Takashi Hongo Jbic Revised
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International CEO Forum VI of the DFIs 2009 “Leading the Recovery: Environmental, Social and Governance Imperatives for DFIs ” Financing for Climate Change Adaptation and Mitigation October 22, 2009 Manila, Philippine Financing for Climate Change Adaptation and Mitigation ~ Financing Gap and Innovative Financing Mechanism ~ Takashi Hongo Special Advisor and Head Environment Financing Engineering Department Japan Bank for International Cooperation
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Transcript of Takashi Hongo Jbic Revised
International CEO Forum VI of the DFIs 2009“Leading the Recovery: Environmental, Social and Governance Imperatives for DFIs”Financing for Climate Change Adaptation and MitigationOctober 22, 2009Manila, Philippine
Financing for Climate Change Adaptation and Mitigation~ Financing Gap and Innovative Financing Mechanism ~
Takashi HongoSpecial Advisor and Head
Environment Financing Engineering DepartmentJapan Bank for International Cooperation
© 2007 Munchen Re
Trend of damage
Economic Damage
Insurance Payment
Trend of Payment
USD Billion
Economic Damage by Weather Related Disaster
Source: Japans government’ MLIT HP
Average Annual actual
Trend
Rain Fall
19501900 1990
Fluctuation of Rain Fall in Japan
Funding Demand by the constraints
Mitigation (CO2
Constraint) (430)
Adaptation(75~100)
Funding Demand( Additional)(USD billion)
Future
Emerging
500
1.000
Forest/Bio
Diversity( ?)
Water Infra(200)
Finance Flow to developing countries
Total Funding Demand
MultilateralODADirect Investment
Emission Trading
Private Finance
Public Finance(Export Credit etc.)
Finance Gap⇒Private but supported by the Public
Base load 100
62030
100 100
0
100
(USD billion )
200
100
Additional Funding
Potential Credit Demand post 2012 (Value)
Billion USD(PA)
Credit Price( ton)
Domestic Reduction Ratio
AssumptionCO2 emission of OECD(+) countries shall be reduced by 25% by 2020.
Innovative Financing Tools
Mitigation( USD430billion)
Adaptation(USD100Billion)
Water Infra（USD200billion)
Emission Trading
PPP, Bio Diversity
Weather Derivative
Carbon Capture & Storage
REDD
Bio Diversity( USDXbillion)
Public Private Partnership
＜Possible Innovative Tools＞
Carbon Capture and Storage
CO2Climate Change
Fossil Fuels [Oil, gas, Coal ]Storage
CaptureCCS Now
CO2
・Step: Capture – Transportation – Storage・Additional cost:⇒ Carbon Credit as revenue stream
In Salah Gas FieldLarge scale CCS
World Bank FCPFJapanese
Governmentetc
Readiness Fund
Carbon Fund
Climate Change Mitigation
Private Compani
es
Host governme
nt
EnvironmentContribution
Sustainable
Forest Managem
ent
Contribution（165 Mil USD ）
Policy Dialogue
Implementation of activities
Carbon emission reduction
Funding
Investment
Forest Credits
ForestCredits
Forest Credit
Biodiversity①Limitation of development②Compensation, alternative development ③More funding – mobilization of private money⇒ Biodiversity credits
Steps①Analyze of BD②Measurement③Issue of credits
●CSR (Voluntary )●Obligation for development●Global framework
Biodiversity Credit Mechanism
DemandSupply
Investment（Contribution for
BD）
Biodiversity
Development (Negative Impact)
Offset by BD credit
Biodiversity Credits
“LIFE” (Leading Investment to Future Environment) Initiative by JBIC
●The LIFE will …・support both public and private sectors, ・co-operate with Multilateral Development Banks (MDBs) and mobilize private finances. ●The JBIC’s financial support under the Initiative will be around 5 Billion USD for the next 2 years.
4 Main targeted sectors of the Initiative are ...・Clean Power Generation (Solar, Geothermal, Wind Power, Clean Coal Power Plant, etc)・Energy Efficiency Improvement (Upgrading of Existing Transmissions and Distributions, Modernization and Heat Recovery of Steel Furnaces and Cement Kilns, ESCO (Energy Service Company), etc.)・Water (Water Purification and Supply, Sewage System, Wastewater Treatment, Desalination and Water Processing, etc)・Urban Transportation (Modal Shift in Densely Populated Areas, etc)
Co-operation(Co-finance, Information Sharing, etc)
Loans /
Loans, etcCatalytic Role
Loans, etc
MDBs（ADB, World Bank Group, etc）Private Financial
Institutions
J B I C
Equity Investment
The first step of Environment Finance
１ Mobilization of private fund
Demand is enormous. Mobilize of private funding is inevitableLimitation of public funding２ Specification of commercially viable BAT
Diffusion of BAT Establishment of global de fact standard
Aims of LIFE
Commercially viable BAT ～ Steel industry ～
Public- Private- Financial Partnership ( PPFP)
New Market Mechanism for Climate Change with financing
Public Sector(Improvement of investment
climate)
Private Sector(Driving force) Financial Sector
(Push last one mile)
Conclusion
