Green Banking and MRV

17 November 2010

Takashi HongoSpecial Advisor and Head of

Environment Finance Engineering Department

Japan Bank for International Cooperation

22

Green Finance and MRV

3

Green Pressure

Financial InstitutionsGreen company

Green Projects

Stake Holders Regulator

Non Green Company/Projects

X

What is “Green” ?

How to evaluate the outcome of “Green” ?

Measurement of CO2 reduction

4

Financial Institutions

InvestorsInvestment

Projects

Affluent society

Mission of Financial Institutions

Mission of Financial institutions

Financial Institutions should support economic growth to realize affluent society under environment constraint. Balancing economy and environment is crucial

0 2 4 6 8

Asean

India

China

Japan

ＵＳ

2007

1990

Per Capita Energy Demand

Source IEA. ASEAN is 1980 and 2007

Toe0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1 400

Ele

ctrif

icat

ion

rate

Population without access to electricity (million)

MalawiUgandaBurkina FasoDR of CongoTanzaniaMozambiqueMyanmarAfghanistanKenyaEthiopiaAngolaCameroonSudanYemenBangladeshNigeriaPakistanIndonesiaIndiaOthers

Average electrification rate in developing countries = 72%

1456

Source IEA WEO2009

India300+ million

Access to clean energy

5

“Emission” or “Reduction”?

Reductions

Emission from invested projects

Emission from invested projects

Emission from Existent facilities

66

J-MRV

7

JBIC “GREEN”

Futurecarbon market

Finance

J-MRV

Commercially viable BAT

(best available technology)

Deployment

Possibility

・ Industries・ Carbon Players・ Host Government

Dialogue

Share

GHG emission reduction projects

GHG emission reductions

JBIC will review the followings 1. Climate change policy of the host country 2. Technology to be used 3. Reduction amount by J-MRV

J-MRV・ Scaling up low carbon investment・“ simple, practical and internationally acceptable” guideline・ Following investor’s decision making process

(MRV: Measurement, reporting and verification)

Reduction amount

Ownership

New Financial Program (GREEN) and J-MRV(Global action for reconciling economic growth and environmental preservation)

Procedure of J-MRV and GREEN

Project JBIC

Request for Finance

(with emission data)Financial

consideration

External Expert

Advisory Committee

Loan Agreement

DisburseProject construction

Emission monitoring

After investmentMonitoring

External Expert

Advisory Committee

・ Project completion・ 1 year after completion

Calculation ofReductions

Calculation ofReductions

Third party opinion

Third party opinion

Procedure of GREEN and J-MRV

・ Scaling up low carbon investment・“ simple, practical and internationally acceptable” guideline

・ Following investor’s decision making process

Baseline amounts = Emissions in the case without investment

Option of Baselinea/ Actual emissions before investment,

b/ Emissions from similar installations in operation in the country or in the region

c/ Emissions from similar installations recently invested in the country or in the region

Reduction amounts = Baseline emissions - Emissions from projects

Taking into account of・ investment climate such as economy, energy,

technology, regulation.・ availability and reliability of data

Sampling and theoretical value may be applicable

http://www.jbic.go.jp/en/about/news/2010/0730-01/100730_mrv_guideline.pdf

J-MRV

Energy Efficiency (Renovation)

Reductions

Before Investment After Investment

Taking into account of the capacity increase of the facility by the investmentIn case of new facility, CO2 emission amount of new facility will be compared with the national average of the same type of facility

CO2 emission amount

J-MRV Methodology

Renewable Energy

Reductions

National Total Invested Facility

Renewable energy is Zero emission energy, in principle.

Average CO2 emission

(CO2 emission factor)

J-MRV Methodology

Fossil Fuel Energy

Reductions

National Total

Invested Facility

National energy security, economic is cosidered

Average CO2 emission

(CO2 emission factor)

In PrincipleReductions

Availability of low carbon energy is limited

Average CO2 emission of the same fuel

National Average

Investment

J-MRV Methodology (under preparation)

Higher Energy Efficiency Appliance

Reductions

National Average

New Alliance

Theoretical value and estimated value is acceptableAvailability of data is considered

Average CO2 emission

An unit

Reductions

National Total

Estimated National

Total emission By the appliance

National Average

After Investment

Estimated National

Total emission By the appliance

Estimation of program Total

J-MRV Methodology (under preparation)

14

“EXIT” of MRV

Demonstration Purpose

Carbon Market

Risk Mitigation

We can clearly introduce our contribution for climate change to the stakeholders under low carbon pressure.

Carbon is cost and banks have responsibility to curve emission increase. Credit Rating including carbon is considered.

CDM or Bilateral Credit Scheme will generate additional cash flow.

Bilateral Credit

Bilateral Scheme : F/S Support Program

Project types Project site

METI Advanced Coal Fired Power Indonesia, Viet Nam, India

Geothermal Power Indonesia×2, Philippine

Transmission Improvement Viet Nam

Energy Intensity Industry ( Steel, Cement) Philippine, India, Lao, Indonesia, Malaysia

Energy management of industry Indonesia, Thailand, China, Malaysia

New Air-Conditioning Systems (Office, Hotel, etc.) Maldives

CHP Thailand

DSM (Home Appliances) Mexico, Viet Nam

REDD+ Peru, Indonesia, Lao, Brazil

Eco Drive, Eco House Thailand , China, Asia

CCS Indonesia

Nuclear Power Viet Nam

Efficient use of Fertilizer Malaysia, Indonesia

MOE Waste Management Thailand

Peat Fire Management Indonesia

Modal Shift Lao

F/SProject Construction

Project Operation

Finance(GREEN, LIFE)

Standardized MRV

J-MRV

Bilateral Agreement

“Demand”

International acceptance

Management Capacity

F/S SupportProgram

Bilateral Scheme : “J-MRV and GREEN” and F/S Support Program

Project Cycle

1818

Public Sector(Improvement of investment climate)

Private Sector(Driving force)

Financial Sector (Push last one mile)

Capacity of Our Planet

Change of Lifestyle

Better investment climate, More investment

Use of Technology

Public Private Financial Partnership