Private Investment for Green Growth. Céline Kauffmann (Directorate for Financial and Enterprise Affairs, Investment Division)

Transcription

1 Private Investment for Green Growth Céline Kauffmann (Directorate for Financial and Enterprise Affairs, Investment Division) MENA-OECD INVESTMENT PROGRAMME Meeting of Working Group 1, December 2010

2 Joint DAF/ENV work streams 1. Transition to a low-carbon economy, public goals and corporate practices 2. Defining and measuring «Green» FDI 3. Improving low-carbon investment conditions OECD 2

3 1 - OECD, 2010: Transition to a low carbon economy: public goals and corporate practice OECD 3

4 Regulation and other drivers of corporate practices Focus: growing pressure on companies to deal with climate change. What business practices are emerging? What challenges are companies facing? What are governments doing to mobilise companies? Surveys policy frameworks, regulations and other drivers of corporate action in 3 areas: disclosure of climate change information; corporate action to reduce greenhouse gas emissions; engagement of suppliers and consumers. Developed through stakeholder consultations, interviews and a survey to companies; builds on the OECD Guidelines for Multinational Enterprises. OECD 4

5 Increasing corporate disclosure of emissions Growing regulatory pressure and demand from investors and society. Internal drivers include identifying energy savings, assessing impact, risks and opportunities => 4 in 5 of Global 500 report GHG emissions 60 Number of companies (out of 63) OECD 5

6 Emergence of an international consensus Key issues: methodology, reporting boundary, multiplicity of reporting frameworks and requirements, quality of corporate information. Emerging standards and practices: The GHG Protocol has become de facto the international standard for GHG accounting Measuring and reporting direct emissions and those from by energy consumption are becoming standard practices On going debates: Reporting of indirect emissions Alignment of carbon reporting with financial reporting Verification of corporate information OECD 6

7 Corporate reduction of emissions Setting targets has become widespread practice among leading companies. How to ensure that they lead to clear, measurable and comparable emission reductions. In many cases, actions to reduce GHG emissions make good business sense and have other benefits (energy security, resource use efficiency ). For the vast majority of firms, going beyond energy efficiency measures will require clearer government signals, incentives, guidance. OECD 7

8 Corporate actions to reduce emissions Number of companies (out of 63) Very important Important OECD 8

9 Managing emissions through the value chain The bulk of emissions is often produced outside the companies boundaries, through the supply chain and the use & disposal of products. Managing emissions through the value chain and the lifecycle of products is the new frontier of corporate action. It is, however, a great challenge for companies. Among participants in the OECD survey, less than half estimate emissions generated throughout the supply chain. Mobilising consumers will work only if consumers can trust corporate information. OECD 9

10 2 - Defining and measuring «Green» FDI OECD 10

11 Why define and measure green FDI? FDI can play an important role in support of the diffusion of environmentally-friendly technologies Countries have made various pledges in support of climate change actions that will require greater mobilisation of private resources (funding and expertise) Tools are necessary to monitor progress with green growth (e.g. performance of policy to lever private investment) However, so far: Limited information on the scale of green investment flows, incl. green FDI. It is not clear what «green» investment may mean. OECD 11

12 The feasibility study Feasibility study summarizing work to date, investigating the practicability of various possible definitions of green FDI, surveying available statistics and identifying associated investment policy restrictions Build on and complement other efforts at OECD to track ODA, trade in environmental goods and services, export credits, as well as UNCTAD and Eurostat work. Two-part definition of green FDI: 1) FDI in green industries and environmental services; and 2) FDI in environmental mitigation processes, i.e. use of cleaner and/or more energy-efficient technologies OECD 12

13 Estimating the magnitude of «green» FDI No readily available statistics matching part 1 or 2 of the definition: What to include in part 1? Renewable energy, waste treatment, manufacturing of environmental goods How to assess the environmental outcome of FDI in part 2 => Definition of a range framing green FDI: 1) Lower bound: FDI in renewable energy & environmental goods and services => proxied by FDI in Electricity, Gas and water (2.8% of World FDI in ). 2) Upper bound: all FDI in mitigation-relevant sectors: Agriculture, Mining, Manufacturing, Construction and Transport (41 % of World FDI in ). OECD 13

14 3 - Improving low-carbon investment conditions OECD 14

15 Mobilising private finance for climate change Forthcoming joint DAF/ENV activity calling on 4 committees, with a double focus: Innovative policy incentives, financial mechanisms & improved PPP to overcome risks and other obstacles to investment in low-carbon technology & infrastructure. Monitoring tools to measure progress in mobilising private sector funding for climate change & PS contribution to Copenhagen commitments. Brainstorming and high-level breakfast event in Cancun in the margin of COP16 to exchange ideas on how to shift more private finance and funds into low-carbon development, and on what role the OECD might play to accelerate action by governments to make this happen. OECD 15

16 Context Meeting the challenge of climate change urgently requires scaling up of public and private investment into low-carbon, climate resilient infrastructure and technology Yet, the risk / return profile of low-carbon investment is poor Consequently, business and investors are calling for governments to provide long-term, clear and stable signals. Given the slow progress in defining a robust global policy framework for climate change, domestic policies are the central driver of change in investment conditions today OECD 16

17 Challenges Turn institutions around and change the culture towards a low carbon economy in months and not years Ensure greater harmonisation/coordination across the domestic approaches to provide greater clarity and vision about the future for business investors Establish policy frameworks that provide a clear long-term vision, i.e. establish incentives for business and private investment to go green; capture and reflect the opportunities in green growth; deal with the transition to green growth (trade-offs and losers). But also: which guarantee basic elements of a sound investment policy framework. Progress are needed to boost accountability and transparency on private (as well as public) flows OECD 17

18 OECD contribution Identify cost-effective policy measures and innovative financial mechanisms that help lever corporate investment and mobilise institutional investors (including pension funds). Building on case studies and the establishment of a forum for exchange between business, investors and policy leaders. Making use of OECD Investment tools and committee structure (pension fund regulators, export credits, investment experts, environment experts). OECD 18

19 Gross entry capacity in gigawatts New plant entry by type of renewable energy in North America, Pacific and EU-15 regions Geothermal Wind Solar Biomass Kalamova, M., C. Kaminker and N. Johnstone (2010), Sources of Finance, Investment Policies and Plant Entry in the Renewable Energy Sector OECD 19

20 Thank you