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Dr. David J.

Jhirad Professor and Director Johns Hopkins SAIS Energy Resources and Environment Program US-Taiwan Sustainability Symposium, December 10, 2012

 Global Developments in Infrastructure and Energy !  Energy-Water Nexus !  The Strategic Benefits of Energy Efficiency !  Sustainable Mobility and Transport !  The Obama-Roussef Joint Initiative on Urban Sustainability !  The Rockefeller Foundation Asian Cities Climate Resiliency Network(ACCRN) !  Innovative Partnerships and Financing (ARISE) !

•  68.7% Of the world’s population will live in urban areas by 2050 (in 2010, this figure was 50.5%) •  25% of global GDP comes from the top 100 cities •  13% Of the world’s population live in at-risk coastal areas (which make up 2% of the world’s land area) •  75% Of people who live in at-risk coastal areas (0–10 m above sea level) are in Asia •  80% expected $80 billion to $100 billion per year in climate change adaptation costs will likely be borne by urban areas

Sources:  Booz  Allen  Hamilton,  Global  Infrastructure  Partners,  World  Energy  Outlook,  OECD,  Boeing,  Drewry  Shipping   Consultants,  US  Department  of  TransportaHon  (2007)  

Global  water  use  
100%

Water  for  energy  
Other   Biofuels   Fossil  fuels  

80% 60% 40% 20%
Energy   Power  

Nuclear  

Coal  

2010

2010  

The  energy  sector’s  water  needs  are  set  to  grow,  making  water  an  increasingly   important  criterion  for  assessing  the  viability  of  energy  projects  
Source:  IEA  WEO  2012  

Energy  efficiency  potenFal  used  by  sector  in  the  New  Policies  Scenario  
100%   80%   60%   40%   20%   Industry   Transport   Power   genera9on   Buildings   Unrealised  energy   efficiency  poten9al   Realised  energy   efficiency  poten9al  

Two-­‐thirds  of  the  economic  potenFal  to  improve  energy  efficiency  remains   untapped  in  the  period  to  2035  
Source:  IEA  WEO  2012  

Energy  expenditure  in  2035  compared  with  2010  
Trillion   $1.5   $1.2   $0.9   $0.6   $0.3   $0   -­‐$0.3   China   India   European   Union   United   States   Japan   New  Policies     Scenario   Efficient  World     Scenario  

In  addiFon  to  cuNng  energy  expenditures  by  an  average  of  20%,  improved   efficiency  brings  wider  economic  gains,  parFcularly  for  India,  China,  the  United   Sates  &  Europe  
Source:  IEA  WEO  2012  

District  Cooling  could  greatly  increase  the  energy  efficiency  of  very  densely   populated  ciFes  such  as  New  York  City,  replacing  the  need  for  air  condiFoning   and  hence  greatly  reducing  electricity  consumpFon.  
Sources:  Cenergy  and  Logstor  

Electrical and Thermal Efficiency in %#

Source:  Logstor  

Source:  IEA  WEO  2010  

A  Smart  City  incenFvizes  and  supports:   •  Non-­‐motorized  transport  through   prioriFzaFon  of  bicycle  and  pedestrian   infrastructure  development     •  Transit-­‐oriented  development  of  residenFal   and  commercial  areas   •  Use  and  efficiency  of  public  transport  (e.g.   Bus  Rapid  Transit)   •  Affordable  transport  soluFons  for  everyone   But  puts  in  place  disincenFves  for:   •  Individual  car  use  through  measures  such  as   congesFon  charging,  limited  parking,  and   vehicle  taxes   •  Urban  sprawl  through  proper  zoning  

•  Dedicated  lanes  and  bus  stops  with  easy   access   •  Local,  Express  and  Feeder  Services   •  Tickets  integrated  across  whole  system   and  affordable  for  general  public   •  Reliable  user  informaFon  system   •  Clean  buses  with  low  emissions,  e.g.   using  CNG   •  Integrated  into  zoning  to  enable  transit-­‐ oriented  hubs  

Major  global  gas  trade  flows,  2010 035  

Source:  IEA  WEO  2012  

"   Sustainable development for
the next 20 years: Rio+20 !
"   Integrating environmental,
economic and social goals!

"   Addressing rapid urbanization!

"   Domestic priority on
infrastructure in US & Brazil!

"   New frame for bilateral
engagement and action !
Brasilia, March 2011!

Source:  Dr.  Shalini  Vajjhala  

- President Obama!

"   Key Objectives! "   Bundling: moving from project to portfolio-finance! "   Avoiding losses: capturing savings and externalities! "   Leveraging: making the most of public resources! "   Structure: Bilateral public-private partnership with federal,
state and local governments and communities!

"   JIUS Cities: Rio de Janeiro and Philadelphia!
Source:  Dr.  Shalini  Vajjhala  

"   Local leadership on sustainability!
"   Rio mega-events: Rio+20, 2014
World Cup, 2016 Olympics!

"   Philly 100% green stormwater plan!

"   Major gaps in implementation! "   Opportunity to transform
infrastructure finance & delivery!

"   Model for both established &
emerging cities around the world!
Source:  Dr.  Shalini  Vajjhala  

"   Targeting urban adaptation investments ! "   Identifying opportunities for avoiding losses! "   Enabling integrated planning and policy! "   Creating local institutions and delivery mechanisms! "   Financing integrated, flexible, resilient infrastructure! "   Successful adaptation is often a non-event ! "   Need to create space for continuous improvement! "   Building investor confidence in sustainable systems !
Source:  Dr.  Shalini  Vajjhala  

Private! Public!
Loans! Grants!
(Zero/LowInterest)$

[Equity/Debt]!
+15% Return!

10-15% Return!

Concessional Finance! National/Local Capital!

5-10% Return!
National/Local Capital!

Asset Manager

Independent Management Board! (Governments, Stakeholder Groups, etc.)!

Local Green * Development B-Corporation!
[Implementing Authority / Delivery Mechanism]!

Sustainable Development Portfolio!
Social! Programs!
Integrated Systems / Public Goods / Networks! Project! Finance! Corporate Finance!

Jardim Gramacho Redevelopment

(~$2 billion, 15-year, est. ROI 12-25%)
Public

MDB Development Policy Loans

(Zero/Low-Interest)

Tech. Assistance/Planning Grants

Private

20+% Return (Private Equity/Debt)
15-20% Return (Private Equity/Debt)
12%-15% IFC & Sovereign Funds (1st loss)
OPIC (Risk Insurance)

Asset
Manager

Grants

Jardim Gramacho Board -- City and State of Rio, Duque de Caxias, local stakeholders

New B-Corp
Land concession & development rights incentive mechanisms;
15-year life, contracting authority with State and City of Rio

Job Training Center(s)

Green building, affordable housing, transit, energy, water, lighting systems, etc.

E-Waste Recycling Facility

Construction, technology firms -- corporate finance

Revenue Streams: Real Estate Development, CDM Credits

Source:  Dr.  Shalini  Vajjhala  

•  Historically, the landfill has received 3 million metric tons of waste per year, releasing large volumes of methane, a highly potent greenhouse gas. •  In June, the landfill was closed, with daily trash now transported to the most advanced treatment plant in Latin America to curb production of greenhouse gases and pollution of nearby marshes. •  Further, about 75 million cubic meters of methane gas will be collected over the next 15 years from the remaining waste. •  The Brazilian petroleum company Petrobras plans to purchase the landfill's methane gas for use in its refineries. •  A portion of the revenue stream from the methane sales will help rehabilitate the impoverished favelas that have sprung up around the landfill - generating social and environmental benefits.

"   Project Recipes! "   Financial
Ingredients!

"   Policy Menus! "   www.epa.gov/jius!

•  Structuring at least 3 Sustainable Development Portfolios to jump-start the master planning process •  $1.2-1.5b bankable portfolios developed by NGOs and entrepreneurs •  Gramacho Landfill •  Guanabara Bay •  Another currently being selected in the US •  Identifying legal and financial structure for the SDCs

•  7 year initiative launched in 2008 •  $60 M of $90M Global Climate Change Initiative •  Investing in 10 cities in 4 Asian countries •  Emphasis on 2nd tier cities

Source:  CrisHna  RumbaiHs  del  Rio(Rockefeller  FoundaHon)  

Impact
The resilience and capacity of a growing number of developing country/Asian cities in relation to current and future climate risks is enhanced, and through this work the lives of poor and vulnerable men and women are improved.

Outcomes
1. Capacity of Cities to plan, finance, coordinate and implement climate change resilience strategies 2. Network for Knowledge, Learning and Engagement 3. Expansion, deepening of experience, scaling up

Source:  CrisHna  RumbaiHs  del  Rio(Rockefeller  FoundaHon)  

Educa9on  &  capacity   building  of  ci9zens!

Climate  sensi9ve   land  use  &  urban   planning!

Drainage,  flood  &   solid  waste   management   Water  demand  &   conserva9on   systems  

Diversifica9on  of   climate  affected   livelihoods  

Urban Climate Change Resilience #

Emergency  early   warning  systems  

Large-­‐scale   ecosystems   service   strengthening  

Resilient   housing  &   transport   systems  

Responsive   health  systems  

Institutional coordination  

Source:  CrisHna  RumbaiHs  del  Rio(Rockefeller  FoundaHon)  

City !

•  Taxes, receipts!

National!

•  National transfers, Urban Development Funds !

Bilateral!

•  ODA, Climate Funds !

Multilaterals!

•  Climate Funds (e.g. Green Climate Fund), Loans for urban development!

Private Sector!

•  CSR, Climate Proofed Value Chains, Resilience building goods & Services!
Source:  CrisHna  RumbaiHs  del  Rio(Rockefeller  FoundaHon)  

ARISE

•  Global facility to assemble sustainable development portfolios consisting of pipelines of investible projects •  Wholly capitalized and supported by grant funds •  Resolves credibility challenge by providing continuity and due diligence across regions and portfolios •  Provides three intelligences: technical, financial, communication •  Unresolved: Where will be GPPF’s home? Role of the Green Climate Fund (GCF) located in Seoul

Market Viability Challenge •  Small, fragmented, non-existent market often dominated by public sector (now experiencing budget constraints) •  Projects often fall below the initial capital investment threshold required of large institutional investors •  Lack of proven revenue models •  Prohibitively high transaction costs Upfront Capital Challenge •  Despite favorable economics when full lifecycle and avoided costs are considered, relatively higher relative initial capital requirements often deter serious consideration and implementation Risk Premium Challenge •  Would-be borrowers (city, municipal, local governments) suffer from lower credit ratings than provincial and national counterparts •  Innovative technologies and project designs lack sufficiently robust track records, thereby raising their risk profiles

Innovative Public-Private Partnerships •  Visibility, transparency, well-defined channels of communication •  Global Initiative on Urban Resilience: World Bank; SAIS/ERE; ICLEI; C-40; US Green Building Council; Abu Dhabi Eye-onEarth Summit Intermediary entities to ensure access to full array of capital available •  Bring together different stakeholders representing different “colors” of money – public and private grants all the way to venture capital and private equity Global entity to prepare portfolios of smaller projects: New Role for Green Climate Fund? •  De-risks individual projects •  Reduces aggregate transaction costs