1. 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
3. Fluctuation of Rain Fall in Japan
Annual actual
Average
Trend
Ra
in
Fa
ll
199
1900 1950
0
Source: Japans government’ MLIT
HP
4. Funding Demand by the constraints
Funding Demand( Additional)
(USD billion)
1.00 Forest/
0 Bio
Diversity
( ?)
Water Infra
(200)
50
0 Adaptation
(75~100)
Mitigation
(CO2
Constraint)
(430)
Emergin
g
Futur
5. Finance Flow to developing countries
(USD billion )
200
Finance Gap
⇒Private but
Additional supported by the
Public
Funding
100
0
Base load 6
30 20
100
100 100
100
Total ODA Multilateral Emission Private Public Finance
Funding Trading Direct Finance (Export Credit etc.)
Demand Investment
6. Potential Credit Demand post 2012 (Value)
Billion USD
(PA)
Credit Price(
ton)
Domestic Reduction
Ratio
Assumption
CO2 emission of OECD(+) countries shall be reduced by 25% by 2020.
7. Innovative Financing Tools
＜Possible Innovative Tools＞
Mitigation( USD430billion) Emission Trading
Carbon Capture & Storage
REDD
Adaptation(USD100Billion) Weather Derivative
Water Infra（USD200billion) Public Private Partnership
Bio Diversity( USDXbillion) PPP, Bio Diversity
8. Carbon Capture and Storage
CCS Now
Capture Climate
CO2 Change
CO2
Storage [Oil, gas, Coal ]
Fossil Fuels
In Salah Gas Field
・Step: Capture – Transportation – Storage Large scale CCS
・Additional cost:
⇒ Carbon Credit as revenue stream
9. Forest Credit
World Bank
Contributi Policy
Japanese on FCPF
Dialogue Host
Governm （165 Mil USD ） Readiness
Fund
governme
ent
nt
etc
Implementatio
Investme Fundi Sustainab
n
Private nt ng le activities
of
Carbon
Compani Forest
Fund
es Managem
Fores Carbon emission ent
Fores t reduction
t Credit
Credit s
s
Environment
Contribution Climate Change Mitigation
10. Biodiversity Credits
Biodiversity
①Limitation of development
②Compensation, alternative development
③More funding – mobilization of private money
⇒ Biodiversity credits
Biodiversity Credit Mechanism
Supply Demand
Steps
①Analyze of BD ●CSR (Voluntary )
②Measurement ●Obligation for Biodiversity
③Issue of credits
development
Investment ●Global framework Development
（Contribution for (Negative Impact)
BD）
Offset by BD credit
11. “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.
JBIC
Loans /
Equity Investment MDBs
Private Financial （ADB, World Bank Group, etc）
Institutions
Catalytic Role Co-operation
(Co-finance, Information Sharing, etc)
Loans, etc Loans, etc
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)
12. Aims of LIFE
１ Mobilization of private fund
Demand is enormous.
Mobilize of private funding is inevitable
Limitation of public funding
２ Specification of commercially viable BAT
Diffusion of BAT
Establishment of global de fact standard
The first step of Environment Finance
14. Conclusion
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)
