Role of Finance for the Low Carbon Economy ~ Public Private Financial Partnership ~

1. Plenary Session One – Climate Change: Mitigating its Impact on Business and Economic Development The 24th CACCI Conference Sri Lanka Economic Summit Role of Finance for the Low Carbon Economy ~ Public Private Financial Partnership ~ Takashi Hongo Special Advisor and Head of Environment Finance Engineering Department Japan Bank for International Cooperation

2. Where are we now? : Global Constraint Affluent Society Capacity of Globe Economic Growth Climate Change Food Crisis Water Shortage Bio Diversity Technology and Finance

3. Triple Threats Energy Constraint Financial Crisis Climate Change Economic Stimulus Energy Efficiency Renewable energy/New energy Green Stimulus Short term and mid- Long term strategy

4. Absorption 4.8Gt Carbon Cycle Carbon Cycle Atmosphere Carbon Cycle Net Increase 3.2 Gt Increase 8.0Gt 2.6Gt 6.4Gt 2.2Gt 1.6Gt Increased by economic growth Source: IPCC 4th Report Decrease and Degradation of Forest

5. Energy Constraint :Growing Energy Demand (Mton) Sources：IEA, World Energy Outlook 2008

6. Access to clean energy Malawi 90% Uganda Burkina Faso 80% DR of Congo Average electrification rate in developing countries = 72% Tanzania Electrification rate 70% Mozambique Myanmar 60% Afghanistan Kenya 50% Ethiopia Angola 40% Cameroon India 300+ million Sudan 30% Yemen Bangladesh 20% Nigeria Pakistan 10% Indonesia India 0% Others 1456 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1 400 Population without access to electricity (million) Source IEA WEO2009

7. Sustainable Path : Necessity of technology 42 Gt Share of abatement % Reference Scenario 40 2020 2030 38 Efficiency 65 57 59 52 36 End-use Power plants 6 5 34 13.8 Gt 3.8 Gt Renewable 18 20 32 Biofuels 1 3 30 Nuclear 13 10 28 3 10 CCS 450 Scenario 26 2007 2015 2020 2025 2030 2010 Source IEA WEO2009

8. Investment demand for Climate Change Mitigation 1 200 Other Countries 1 000 Other Major Economies Billion dollars (2008) OECD+ 800 600 400 200 0 2015 2020 2025 2030 USD 200 billion from developing countries and more than half are China and India Source IEA WEO2009

9. Foreign currency reserve Source: IMF International Financial Statistics, the Ministry of Foreign Affairs, Saudi Arabian Monetary Agency (SAMA)

10. Potential of CO2 Emission Reduction by Technologies Potential reduction by commercially viable BAT (‘000 ton/Y ) Source: IEEJ CO2 emission reduction potential by using Japanese BAT

11. Price down Of LED lumps LED Light sales and price down Source GKF Marketing Japan

12. Price down by minimum commitment on purchase Possible Impact of Large Scale Purchase Commitment Price Shift of Price Curve by purchase commitment Price Down BAU Accumulated amount of Products Minimum Purchase Commitment

13. Electric Vehicle at the market Acceleration of Hybrid and EV car sales Share of ICE (Internal Combustion Engine (Base line scenario) EV Plug-in-Hybrid ICE will replace with additional EV, Plug-in-hybrid and Hybrid. Hybrid (Low carbon scenario) Source : Based on IEA WEO2009. By achieving low carbon scenario, average CO2 intensity of new passenger car will drop from 205 (2007) to 90 (2030). ( Gram per kilometer )

14. Technology Cycle Development of New Technology R&D support Program Financial Return Commercialization of Technology Diffusion of Technology Finance IPR support

15. “Carbon Offset” : Voluntary Action Carbon Friendly Magazine Subscribers CO2 Emission （Printing, delivery, Office etc） Carbon Offset CDM projects CO2 Emission Reduction

16. Contribution to global warming mitigation through carbon credits Example given in carbon credits fair Step 1 Estimate amount of CO2 emissions Step 2 Set an emission reduction target Step 3 Choose the type of carbon credits Step 4 Track the carbon credits Scope of the carbon offset Returning flight and electricity use in the exhibition hall 　→　58 tons 50% reduction up to 2050 Airline companies and power companies involved in the emission reduction efforts →With passengers’ cooperation, over 50% Emissions reduction certified for its certainty →Carbon credits approved by the UN “Certified carbon credits” (SOTOKOTO certification) Secure a sufficient amount of carbon credits (95%) Prevention of illegal selling →Donation to the Japanese Government; Contributing to the emission reduction target under the Kyoto Protocol Disclosure of information would be key

17. JBIC for ‘Green growth’

18. “LIFE” (Leading Investment to Future Environment) Initiative by JBIC ●The LIFE will … 　　　・support both public and private sectors, 　　　・co-operate with Multilateral Development Banks (MDBs) and mobilize private finances. ●The JBIC’s financial support under the Initiative will be around5 Billion USD for the next 2 years. J B I C Loans / Equity Investment MDBs （ADB, World Bank Group, etc） Private Financial Institutions Co-operation (Co-finance, Information Sharing, etc) Catalytic Role Loans, etc Loans, etc 4 Main targeted sectors of the Initiative are ... ・Clean Power Generation(Solar, Geothermal, Wind Power, CleanCoal Power Plant, etc) ・Energy Efficiency Improvement(Upgrading of Existing Transmissions and Distributions, Modernization and Heat Recovery of Steel Furnaces and Cement Kilns, ESCO (Energy Service Company), etc.) ・Water (Water Purification and Supply, Sewage System, Wastewater Treatment, Desalination and Water Processing, etc) ・Urban Transportation(Modal Shift in Densely Populated Areas, etc)

19. Aims of LIFE １　Mobilization of private fund Demand is enormous. Mobilize of private funding is inevitable Limitation of public funding ２　Specification of commercially viable BAT Diffusion of BAT Establishment of global de fact standard The first step of Environment Finance

20. Projects Financed by LIFE Total amount of financing by LIFE including private funding as co-financing is USD 5.4 billion as of 31 March, 2010.

21. New Financial Program (GREEN) and J-MRV (Global action for reconciling economic growth and environmental conservation) J-MRV JBIC are going to establish a guideline for quantifying GHG emission reduction amounts. It should be “simple, practical and internationally acceptable.” JBIC will review the followings 1. Climate change policy of the host country 2. Technology to be used 3. Reduction amount by J-MRV Commercially viable BAT (best available technology) JBIC “GREEN” GHG emission reduction projects Finance Deployment Reduction amount Dialogue Ownership J-MRV ・Industries ・Carbon Players ・Host Government Future carbon market Share Possibility GHG emission reductions (MRV: Measurement, reporting and verification)

22. Commercially viable BAT ～　Steel industry　～　

23. Water Infrastructure and Water Finance H2O : Health, Hope and Opportunity Demand for Water Infrastructure Water Finance Local Partner Global Partner Secondary Market Water Efficiency Economic Growth Population Growth Extreme Water Cycle

24. Public-Private Financial Partnership Capacity of Our Planet Change of Lifestyle Use of Technology Better investment climate, More investment Public Sector (Improvement of investment climate) Private Sector (Driving force) Financial Sector (Push last one mile)