To what extent can a financier be green?

Kazunori MIURA

Japan International Cooperation Agency

Presentation outline

� JICA at a Glance

� How can a Financier promote green economy?

� Think Green

� Implement Green

� Procure…Green?

� Conclusion

JICA at a Glance (JICA’s Activities in Numbers)

3

An overview of results for the past 10 years is used where there are no references to dates.

Source: JICA Annual Report

I. Overview of JICA – Three main arms of cooperation

� ODA Loans are provided by the GOJ through JICA at

concessional conditions, namely low interest rates and a long

maturity period, to developing countries to finance investment for

development.

� Japan’s technical cooperation aims to nurture the humanresources who will lead

economic and social development

in developing countries by

passing on Japan’s technologies

and expertise.

� Japan is providing assistance in

the form of grants with no repayment obligations to

provide the goods and services

necessary for projects for

economic and social

development in developing

countries.

Delhi Mass Rapid Transport System Project

in India

Assistance in agricultural production

in Uganda

Rural water supply in Ethiopia

Cooperation through Finance and Investment

Technical Cooperation

Grant Aid *

* Note : JICA carries out a substantial part of the budget for Grant

Aid operations, while the rest is left for MOFA.

Foreign exchange

rate:

USD/JPY = 80

� In FY 2012, approximately 75% of JICA’s

overall budget is allocated to Finance and

Investment.

� See also Appendix I. (p.26, FY 2012 Budget).

*

*

145(1.8)

162(2.0)

880(11.0

)

FY2012

Budget

JPY bn(USD bn)

4

5

CountryBalance

(JPY tn (eq. USD bn))

1 Indonesia 2.11 (26.4)

2 China 1.71 (21.4)

3 India 1.44 (18.0)

4 Vietnam 0.91 (11.4)

5 The Philippines 0.91 (11.4)

6 Pakistan 0.57 (7.1)

7 Thailand 0.47 (5.9)

8 Sri Lanka 0.37 (4.6)

9 Egypt 0.29 (3.6)

10 Turkey 0.28 (3.5)

I. Overview of JICA – Exposure to Asia Over 80%

Geographical distribution (as of March 31,

2012)

10 major debtor countries (as of March 31,

2012)

Accumulated Total ODA Loan:

JPY 28.5 trillion (eq. USD 356bn)

Foreign exchange

rate:

USD/JPY = 80

6

Example of projects financed by Japanese ODA Loans

Photo/JICA

Highway Construction Project– Thailand 2nd Bangkok International Airport Construction

Project– Thailand

Transmission Improvement Project – IndiaHydroelectric Dam Construction Project–Thailand

How can a financier promote

green economy?

� Think green

� Implement green

� Procure….green?

In addition, “Be green”…..

JICA has ISO 14000 since 2002.

Think Green～Initiatives taken by the

Government of Japan

� “Cool Earth Partnership” (January 2008): Financial assistance (US$ 10 billion over 5 years) to developing countries for reduction of GHGs emissions

� “Hatoyama Initiative” (September 2009): Mobilization of financial resources (US$ 15 billion over 3 years) for developing countries to cope with the climate change

Think Green (continued)

� Projects to cope with the climate change

- mass transit (India, Thailand, Vietnam, etc.)

- renewable energy

� Projects to improve environment

- wastewater treatment

- afforestation/forest protection, etc.

� Programs to reinforce the institutional framework of the partner countries

- Climate change program loan (Indonesia,

Vietnam)

JICA emphasizing Environmental issues (climate change)

� JICA’s climate change policy is broadly classified into mitigation measures(1)(2) and adaptation measures(3).

� JICA has been tackling climate change in developing countries as a critical part of development issues.

� As a part of the United Nations Environment Programme Finance Initiative (UNEP FI), JICA cooperates with AFD (Agence

Française de Développement ), KfW (KfW Bankengruppe), EIB (European Investment Bank) and NEFCO (Nordic

Environment Finance Corporation) in financing related to climate change as a bi-lateral development finance institution.

Senegal, Mozambique, Niger

and Ethiopia: Programmes

for Emergency Water Supply

Zambia: Increased Access to

Electricity Services Project

Egypt: Zafarana Wind Power Plant Project

Egypt: Gulf of El Zayt Wind Power Plant Project

Kirgizstan: Biogas Technology Dissemination

Support Project

India: Delhi, India Mass Rapid Transport System

Project

Vietnam: Support Program to Respond to

Climate Change (SP-RCC)

Vietnam: Development Study on Capacity

Development for AR-CDM Promotion

Finance and

Investment

Technical

Cooperation

Grant

Aid

Indonesia: Climate Change Program Loan 1-3

Tanzania: Transmission and

Distribution Facilities Reinforcement

Kenya: Olkaria Geothermal

Development Project

Kenya:Transmission line project

Technical Cooperation

Technical

Cooperatio

n

Vietnam: Energy Saving/ Renewable Energy Project

Bangladesh ：：：： Rural Electrification Project

Bangladesh: Combined Cycle Power Plant Project

Indonesia: Lumut Balai Geothermal Power Plant Project

Brazil: Utilization of ALOS Images to

Support Protection of the Brazilian

Amazon Forest and Combat against

Illegal Deforestation

Finance

and

Investment

Finance

and

Investment

Finance

and

Investment

Finance

and

Investment

Finance

and

Investment

Finance

and

Investment

Finance

and

Investment

Finance

and

Investment

Finance

and

InvestmentFinance

and

Investment

Finance

and

Investment

Finance

and

Investment

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Outline of JICA’s climate change policy and its achievements

(1) Reducing emissions and increasing absorption of greenhouse gases which causes climate change

(2) Mitigation measures include REDD+ (Reducing Emissions from Deforestation and Forest Degradation in Developing Countries).

(3) Climate change at present and the future, and mitigating and addressing the damage from the effects of climate change

Implement Green～Traditional Safeguard and Built-in Mechanism

� JICA’s Environmental Guidelineshttp://www.jica.go.jp/english/operations/social_environmental/guideline/pdf/guideline100326.pdf

� Protection of the environment during the construction works

- contractual requirements (by the Contractor)

- construction supervision (by the Engineer)

Procure… Green ?～Who will benefit from it?

� Select “Greener Contractors”

� Promote use of “Greener products”

� Difficulties

- How to define “greener”?

- How to evaluate “greenness”

- Then, who will benefit from it?

Procure… Green ? (continued)

� It was once proposed to JICA:

- “environmental friendly equipment” (e.g. pumps) should be procured under Japanese ODA Loans.

- Environmental Friendliness should be evaluated by CO2 emission to produce such equipment

� Questions

- Can all the manufacturers trace the CO2 emission?

- How to make sure the CO2 emission declared by

bidders is true and correct?

- Is the Employer ready to accept higher prices for that?

Conclusion

� Financiers can play a leading role to promote green economy through their operations

� Traditional safeguard and conventional mechanism built in the contract/supervision help projects to remain green, at least not brown.

� Concept of “green procurement” may deserve more consideration. But, it should be developed so as to be more beneficial to the Employer.

Thank you for your attention!