forming and capitalizing green banks to scale up climate ... · institutional design, formation,...
TRANSCRIPT
![Page 1: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/1.jpg)
Forming and Capitalizing Green BanksTo Scale up Climate Investment
A p r i l 2 0 1 9
![Page 2: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/2.jpg)
CGC implements the Green Bank model to lower C02 emissions through institutional design, formation, capitalization, and administration.
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
2
Who we are
• CGC works to advance the Green Bank model, partnering with govts., national development banks, and local NGOs to form and support GBs.
• CGC has helped design and create six Green Banks that have catalyzed >$1.5B in climate investment:
• South Africa • Connecticut (U.S.) • Montgomery County (U.S.) • New York (U.S.) • Rhode Island (U.S.) • Washington DC (U.S.) • Climate Access Fund (U.S.) • Currently working with Rwanda, Colombia, Indonesia and others
Consulting and
Technical Assitance
Thought Leadership
Advocacy
![Page 3: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/3.jpg)
CGC implements the Green Bank model to lower C02 emissions through institutional design, formation, capitalization, and administration.
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
3
Our supporters who we are and collaborators
FUNDERS PARTNERS (indicative selection)
COALITION FOR GREEN CAPITAL founded and leads (or co-leads)
![Page 4: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/4.jpg)
Approximately one trillion dollars per year of additional investmentin clean energy is needed to keep warming below two degrees.
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
4
Annual investment in clean energy under IEA scenarios with DFI commitments
Source: Coalition for Green Banks in Developing Countries: Scaling up Private Finance to Archieve Paris Climate Goals, July 2017
USD
, Bill
ions
$ 0
$500
$1,000
$1,500
$2,000
$2,500
$2Trillion
$1.1Trillion
$517Billion
$395Billion
$49Billion
Amount needed to hit two degree
target:
Investment today:
Additional projected under current policies:
Potential for increased commitments and leverage via DFls:
Additional investment needed:
![Page 5: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/5.jpg)
Public funding is insufficient to fund the shift from brown to green:Countries must drive more private investment into climate projects.
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
5
In non-OECD countries climate projects are largely publicly financed
Sources: 1OECD, Risk and Return Characteristics of Infrastructure Investment in Low Income Countries, September 2015. 2Asian Development Bank, Catalyzing Green Finance:A Concept for Leveraging Blended Finance for Green Development, August 2017. 3Colombia Department of National Planning (DNP), November 2017.
$398M
$179M$80M
$763M
$630MBillion
NDCinvestment
gap:
The National Planning Dept. projects that to meet Colombia’s NDCs under the Paris accord, private sector investment must grow 7X.
Private investmentPublic investment
Private fundin
g must b
ecome PRIMARY sou
rce and increa
se 7X
![Page 6: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/6.jpg)
Green Banks are country-driven catalytic finance facilities designed to mobilize private investment into climate projects
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
6
Green Banks can be placed within existing institutions or exist independently
Capital Markets Climate Proyects
A finance facility, which can exist independently or within an existing institution, that has a:
• Dedicated mission: “crowd-in” private investment to address climate change.
• Geographic focus: is nationally -or locally- owned, and focuses on addressing gaps and catalyzing greater investment in local markets.
• Capital base in-line with its mission: sources and deploys a mix of public and private sources (excluding customer deposits, typically).
Note: Green Banks perform many functions to enhance private investment in climate projects:
• Capital mobilizer • Capital provider • Lead arranger • Innovator • Capacity-builder • Feedback to government on enabling environment
Green Bank
![Page 7: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/7.jpg)
Green Banks raise capital from a variety of sources and deploy catalytic investments or financial products based on local market needs
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
7
![Page 8: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/8.jpg)
Existing Green Banks have delivered strong results
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
8
Green Banks lower CO2 emissions and act as innovators to mitigate risk in local markets through financial solutions that can be replicated by other market actors.
Sources: Annual and quarterly reports
![Page 9: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/9.jpg)
Green Banks have growing interest as a Strategy to Scale-Up Climate Investment in Emerging Markets
Highly-engaged Countries (23)
AngolaBahrainBarbadosBrazilCambodiaChileChinaColombiaIndiaJordanKyrgyzstanLebanonMalaysiaMexicoMongoliaPeruRwandaSenegalSouth AfricaTurkeyUgandaUkraineUnited Arab Emirates
Interested Countries (8)
ArgentinaArmenia
EgyptEl Salvador
KenyaNigeria
The PhilippinesVietnam
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
9
Most Green Bank activities are happening in isolation. A systematic approach could help take this opportunity to scale
EUROPE: 1
AFRICA: 8
ASIA: 14
LATIN AMERICA & CARIBBEAN: 8
Hosted by:
Sponsored by:
Organized by:
![Page 10: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/10.jpg)
Green Banks offer a systemic model which could be scaled globally tohelp close the trillion dollar annual climate finance gap
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
10
System of 25 Green BanksOne individual Green Bank
DEPLOYS ~USD 500Mof public-purpose capital
LEVERAGES ~USD 1-5Bof private capital
Demonstrates viability of multiple clean technologies and markets
DEPLOYS ~USD 12.5Bof public-purpose capital
LEVERAGES ~USD 25-125Bof private capital
Catalyzes full private sector adoption ofclean technologies and markets
x25
![Page 11: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/11.jpg)
Green Facilities can support large projects… and small projects
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
11
Distributed Solar, Biogas & Energy EfficiencyOffshore Wind
UK: Green Investment Bank (now Green Investment Group):
• Lead debt syndicates and organized long-term private sector refinancing.
• Brought new investors (pension funds) in the OSW space.
South Africa: Climate Finance Facility:
• Will finance distributed renewable, efficiency and water projects.
• Will focus on technologies with limited track record in South Africa,and that struggle to find affordable finance.
![Page 12: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/12.jpg)
Green Banks fill gaps & serve as “first movers”:Can take early stage risk
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
12
ExampleGREEN BANKInterventions
CommunitySolar Project
Commercial Investors
Time/Project stage: EARLY MIDDLE LATE
Bridge loan beforeinterconnection
Commercial bank provides project finance after interconnection achieved
For example, newinterconnection rules
are uncertain andperceived as slow
![Page 13: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/13.jpg)
Green Banks can address risk associated with “first application” oftechnologies, and difficulties underwriting multiple revenue streams
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
13
ExampleGREEN BANKInterventions
Biogas projectwith PPA
Commercial Investors
Time/Project stage: EARLY MIDDLE LATE
Subordinated debt and/or tenor extension
Commercial bank provides coinvestment in senior position,and/or with shorter tenor
For example, technology and/or developer has limited track
record in country. Project relies on multiple revenue streams, which are hard to underwrite beyond 5 years.
![Page 14: Forming and Capitalizing Green Banks To Scale up Climate ... · institutional design, formation, capitalization, and administration. Forming and Capitalizing Green Banks To Scale](https://reader034.vdocuments.net/reader034/viewer/2022052013/6029e5ec1ef6824b2e7e860b/html5/thumbnails/14.jpg)
Green Banks can help with regulatory risk, for example financingunder a new regulatory scheme, with intention of refinancing
Forming and Capitalizing Green Banks To Scale up Climate Investment - April 2019
14
ExampleGREEN BANKInterventions
Portfolio ofon-site EE/RE
Commercial Investors
Time/Project stage: EARLY MIDDLE LATE
Green Bank finances entirety of first portfolio of projects
Commercial bank or asset manager refinances portfolio of loans when it
reaches sufficient size
For example, a new regulatory scheme (e.g. Commercial PACE) where no
commercial investors have experience