Coordinator, EASES, SE Asia

The World BankThe World Bank

30th Floor Siam Tower, 30th Floor Siam Tower, 989 Rama I Rd, Pathumwan, 989 Rama I Rd, Pathumwan,

Bangkok Thailand 10330Bangkok Thailand 10330' DIRECT LINE ++ 66 2 686 8360  ' DIRECT LINE ++ 66 2 686 8360  ' Cell phone ++ 6689 9214223' Cell phone ++ 6689 9214223

7 ++66 2 686 8301  7 ++66 2 686 8301  jshah@worldbank.orgjshah@worldbank.org

www.worldbank.org/eapenvironmentwww.worldbank.org/eapenvironment