20151110 funding clean technology in asia yun... · 2018-06-29 · north america korea 1970-2000...
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Funding Clean Technology in Asia
Presented by Eugene Yun
Managing Director P80 Group Founda?on
At
GCCA Mee?ngs in Taipei 10 November, 2015
1
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?
2
Who are the enemy?
Us!
3
4
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
5
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
6
New investment in Renewable Power and Fuels
7
New investment: Asia (ex China, India)
8
New investment in Renewable Power and Fuels: China
9
New investment in Renewable Power and Fuels: India
10
INDC?
• Intended Na?onally Determined Contribu?ons
• Enforcement mechanism is needed
• Too small, too slow … and too late?
11
INDC Scenarios
12
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”…
13
Global Assets Under Management
33
10
2
3
1
7
4
24
25
31
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
14
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”
15
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
16
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
17
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
18
Key Components
• Large size fund
• Top ?er private equity fund management
• Mul?lateral Development Bank • • Project development facility
19
Investment infrastructure is needed for efficient and expedient
investment in infrastructure
20
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