isabelle vincent - investing in policy transformation

8/6/2019 Isabelle Vincent - Investing in Policy Transformation

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Investing in Policy Transformation :Experience from a Development Bank

Isabelle VINCENT

June the 22nd, 2011


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22/06/2011Investing in Policy Transformation : Experience from a Development Bank 2

Fossil energy business model1.1


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Lack of change

in trends from

supply side


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Lack of change in trends from demand side1.3

0

200

400

600

800

1 000

1 200

1 400

1 600

1980 1990 2000 2008 2020 2035

Million

China

Other non-OECD

United States

Other OECD

Passenger vehicles in the New Policies Scenario

Source : World Energy Outlook 2010


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Non sustainable growth since the industrialrevolution

Goods and services are under-priced

E&S externalities are not valued

Scarcity is not correctly valued

Path taken is the one of inaction although actionwould be economically relevant

Stern report : cost of CC inaction = 5% of global GDP each

year ; cost of action = 1% of global GDP each year

Wrong economic drivers1.4


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Change our representations

Change indicators of progress :

Green GDP

Sustainable development index (vs. HDI)

GDH : Gross Domestic Happiness

Give economic value to environment and resources

Technical, human, social and natural stock

Use new methodologies : increasing value of limitedresources, rethink the use of discounting rate

Shift form pre-supposed abundance tomanagement of shortage of resources ; DSM

1.5


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Technology or methodology ?2.2


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Where can development finance add value ?

Promoting Systemic approaches

Innovative economic and policy making methodologiesfactoring environmental externalities and scarcity ofresources ;

New institutional organizations favoring cross-sector andinter-ministerial dialogue to improve quality of political,

budgetary, technical decision making ;

Social engineering, to ensure proper design, appropriationand implementation of enabling, effective and sustainableclean energy policies by all stakeholders (including civilsociety and private sector) ;

R&D and massive dissemination of new technologies.

Focus on risk analysis : building resilience againstenergy shocks to come

2.1


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Example of capital stock valuation : Mozambique2.3

Technical K


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Challenge of urban density

Different sizes of suburb hosting500 households and

corresponding population withinthe range of public transportation

Associated

GHGemissionsrelated to

transportation(Vietnam)

2.4


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Resilience of Mexicos economy to fuel

prices2.5

Ruiz Npoles, Pablo (Sermanat)


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AFD Group

French ODA Agency: Public Company & Bank

AfD, PROPARCO : financing of the private sector, French GEF secretariat

Present in 80+ countries

6.8 billion committed in 2010

Energy & climate change agenda ~ 40% ; Asia ~ 1 billion

Wide range of financing tools

Untied aid

3.1


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Climate change policy lending (Vietnam)3.2

Loan to GOV :dialogue on apolicy matrix

TA : to supportthis dialogue onspecific issues

MONRE, MOF, MPI

Excecutive Board of NTP-RCC

National Steering Committee of NTP-RCC

Line agency A Line agency B Line agency C

Province A

Province B

Province C

Line agencieselaborate

sectorial policiescontributing toCC response

Provinces implement local climate change action plans

Eg : elaboration of aroad map on EE in the

steel sector

Eg : elaboration of a CC action plan in Danang


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Thank you for your attention

[email protected]


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AFD Groups geographic implantation


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AFD Groups committments, M


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Breakdown of (C)lean Energy commitments in 2009

(Total US$ 3.0 bn)

18%

11%5%

35%

5%

26%

Policy loans

Energy Efficiency

Renewable Energy

Fuel switch

Credit lines

Urban transport


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To build up overall capacity for climate change actions

in cross sectors in the Government of Vietnam

ClimateChangerelated

strategies,policies, etc.

Policy Action Sectors Main Responsible Ministries

MOIT

MARD

MOC

Related ministries

MOT, MOC, MOIT2) Transportation and Construction

3) Forestry and Agriculture

4) Waste Disposal

5) CDM

6) Water

8) Disaster Prevention

9) Forestry, Biodiversity and Agriculture

11) Health Care

7) Integrated Coastal Management

10) Transportation and Construction

MOC etc

MARD etcMARD

MARD, BCA etc

MOT, MOC

MOH

12) Assessment, Monitoring & Evaluation

13) Financial Mechanism

15) Awareness Raisingand Human Resource Development

MOST

MOF, MPIMPI

MOET

Mitigation

Adaptation

Cross-Cutting

Pillars

MONRE

1) Energy (Renewable Energy and Energy Efficiency)

14) Mainstreaming CC issues to development planningand Program Management of NTP-RCC and SP-RCC

Policy matrix SP-RCC


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Outcome/TargetCY2010 Actions

(2nd Cycle)CY2011 Actions

(3rd Cycle)CY2009 Actions

(1st Cycle)

Achieve 3 % ofrenewable energyand new energy ofprimary energyconsumption by2010(about 5% in 2020and 11% in 2050)

Formulate Strategyand Master plan forRenewable EnergyDevelopment (2015-2025)

Finalize the draftDecree on encouragingand supportingRenewable Energydevelopment

Conduct a study how tofinance additional costsof renewable energy viaRenewable EnergyFund

Establish RenewableEnergy Fund asstipulated in theRenewable EnergyMaster plan

Adaptation

Cross-Cutting

Mitigation RE&EE

GoV develops a policy framework to promote the development of

commercial renewable energy and energy efficiency and conservation.Summary

*The number to be reconfirmed

Develop policyframework to save

5-8% of the totalenergy amountconsumednationwide in theperiod of 2011-2015

Prepare thelegislative

framework forimproving energyefficiency andconservationactivities in Vietnam

Prepare theregulations to

enforce the Law onenergy efficiencyand conservation

Complete theresearch of the

financial mechanismfor improving energyefficiency andconservationactivities in Vietnam

Content of Policy matrix, Vietnam


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1

Projects cycle

Based on the result,funds are made

available to GoV

DonorsandNGOs

(JICA)(AFD)

1st Cycle (2008-9) 2nd Cycle (2010) 3rd Cycle (2011)

Policy Dialogues between ministries and donors

GoV

Evaluate theachievement of 1st

Cycles PAs

Evaluate theachievement of 2nd

Cycles PAs

Evaluate theachievement of 3rd

Cycles PAs

Monitoring PAs by ministries and donors

Implementing Policy Actions (PAs)

4 5 6 7 8 9 10 11 12 4 5 6 7 8 9 10 11 12 4 5 6 7 8 9 10 11 12

1st TM : identification

2nd TM : supervision

3rd TM : assessment


available to GoV


available to GoV


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Examples of EE/RE (and pollution

abatement) credit lines1


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EE/RE credit line in China

First credit line through 3 banks : HuaXia, China

Merchants Bank, SPDB -> 60 million euros ;

Financing of 12 projects in EE/RE : heat recoveryin cement and steel plants, up-grading of power

generation plant, waste-to-energy projects, powergeneration from biomass, etc.

1,9 million tCO2/year saved

TA for capacity building on EE/RE financing withinthe banks

2nd line for a total amount of 120 million euros

2


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EE/RE credit lines in India

70 million RE credit line with IREDA (IndianRenewable Energy Development Agency)

Small and medium sized projects targeted (maxamount of loan = 15 M)

Criteria : hydropower < 25 MW with limited E&Simpacts, wind IPP, biomass cogeneration (high

steam pressure), biomass power generation < 10MW, solar heat/electricity generation

50 million EE credit line with SIBDI (SmallIndustries Development Bank of India)

Minimum EE / GHG savings criteria

Potential projects : heat recovery, fuel shifts, A/Cimprovements, etc.

2


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EE credit line with Mandiri, Indonesia

100 million dollars credit line

Criteria : EE projects (heat recovery, replacement ofchillers, etc.), co-generation projects, fuel switchs,small scale renewable energy projects,

harnessing/use of GHG (eg : capture of gas fromwaste disposal)

Projects financed include the addition of a steamcycle to a simple cycle gas power plant

2


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Municipalities can play a key role in CO2 reduction

As direct energy consumers with potential energy conservation

(street lighting, public buildings, municipal transport fleets, schools,

hospitals )

As owners of urban infrastructures (local electricity grid, waste

treatment units, public transport )

As urban planners (land use, transport, urban waste and sewage

schemes)

1 Climate change and citiesGlobal strategy


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URBAN PLANNING

Master plan taking sustainable development into account:

Durbans urban fringes

URBAN MORPHOLOGY

Urban Shape Urban network and compactness: sizes of streets,

heights of buildings, etc.

URBAN DEVELOPMENT

Environmental approach to urban development

Eco-friendly neighbourhoods

BUILDINGS: energy efficiency

EQUIPMENTS: heating, air conditionning

USERS HABITS

URBAN SUSTAINABLE DEVELOPMENT: SIX KEY ENTRIES

1 Sustainable urban planningGlobal strategy


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3 Case studies: AFD directfinancing to LAs

Examples of projects financed by AFD

Colombia - Medellin - social housing and green transport programme - Direct financing toMedellin Municipality 250MUSD

Brazil Curitiba support to local environment programme for urban transport and

environment (urban biodiversity) Direct financing to Curitiba with Central Gov. guarantee -36M

Morroco Al Omrane financing and capacity building to implement an environmentalapproach in the national urban and social housing programme Direct financing to Al Omrane- 50M

Tunisia 5 municipal projects upgrading municipal infrastructures (waste collection,sewage, etc.) Financing to Central Government transferred to public LA financing body -147M


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3 Case studies: AFD directfinancing to LAs

Examples of technical cooperation and study supported by AFD

Turkey Gaziantep: support to GHG emission inventory and to the city action plan(+ financing of the dedicated investment programme)

Study to be launched: learning from experience of French and European citiesclimate action plan to better support emerging cities, 8 case studies (4 Europeancities, 4 emerging cities), will imply exchange of experiences between the citiesstudied (seminar to present conclusions)

AFD strategy to support LAs through capacity building and financing investmentswill be explained through the presentation of 2 projects as case studies Vietnam

and South Africa


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3 Cities in Viet Nam

Ho Chi Minh City

First economic city: GDP 3,094 USD/inhab., increase: + 3.5 %/yr,produce 50% of VN GDP

7.1 M inhabitants: population doubled from 1989 to 2005 Congestion, insufficient public transport and equipment despitesignificant efforts

Danang / Can Tho

2 secondary cities (+/- 1 M inhbts), economically dynamic highly vulnerable to climate change the will to build up a dedicated strategy over the next 20-30 yrs

Case studies: AFD financingTo LAs through the state


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Issues:

support for design and implementation of public policies, particularly in the environmental sector

Can be implemented through partnerships with other institutions (vulnerability assessement)

3Case studies: AFD financingTo Las through the state

3 cities programs

Background:Supporting HCMC, Danang and Can Tho sustainable development

programs and master plans taking into account adaptation to climate

change, a major constraint

-> emerging thoughts around climate change at the national level (CCAP)

HCMC: sustainable social housing, waste managementDanang: Climate change action plan with ADBCan Tho: urban planning, sustainable urban projects

isabelle vincent - investing in policy transformation

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