Asia Clean Energy Forum 2012 8 June Plenary Session 23

The Future of the Global Financial Architecture for Climate Change: A Perspective from Asia
Lakshmi Venkatachalam Vice President for Private Sector and Cofinancing Operations Asian Development Bank

Climate Finance: Perspectives from Asia

Seeking a climate-smart development pathway

Sourcing and deploying financial resources critical

Bilateral and multilateral climate finance flows increasing, including through ADB

Climate-friendly investment in Asia dominated by private sector flows Smart use of public funds to leverage private sector resources

Global Climate Finance Directions

Fast-start Goal:

financing: $30 billion (2010-2012)

Mobilize $100 billion/year (by 2020)

Green Climate Fund (GCF): To play key role in mobilizing additional financial resources, especially private sector

Fast-Start Finance: 2010-2012

Contributor
Australia Pledge, $ millions 640 Share in Total, % 2.2
EU Country Pledges Belgium
Denmark Finland France Germany Pledge $ millions

215
231 157 1,804 1,804 13 444 52 537 1,145 2,454 1,451

Canada European Commission

European Union Japan Norway Switzerland

414 215
10,307 15,000 1,000 159

1.4 0.7
35.0 51.0 3.4 0.5

Luxembourg Netherlands Portugal Spain Sweden UK Others

United States

1,704

5.8

Total

29,439

100.0

Total

10,307

~$20 b via bilateral ~$10 b via multilateral (e.g. CIF, FCPF)

Source: WRI

Estimated Global Climate Financing Flows for 2010: $55 of $97 billion from the Private Sector
Legend: Public money Offset money Private money NE: Not Estimated

Sources (US$ billion)

Offset markets and voluntary 3

Instruments
Carbon Offset flows 3 Policy incentives NE

Uses
Adaptation
4

Carbon markets 2 Carbon taxes 7

General tax revenues NE

Domestic public budgets 21

Bilateral agencies/ banks 24

Multilateral agencies/ MDBs 15
18

Grants 4 Concession loans 13

Global capital markets 55+

38

Market rate loans 56

Mitigation 93

Private sector finance 55

16

Equity 18

Source: Climate Policy Initiative; boxes and flows not drawn to scale

North-South Climate-Related Investment Flows US$ Billions (est. average 2007-2009)

Sources: UNCTAD 2010, OECD DAC and export credit databases, World Bank 2010 and AGF Report 2010.

Evolving Key Features of GCF

Adaptation & Mitigation Funding Windows
Private Sector Facility Facilitated and Direct Access to Funds 24-member Board with considerable powers Inception Meeting in Next Weeks

Uncertainty Coupled with Urgency

Uncertain GCF timing and global financial situation Adaptation finance to address high vulnerabilities Urgency to decouple Asias growth from GHGs Multiple benefits of climate-friendly investments: GHG emission reductions address climate crisis Greater energy security Savings of foreign exchange Improved economic efficiency Better air quality Fundamental economic restructuring required Financing key to plotting a sustainable future

Issues for Consideration by the Panel

Adjusting the policy enabling conditions to unlock private investment Level of ambition for Asian mitigation goals Learning from public-private partnership experience
Tapping private sector entrepreneurship and financing for adaptation measures

Thank you