CPI Presentation made during OECD/IEA CCXG Global Forum March 2014: Replicating and scaling-up Climate Change - Lessons from the San Giorgio Group

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Island of San Giorgio Maggiore 8
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climatepolicyinitiative.org
Replicating and Scaling-up
Climate Finance
Lessons from the San Giorgio Group
OECD, Paris 18-19 March 2014
Jane Wilkinson
Director

2. An Overview of CPI Work 2
San Giorgio Group
2
• Core framing inquires
– What is the role and reasons for public finance?
– What are the best delivery mechanisms for public
monies?
– How can international and national public investment
flows be aligned with each other and with private
investments?
– How do we ensure learning?
The San Giorgio Group assembles financial
intermediaries and institutions actively engaged in
green, low-emission climate resilient finance

3. An Overview of CPI Work 3
Case studies: analytical framework
• Complex interactions
between all
stakeholders
• Investment, returns and
profitability
• Risk allocation
arrangements

4. An Overview of CPI Work 4
SGG case studies overview
EIB
multipl
e
E
E
PPCR
Nepa
l
Adaptatio
n
KFCP
Indonesi
a
Forest
ry
Non-
renewables
World Bank
Risk
Instruments
First-loss
Protection
Mechanisms
Risk
Mitigation
Instruments
Policy
Risk
Instrumen
ts
Instrument
s
Renewables
time
marketdeployment
RD&D
Deployment &
Diffusion
Commercial
maturity
Montalto
di Castro
ItalySolar PV
Walney
UKOffshore wind
Jädraås
SwedenOnshore wind
Prosol
TunisiaSWH
Ouarzazate
MoroccoCSP
CIFs+
multipleCSP

5. An Overview of CPI Work 5
Prosol Tunisia Small-Scale Renewables
Goal
• To accelerate the penetration of Solar Water Heaters in the
residential sector by engaging local commercial banks
Challenges
• High up-front cost  Lack of consumer financing
• Distorting subsidies  Perverse policy incentives
• Knowledge gaps  Risk aversion
Measures
USD million 60 0.224.0
Investment
Subsidy
Capacity and
Awareness-
building
Credit
Mechanism

6. An Overview of CPI Work 6
Ouarzazate I CSP Morocco
Goal
• To develop a large scale Concentrated Solar Power plant that can
pave the way for a portfolio of CSP in Morocco and the region
Challenges
• Early development stage tech  Viability gap
• High capital cost  Lack of commercial finance
• Multiple partners  Cooperation & coordination
Financing
GoM– MASEN
- Grant $ 126
- Equity $ 40
- Subsidy $280
CTF
(WB/AfDB)
- Loan $197
IFIs
(AfDB,ADB,EIB,KF
W/BMZ/BMU,EC)
- Loans $639
- Grants $56
Private
Developer
- Equity $120
% of Project cost: 30% 13.5% 47.5% 9%

7. An Overview of CPI Work 7
Indonesia KFCP Peat Forest Rehabilitation
Goal
• To demonstrate a credible, equitable and effective
approach to rehabilitating peat forests that could
inform efforts in other locations and geographies.
Challenges
• Technical and scientific feasibility questionable, little know-how
 Test technical approaches and scientific methods
• Potential conflict with local communities
 Construction, operation phase, permanence
• Policy and legislative uncertainty
 Overcome poor zoning, contested land tenure, unclear approval
processes

8. An Overview of CPI Work 8
Nepal - PPCR
Engaging the Private Sector in Climate Resilience
Goals
• To tackle farmers’ barriers to climate resilience by engaging
private agribusinesses to train farmers on climate resilient
agricultural practices
• To build models for making climate resilience a long-term
business
Challenges
• Awareness and know-how
Develop tailored capacity building measures, leveraging
companies’ networks and incentives to train farmers in their
supply chains
• Access to climate-adaptive agricultural inputs and equipment
 Facilitate market entry to equipment provider
• Lack of access to finance
Buy down banks’ risks with innovative risk-sharing mechanisms

9. An Overview of CPI Work 9
How to scale up green finance?
• Develop well-articulated domestic enabling
environments to encourage further private investment.
• Continue to invest in, and ensure effective use of,
international public finance, which play a critical role
in facilitating low-carbon and climate-resilient
investments (consider specific context!)
• Provide new and improved mechanisms to address
risks, e.g. policy risk insurance and first loss
mechanisms
Viability
Know-
ledge
Reduced
Risk
Enabling
Environment
Public finance
Risk mitgation

10. BRAZIL
CHINA
EUROPE
INDIA
INDONESIA
UNITED STATES
+39 041 2700 426
Island of San Giorgio Maggiore 8
30126 Venice
Italy
climatepolicyinitiative.org
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