Towards a Sustainable Future: The Role of Financial Innovation Barbara Buchner Executive Director, CPI Climate Finance @bbuchner13 BRAZIL CHINA EUROPE INDIA INDONESIA UNITED STATES 1
Global climate finance reached $392 bn in 2014 TOTAL CLIMATE FINANCE IN 2014 $ 392 2011 $ 364 BN 2012 $ 359 BN 2013 $ 342 BN BILLION Global climate finance increased by 15% in 2014, when more money than ever went to climate action 2
$392 billion may sound like a lot but we re falling short < $ $ 13.5 16.5 1.2 TRILLION Investment Invested needed in 2011 from 2014 2015 2030 in renewable to 2030 limit to temperature energy support and NDC increase energy implementation efficiency to 2 C 3
To identify opportunities for transformation, we need to understand the climate finance landscape 4
Several barriers affect investors incentives and ability to invest in climate action Policy gaps Knowledge gaps Risk, viability & funding gaps Inadequate regulatory frameworks Investment opportunities Pricing of climate risks Inadequate access to finance Return uncertainty Perceived risks Barriers vary by type of private actor, region, sector, technology & level of climate exposure 5
How to scale up? A focus on innovation 6
Unlocking innovation The Global Innovation Lab for Climate Finance supports the design and piloting of transformative climate finance instruments to drive private investment in mitigation & adaptation. 7
Lab members & partners 8
The Lab model & impact on the ground Crowd sourced ideas Publicprivate partnership Innovative finance solutions G7 Endorsement US$600M+ in new funding raised for pilots in Latin America and Africa. Model successfully replicated through the Fire Awards, India Lab, and a new Brasil Lab. 9
Brasil Lab members & partners Steering Group: Secretariat: 10
Lab Instrument Examples 11
Energy Savings Insurance Overview Insures the financial performance of energy efficiency (EE) savings projects. Pilots in 7 countries in Latin America is underway, and the challenge now is to replicate in additional sectors and regions. Key features & Updates Led by the Inter-American Development Bank with support from the Danish Energy Agency, this insurance product covers the expected value of savings generated by EE investments Received USD 21.7 million from the Green Climate Fund to scale in El Salvador Strong interest in scaling model in Asia 12
The Green Receivables Fund Overview The Green Receivables Fund is an assetbacked security used to finance climate relevant projects. It builds on a Brazilspecific instrument, (FIDC) - widely used by companies in Brazil to raise capital by securitizing receivables, but applies to green projects. Key features The Green FIDC team, led by Albion Capital and Get2C, is exploring two concrete pilot opportunities that will be ready for financing in late 2017 or early 2018: a street lighting securitization and a solar PV project. 13
Climate-Smart Cattle Ranching Overview Provides finance and technical assistance to ranchers without land titles to improve the sustainability and productivity of cattle ranching practices. Key features TNC has already implemented a sustainable cattle pilot project for 43 farms that covers 40,000 hectares. Ranchers have increased their overall productivity, become compliant with Brazil s Forest Code, and have been supplying higher quality beef at better prices to meatpackers. Roll-out could cover up to 300,000 hectares in the first five years, mobilizing USD 300mn and saving 550 thousand tons of CO2 annually. 14
Distributed Generation for Cooperatives Overview The Distributed Generation for Cooperatives Fund provides long-term affordable pay-per-use renewable energy to agricultural cooperatives. Key features 2-part lease contract links payments to performance without overstepping regulatory boundaries Energy would be 10-20% cheaper in this model. Target market is 127 cooperatives with ~120 million BRL in monthly energy costs in the Rio do Grande do Sul state. 15
Thank you! Explore CPI s in-depth analysis: http://climatepolicyinitiative.org/publications/ Explore the interactive: http://www.climatefinancelandscape.org/ Explore The Lab: http://climatefinancelab.org/ 16