Funding  Clean  Technology    in  Asia

Presented  by  Eugene  Yun  

Managing  Director  P80  Group  Founda?on  

 At  

GCCA  Mee?ngs  in  Taipei  10  November,  2015  

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Can  we  help  ourselves? §  Taiwan  is  holding  an  important  mee?ng  at  an    

 important  ?me  

§  UN  Climate  Change  Conference  COP21    is  less  than  one  month  away  

§  2-­‐degrees  target  “unaNainable”  

§  How  can  we  help  ourselves?  

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Who  are  the  enemy?      

Us!

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Observa?ons •  Largest  emiNers  are:    

1.  China  2.  US  3.  EU  4.  India  5.  Russia  6.  Japan  7.  Germany    8.  Korea  

•  Asian  countries  (in  red)  all  increased  emission  amounts       between  1990  and  2012;  while  others  decreased  

•  The  war  against  climate  change  will  be  won  or  lost  in  Asia  

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Economic  development  &  Energy  Intensity

0

50

100

150

200

250

300

350

400

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000

GDP per capita, US$ 1995 ppp

Ene

rgy

Use

, GJ

per

capi

ta

Global Trend

EU-15

North America

Korea 1970-2000

Malaysia 1970-2000

China 1970-2002

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New  investment  in    Renewable  Power  and  Fuels

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New  investment:    Asia  (ex  China,  India)

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New  investment  in  Renewable  Power  and  Fuels:  China

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New  investment  in  Renewable  Power  and  Fuels:  India

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INDC?

•  Intended  Na?onally  Determined  Contribu?ons  

•  Enforcement  mechanism  is  needed  

•  Too  small,  too  slow    …  and  too  late?  

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INDC  Scenarios

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Where  is  the  money?

•  Public  sector:  Green  Climate  Fund  (GCF)  is       proof  of  public  sector’s  reluctance  to              provide  funds  

•  Public  private  partnership:  World  Bank,  IFC,       ADB  are  examples  of  promising  poten?al  

•  Private  sector:  promises  best  hope…  there  is            “plenty  of  money”…    

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Global  Assets  Under  Management

33

10

2

3

1

7

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24

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0 5 10 15 20 25 30 35

Private Wealth

Real estate

Private equity funds

Hedge funds

REITs

Foreign exchange reserve

Sovereign wealth funds

Mutual funds

Insurance companies

Pension funds Conventional investment management asset

non-conventional (alternative) investment man

agement asset

Units: Trillion US Dollars Around one-third of private wealth is incorporated in conventional investment management Source: Wikipedia

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P80  Group

•  Our  goal:  mobilize  capital  in  large  scale  into  green,      clean,  sustainable  projects  

•  Target  funds:  pension  funds  and  sovereign  wealth      funds  

 •  Capital  deployment:  Less  than  1%  of  total  assets    

 (in  2009)    •  Job  Number  One:  fix  the  “financial  plumbing”  

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Funding  Needs  Vs  Capacity:  Asia

§     Annual  projected  funding  needs  for  climate  change          mi?ga?on/adapta?on  es?mated  at  US$500-­‐550  billion  

–     Asia  por?on  es?mated  to  be  more  than  US$100  billion  

§     Poten?al  funding  sources  –     US$  34  trillion  Pension  Funds  –     US$    4  trillion  Sovereign  Wealth  Funds    

§     Percentage  of  “P8”  assets  invested  “green”  =  0.7%  in  2009    

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Impediments  to  low  carbon  investments    in  Asia

§  Informa(on  and  knowledge  gaps  

–  Lack  of    investment  research  

–  Absence  of  qualified  intermediaries  

–  Absence  of  success  /  proof  of  concept  

§  High  transac(on  costs  

–  Small  porrolio  weigh?ng  

–  Diseconomies  of  small  scale  

–  Fear  of  the  unfamiliar  

§  Global  market  failures      

–  Environmental  externali?es  not  priced  

–  Carbon    market  pricing  in  early  stage  

–  Subsidies  for  hydrocarbon  energy  

§  Perceived  risks  

–  Poli?cal,  regulatory,  technology,    

 execu?on,  currency,  governance  risks  

–  Inadequate  market  incen?ves    

 (e.g.    feed-­‐in  tariffs)  

–  Risk  mi?ga?on  tools  underdeveloped  

§  Poor  investment  infrastructure  

–  Lack  of  specialist  professionals  

–  Lack  of  high-­‐quality  deals  

–  Underdeveloped  business    

 environment  

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Fixing  the  financial  plumbing

GP1  

MDBs,  Pension  funds,  SWFs,  Other  LPs  

Fund  Investments   Co-­‐  Investments  

Private Equity Funds

P1   P2   P3  

GP2  

Project  Development  Facility  

Donors   MDB,  3rd  Party  FM  

Private Equity Funds Private  Equity  Funds  GP2  GP2  

Risk Mitigation

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Key  Components

•  Large  size  fund  

•  Top  ?er  private  equity  fund  management  

•  Mul?lateral  Development  Bank  •     •  Project  development  facility  

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Investment  infrastructure    is  needed  for  efficient  and  expedient    

investment  in  infrastructure

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