Climate Finance: Overview and Strategic Considerations

Transcription

1 Climate Finance: Overview and Strategic Considerations 2nd National Workshop on Innovative Climate Finance Mechanisms for Financial Institutions in the Philippines, Manila, 8 December info@thegreenwerk.net Große Theaterstraße Hamburg Germany 2017 the greenwerk.

2 Agenda Climate Finance driven by policy, an opportunity for FI s Sources of Climate Finance Design considerations for green bankers Capacity development for FI s Concluding remarks for discussion info@thegreenwerk.net 2

3 Climate Finance driven by international policy, a huge opportunity for FI s

4 Climate Change: risks + opportunities for FI s Climate Change is real: Climatic conditons change, with e.g. strong impacts on the economy, e.g. agriculture, water systems and coastal properties (impacting investment portfolios) Policy response: New climate policies increasingly likely (impacting investment portfolios such as energy sector, transport infrastructure, building codes,...) Threat to investments, but: new business opportunities arise from e.g. providing finance and insurances for adaptation to climate change Financing the transformation of energy system, transport sector, energy efficiency, etc. info@thegreenwerk.net 4

5 Intl. policy driving for climate finance Paris Agreement: Key climate policy milestone, to reduce globale temperature rise to well below 2 C by the end of the century Joint efforts by developed and developing countries Nationally Determind Contributuons (NDCs) are backbone of Paris Agreement NDCs are domestic action plans of UNFCCC Parties to derive climate goals NDCs come with targets to reduce GHG and adaptation measures NDCs have unconditional and conditional features info@thegreenwerk.net 5

6 Intl. policy driving for climate finance (ctd) The Philippines NDC: intend to reduce up to 70% of its projected GHG emissions, Also considerable adaptation measures Conditional on international support: Not quantified in $, Based on ASEAN regional RE target of 23 percent, annual investments of up to USD 1.3 billion per year (0.35 percent of annual GDP) will be needed until Conditional elements of all NDCs sum up to more than of USD 4.4 trillion until approx 2035 Financial needs! 6

7 International climate finance provisions: the 100 bn UN target for int. climate finance: USD 100 bn per year by 2020 To be updated by 2025 So far, some USD 67 billion may be achieved from public finance Financing gap of USD 33 billion indicates huge need of mobilizing private sector finance Given the numbers from NDCs on conditional needs, the relevance of the private sector will increase drastically Mobilizing private finance implies engaging with the banking sector Source: OECD,

8 FI s: Financing the climate agenda and beyond Financing the climate agenda FI s play an important role for financing sustainable development as a whole, not only climate Main Message: Climate Change (and Sustainable Development) can mean a huge opportunity for FI s But: An integrated strategy on policy level and banking sector is required info@thegreenwerk.net 8

9 Sources of Climate Finance

10 Co-finance required? Sources of Climate Finance Domestic Funding National Budget FI s Public Funding Central Bank, National Fund, Guarantees, Insurances, Tax incentives, Taxes, fines, etc Multilateral (MDBs) & Bilateral Funds: GCF, GEF, AF, etc Grants, Guarantees & Loans Credit lines, Guarantees, Insurances, etc FI s Loans, Bonds Insurances etc Private Funding International Funding info@thegreenwerk.net 10

11 Opportunities of international Climate Finance Source: Climate Funds Update, WIR,

12 The Potential of Climate Finance Co-Funding for Green Banking Addressing domestic financing gaps (NDC), support in attracting private sector finance (aligning NDC with domestic financial sector) May reduce risks and barriers (e.g. through guarantees) Unlocking finance also for financially less attractive activities (e.g. adaptation) (If international) Learning from other countries experiences (+) Greater independence from domestic structures (-) Dependence from interational partners Which role can the PSF play? 12

13 Some design considerations for green bankers

14 Example: Green Investment Facility Viet Nam Source: GIF

15 Advancing Climate Finance: Banking Sector / FI s Incoprorate climate into existing ES scrutiny : Is the investment / loan repayment at risk due to CC? Which sector specific / climate related risks do the customers face? e.g. Agriculture risks due to harvest loss, smallholder solutions? Energy Efficiency SMEs/ESCOs with a higher credit risk? RE grid connectivity, offtake agreements (PPAs, FiT)? Mitigation /Adaptation: expected returns or need for co-finance? Political framework: Which incentives (e.g. tax reliefs) exist? Implications on funding: Find suitable mix of instruments Fund? Conditional loans? Guarantees? Project equity? Mobile banking? etc Understand (and voice) capacity building needs info@thegreenwerk.net 15

16 Capacity Development for FI s

17 Capacity Development for Green Banking Banking sector in developing countries has capacity building needs for green banking (International) climate finance can support capacity building through e.g. institution building, workshops & trainings, project development Focus: Domestic Leadership (Champions, Central Bank, provincial Gvts) Complement with intl. support: Examples include the GCF with its readiness programme, NDC partnership, IFC (sustainable banking initiative), DENR is NDA, 1st readiness support accessed Also consider e-learning opportunities through ESCAP, or such as IKI with the RENAC Green Banking programme 17

18 Online trainings Trainings in India, Indonesia, Philippines, Thailand and Vietnam Delegation tours & B2B meetings in Germany Green Finance Specialist program Train-the-Trainer Seminars at RENAC s Training Centre in Berlin info@thegreenwerk.net 18

19 Module Climate finance options in South-East Asia 19

20 Food for Discussion

21 The Potential of Climate Finance Co-Funding for Green Banking Seriously consider the risks and opportunities of climate change! Also focus on regulatory & fiscal incentives => important, learn from others (Pakistan, Sri Lanka, China) (mandatory/voluntary??) Coordinating the process, using synergies (integrated climate finance strategy) Facilitate National Climate Finance Dialogue: Get/Keep the core stakeholders on board, enable capacity development opportunities (BSP / IFC workig group approach??) Assess co-funding opportunities domestic and intl; potential (and need) is there, including capacity development / technical support programmes (e.g. GCF) info@thegreenwerk.net 21

22 Pasalamatan! Björn Dransfeld Founding Partner the greenwerk. Climate Advisory Network the greenwerk.

23 Group Work: Innovative Climate Finance approaches for FI s in the Philippines Format: 3-4 Small break out groups, you have minutes Task: Experiences and challenges in designing and applying instruments for climate finance Document it on paper! info@thegreenwerk.net 23