How Private Sector Engages With GCF - Ichiro MAEDA

8/4/2019 How Private Sector Engages With GCF - Ichiro MAEDA

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Japanese Private sector’s Perspectives(1)

The new fund should focus on development,transfer and diffusion of technology todeveloping countries

Bilateral or multilateral governments (ownersand recipients)’ agreements are necessary;

- to promote the investment- to minimize the financial and other risks- to ensure measurement of emissionsreduction,so that financial return should be

ensured



- also important to reduce the utilization of naturalresources and contribute to the sustainable development

Japanese Private sector’s Perspectives(2)

One of the Private sectors’ advantages is;

- The most important is to diffuse to the developingcountries the most efficient technology that is still not inthe market but to be sure to be brought to market if someconditions are met

- expect to decrease the energy cost and increase theenergy security of the developing countries

Energy Efficiency

Waste management



Challenges to the energy efficient technologydiffusion

Though there are more energy efficienttechnologies and products that can realizeeconomic advantages from the life cycle

viewpoint, low efficient technologies areoften locked-in the market because of;

- lack of knowledge about the latest technologies

- lack of capacity of feasibility study about their economics

- lack of internationally recognized environmental policies andefficiency standards

- lack of financial resources to cover the difference over thecurrent technologies

- lack of prioritized funding to the higher recoverable technologies



Basic ideas to utilize GCF from JapanesePrivate sector’s Perspective

• To establish positive lists of environmentbenign and energy saving technologies worthGCF financial support

• To concentrate investment on the above listso that concerned technologies can diffuse

(Examples are shown later)

• Leverage is expected by inviting private

sectors through maximizing economicadvantages under GCF’s support

• Lock-in of the low efficient technologies isexpected to be avoided

To establish positive lists



What is expected to receive technologies

• To eliminate the challenges in place through cooperatingin legislation to introduce technologies positive-listed andpromoting green development policies

• To prepare Internationally standardized regulation

• To measure the CO2 reduction and to report

Private sectors are ready to promoteco-operations to establish & implement

relevant policies and to engage in

building capacity



Electric Power IndustryUltra Super Critical Coal Firing Technology

・In place of low-efficiency bu inexpensive sub critical coal firing technology (Sub) ,

dominant in developing countries, ultra super critical coal power plants (USC) isapplicable due to its technological advantage.・Incremental cost of USC can be covered by mobilizing governmental financial

institutions’ loan and GCF . That can avoid “lock - in problem” in coal firing technology deployment.・Optimal financing can be explored through energy conservation advantage and

possible CO2 offset acquisition.

In case of 600MW class USC（ approx.5% improvementof efficiency） ,

we can expect;・Fuel reduction：approx.170,000ｔ/year・CO2 reduction：approx.400,000ｔ/year

USC600℃ /24.5MPa

Constructioncost

Governmentalfinancial institutions

GCF

Sub538℃ /16.6MPa

USCBaselineEnergy saving

advantage

Fuelreduction

USCBaseline

CO2 offset

CO2reduction

USC Plant in Japan



Iron and Steel IndustryCoke Dry Quenching(CDQ)

What is “CDQ”?

Traditionally, hotcoke from cokeoven is cooled bywater.

Instead, CDQ lets it coolby inert gas andrecovers sensible heatas steam.This steam may be used

on-siteor

to generateelectricity.



1,150 million$

600 million $

Cost Cost’

(After 20years)

CDQ

+150million $

Energy saving

20million $× 20 years

-400 million$

130 million $

Interest rate of CDQ ( in case of 10%)

+130million $

Key Point 2.

GCF Grant / Concessional loanLock in problem due to lack of funding inshort term will be removed.

Key Point 1.

Cooperating legislation

to introduce “Technologies Positive- Listed based on PPP” Positive list, which will be made by bilateralor multilateral sectoral corporation basedon PPP (Public and Private Partnership) inaccordance with terms and conditions of each recipients country, will contribute toremove above implicit barriers.

“Implicit barriers”Lack of ;•

Knowledge about the latest technologies• Capacity of feasibility study about their economics• Financial resources to cover the difference over the current

technologies• Prioritized funding to the higher recoverable technologies• Internationally recognized environmental policies and energy

efficiency standards etc.

Above “Implicit barriers”are removed by GCF scheme

Benefit

Project’s

revenue

(20 years)

*Investmentrecovery :

4-5 years

CDQ’s benefits1) Energy saving by wa steenergy rec overy2) Dec reasing dust, CO2and Sox emissions

3) Ma ssive saving of wa ter4) Prod uc ing bet ter qua litycoke

CDQ’s data (approximation)Cap ac ity :

1 million t-cokes / yea rNew p lant cost :50-100 million $

Benefits of energy saving :10-20 million $ / year

Financial MoblizationGCF c an remove implic it b a rriers ofappropria te Tec hnica l Transfer.

Energy cost of a

steel mill

1,000 million$

Capital cost

1,000 million$



Cement Industry

Institutional Strengthening & Capacity Building are considerably important for the cement industry as well as an aid to an additional cost for low carbon investment.

[Case1: Waste Heat Recovery] Waste heat from kiln, a rotary manufacturing

furnace, is utilized to generate power Substitution rate is 30-40% of total power.Barriers: Additional $2 billion for installing WHR facility

(cf. US $20 billion for new standard cement plant) Operational know-how, Skills and Expertise

[Case2: Co-processing Technology]Wastes as alternative energy sources are frequently

used in the cement kiln to reduce fossil energy.Barrier: Lack of legislations on co-processing,incineration and land-filling.

Following support is expected:1. Establishment of internationally standardized legislation

2. Introduction of national/regional recycling system3. Capacity building for know-how, skills and expertise



Eco-friendly ProductsEco-friendly products are relatively high cost compared with non Eco-friendly products but effective for global warming prevention.

[Case1: Double windows ]Cost of double windows is high because of doublelayers. However from the viewpoint of life cycleassesment, these products can reduce GHGs.

Barriers: High initial cost

Lack of awareness of these products Lack of legislations on support for eco-friendly

products

[Case2: Hybrid car and Electric Vehicles]Hybrid cars are cutting edge technology for new age

Barrier: High Initial cost Charging station for EVs.

Following supports are expected:1. Establishment of national/regional legislation

2. Awareness for eco-friendly products

Double window

Plugged-in Hybrid Vehicles

How Private Sector Engages With GCF - Ichiro MAEDA

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