Financiamiento para la
transicion a una
economia verde
Ensenanzas de Rio + 20 para Mexico
Noviembre 16 2012
Walter Vergara
Chief
Climate Change and Sustainability Division
Inter-American Development Bank
The costs of climate destabilization in the region
Moving ahead, emblematic investments and
future needs
The challenge to move to a low carbon economy
IDB’s plan of action
Outline
• Major physical impacts
(destabilization
of
hydrology;
glacier retreat; sea level rise;
increase in extreme weather
events; reduction of agricultural
yields; collapse of ecosystems;
increased exposure to disease)
• Large
economic
consequences (IDB estimate:
$80-$105 billion/year by 2050)
• But, while not addressing
all impacts, adaptation is
cost effective
•
($1 in adaptation prevents
up
to
$4
in
economic
consequences)
• What needs to be done?
– Protect water supply and quality
– Make coastal zone management climate resilient
– Adapt agriculture
– Deploy ecosystem based adaptation
•
The region has a modest
contribution to the current
GHG global budget (11% of
total, about 5 Gt/year)
•
However, to meet global
stabilization goals will have to
go to 1 Gt/year by 2050
•
Carbon signal very focused
(80% in land use change,
power and transport)
•
94% in eight nations
The challenge to move to a low carbon economy
Figure 11. " Aggressive Pathway I +", 2010-50
Source: Version 2.0.rc1 of the GEA Scenarios Database of the International Institute for Applied Systems Analysis (IIASA), and own elaboration ‐2000 ‐1000 0 1000 2000 3000 4000 5000 6000 7000 8000 2010 2020 2030 2040 2050 Mt C O 2 e
Land‐use Other energy conversion Industrial feedstocks Industry Resid/commercial N2O (agric) CH4 (Agric+waste) Transportation Electricity BAU Aggressive Pathway BAU 0 1000 2000 3000 4000 5000 6000 7000 8000 2010 2020 2030 2040 2050 MtCO2ee
Other energy conversion Industrial feedstocks
Industry Resid/commercial
N2O (Agric) CH4 (Ag+waste)
Transportation Electricity
Land-use
2 tCO2e per capita 2050 9.3 tCO2e per capita 2050
% of total
% of total
• What needs to be done?
– Stop net deforestation by 2020.
– No net emissions from land use change by 2030,
net accumulation of carbon sinks to 2050, and a
50% cut in agricultural emissions
– Abate final energy demand by 40%
– Power sector with 90% zero-carbon capacity
– Widespread electrification of the transport sector
– Tag: US$110 billion per year
Zero out deforestation and decarbonize agriculture
80% of the problem of emissions in the region
Decarbonize power sector
• Priority one
– Develop response measures to maintain water
supply in key basins
– Make coastal zone management climate resilient
– Adapt agriculture to changes in temperatures and
rainfall patterns
– Deploy ecosystem based adaptation
• Support efforts to avoid deforestation and
promote low carbon practices in agriculture
• Support efforts to decarbonize power and
transport sectors
– Large scale deployment of renewable energy
– Market entry of promising new technologies
– Reduce barriers for private sector investment
– Low carbon high capacity urban transport systems
Adaptation Plan for Grijalva Basin in Mexico
12
Value proposition/transformative opportunity 40% of all runoffs in Mexico and 30% of all hidro power generation.
The hydrology in the basin is destabilizing: 4 100 year floods in the last 20 years.
Impacts on settlements and economic activities are not yest controlled
The costs to the States of Tabasco and the border area with Guatemala have exceeded 4% of GDP
Objective
Identify adaptation responses to the impacts of climate change in power generation, water supply, infrastructure, and land use.
Use results to structure an adaptation operation
Financials
Project size 400 Million
SECCI investment $1.0M
Climate Funding $100M
IDB Finance $100M
Status
Adaptation in Fishing sector in Peru
13
Oportunidad de transformación
• Peru 10% world’s of fish catch
• Fisheries account for 3% of GDP
• Fisheries are being afected by changes in
sea surface temperature and dynamics of the
Von Humboldt current.
Financing
Climate funding (AF) US$7 million
SECCI US$0.5 million
Status
Project concept approved by Adaptation Fund
Objective
Design and implement pilot adaptation measures for eventual scale up
Bioclimate Fund in Peru
14
Value proposition/transformative opportunity 20% of the carbon emissions in Latin America and 56% of the emissions in Peru are linked to land use change (largely deforestation).
The piedmont areas of the eastern ridge of the Andes, in particular in Peru provides the habitat for the highest
concentration of biodiversity and high carbon storage in the Planet.
Uncontrolled deforestation and development process, in sensitive areas may threaten its large biological and climate capital.
Objective
Stop and revert the deforestation and land degradation process in the most vulnerable areas of influence of the IOH, Enhancement of carbon stocks and other environmental services in the region of IOH
Financials
Project size 200 Million
SECCI investment $2.0M Climate Funding $100M IDB Finance $20M Others $80M Status In conceptual stage
Large Scale Deployment
: Atacama CSP Plant (100MW)– Chile
15
Value proposition/transformative opportunity
Promote use of solar energy in the Atacama desert, a region with the highest solar radiation levels in the world (3150 kWh/m2-y vs ave 1200 kWj/m2-y in Germany)
Scale –up incentives for barrier removal for use of solar energy technologies
Entry of solar will offset need for fossil additions to power sector, delay investments in hydro in fragile south.
Entry of Low Carbon Technology would transform power sector in Chile have replication potential in Peru
Need for concessional finance
• Concessional financing will be catalytic to improve the mix of IDB long term debt and equity to dramatically reduce the cost of energy produced by the project and thereby attract mining companies
• Need to reduce gap in specific investment costs vis a vis coal option
Financials
Project size 100MW
SECCI investment $0.8M
Secured climate funding (CTF+ CCF) $100M IDB Finance $200M KfW Others $130M $170M Projected GHG emission reductions 10 million tCO2e first 10 years Status
Chile´s Investment Plan for Clean Technology Fund (CTF) endorsed on May 3, 2012; approval for funds September 2012
Geothermal Risk Management Instruments
- Regional
16
Value proposition/transformative opportunity
Geothermal plants are the most reliable, and among the most economical, renewable energy sources
Latin American geothermal potential exceeds 10 GW -some countries could be 100% geothermal
Technical assistance needed for pre-investment geo-scientific surface surveys, temperature gradient surveys, field modeling, and support for exploratory drilling
Finance needed for drilling risk guarantees / insurances during early stage development
Need for concessional finance
g
Developing geothermal plants is inherently risky-high investment costs in mapping, geological studies, test and confirmation drilling can make up 30-50+% of total project costs - before production is assured
Facility could reduce risks by introducing contingent loans repayable against successful development of geothermal field.
Financials
Potential project size 200MW
SECCI support $2M Climate Finance $100M Projected GHG emission reductions +/-10 million tCO2e first 10 years Status Under preparation
Zero Carbon Transport – High Capacity Electric Buses in Colombia
17
Value proposition/transformative opportunity
Transport sector is growing the fastest in the region in terms of GHG emissions. Latin-America is a leader in the adoption of (BRT) systems
Most countries have a low-carbon energy matrix that could support the de-carbonization of transport systems
Low quality fuel results in poor air quality and risks to public health
Set incentives to operators to adopt vehicles with better efficiency standards and to scrap obsolete fleets
Introduction of battery driven articulated buses would transform transport sector and become a big step toward low carbon economies
Financials
Potential project size 10-20 buses
SECCI investment (*) US$5M
Risk Capital US$20M
Other lenders and equity US$8M
Projected GHG emission reductions
Need for concessional sector finance
significant incremental costs
Technology needs to be tested under operational conditions
Risks to the early adoption of the technology need to be managed
Deployment of the technology would require financing significant incremental costs Status
p p
GEF Project registered, Investment Program under preparation
Chile: Pilot for Marine Energy Deployment
18
Value proposition/transformative opportunity
Chile has the highest wave energy potential in the world and great tidal potential (164GW raw wave potential compared to 16GW installed overall power capacity).
Pilot projects with commercial contracts signed in EU, US. More than 10 technologies entering commercial phase.
Potential UK-Chile technology development partnership.
Supply of firm capacity to Chile’s energy needs.
Financials
Potential project size 1MW
SECCI Support US$2 million
Other US$4 million
Objective