SCALING UP CLEAN ENERGY INVESTMENT

THE PROBLEM

Significant additional investment is required to support clean energy technologies in developing countries and thereby constrain climate change and provide a basis for sustainable development. If current financing levels are to be scaled-up, the private sector will have to be a key partner as it is responsible for the allocation of the majority of global financial resources. But there is currently a gap between the investment requirement and the availability of appropriate funds.
Not all private sector financiers are aware of investment opportunities related to clean technologies in developing countries. This is where public sector programmes can play a role to reduce private investors perceived risks such as uncertainties over local markets, governance, infrastructure and available resources. Public sector involvement is often crucial to attracting large-scale private sector finance. Despite acknowledgement of the likely benefits, the gap between potential public and private sector financiers of clean technologies remains very wide.

THE SOLUTION

Governments can show the commercial viability of clean energy and reduce perceived risks by covering some of the start-up costs and/or setting up demonstration projects to show investors that projects are truly “bankable.”
UNEP’s Energy Finance programme activities take many different approaches – often simultaneously – according to the specific needs of the country and the project. For example, sometimes lowering costs for consumers can stimulate a new market and attract financing, and a facility can be set up to help local banks provide low-cost loans to clean tech users.
At other times, countries would like to attract finance to increase the viability of clean technology applications by participating in the global carbon market, but need technical support and guidance on the appropriate carbon finance mechanisms.
Other UNEP interventions offer training for financial institutions in developing countries geared at improving the prospects for clean technology projects, or financial support to suppliers and developers to help get lowcarbon projects up and running.

IMPACTS

Despite the difficult global economic conditions during 2012, many UNEP initiatives have made great positive impacts by scaling-up the level of investment in clean technologies.
For example:

• UNEP’s Climate Finance Innovation Facility provided technical assistance of US$150,000 to the Bank of Taizhou in China to help develop an energy efficiency loan product. The actual investment made by the bank was US$3,269,500.
• UNEP’s Seed Capital Assistance Facility supported an 80MW wind farm in South Africa and a 10MW hydropower project in Tanzania. UNEP funding of US$315,000 for these projects has mobilised private investment of US$1.5m and potential follow-on investment of around US$14m.

SUPPORT

UNEP’s Energy Finance Unit works closely with Frankfurt School – UNEP Collaborating Centre for Climate and Sustainable Energy Finance, to offer extensive climate finance skills and services. The initiative is supported by a range of donors including the governments of France, Germany, Italy, and Sweden.

WEBSITE

• www.unep.org/energy/activities/financialinnovation.aspx

SUCCESS STORY
Seed Capital Assistance Facility (SCAF)
In many developing countries entrepreneurs can transform markets, but entrepreneurs face a number of challenges doing so in the clean energy sector. A lack of early stage financing, high transaction costs and insufficient risk-adjusted returns are just some of them.
SCAF was designed to help overcome these obstacles, offering cost-sharing support to clean energy fund managers to co-invest seed financing in early stage project developments. An example is the South African Evolution One Fund, Africa’s first specialised “clean tech” investment fund with approximately US$90 million in committed capital. US$1 million of funding from SCAF is being matched by US$5 million from Evolution One Fund to develop and invest seed capital in a growing portfolio of renewable energy projects in Southern Africa.

Source: Re-blogged from http://www.unep.org

Help Save The Earth, There Is No Life Elsewhere

CLEAR WIN FOR CLEAN TECHNOLOGY IN THE MEDITERRANEAN

THE PROBLEM

Although small scale renewable energy technologies, such as photovoltaic systems and solar water heaters (SWH), are considered reliable and competitive, they are still not fully established in the Southern and Eastern Mediterranean region due to the high upfront cost for the end-users, and the lack of financing options tailored for this type of investment.

THE SOLUTION

The Mediterranean Investment Facility (MIF) helps to establish innovative financing mechanisms to allow end-users to invest in renewable energies.
The integrated approach is based on:

1. Financing mechanism design, implementation and monitoring
2. Training and capacity building for government officials, financing institutions as well as for technology suppliers and installers
3. Quality control and checking system to select equipment complying with international standards and to check the operation of the systems

THE IMPACTS

• More than 145,100 households now get their hot water exclusively from the sun in Tunisia, thanks to the country’s solar water heater programme for the residential sector – PROSOL – that has created a sustainable market for solar water heaters, with 50 technology suppliers and more than 3,000 direct jobs.
• Since the launch of the photovoltaic project for the residential sector in Tunisia – PROSOL ELEC – in 2011, more than 740 families have installed photovoltaic systems.
• In the tertiary sector, particularly in the hotel sector, 24 collective solar water heaters were installed in Tunisia and Egypt corresponding to more than two million kilowatt-hours of solar energy produced every year.
• Detailed studies are ongoing in Tunisia to set a sound regulatory framework to integrate solar thermal energy in the industrial sector.
• An innovative financing support mechanism in Morocco enables two million households to phase out incandescent lighting and repay the cost of new energy-efficient lamps through their electricity bill over 21 months.
• In Montenegro, free loans to end-users are provided through local commercial banks over a period of seven years to install solar water heaters.

SUPPORT

Italian Ministry of Environment, Land and Sea

WEBSITE

• www.unep.org/energy/Activities/MediterraneanInvestmentFacilityMIF.aspx

SUCCESS STORY

Within the MIF, PROSOL provides financial support to local households through a combination of value added tax exemptions, customs duty reductions and reduced-rate bank loans. The repayment of the loan is included in the regular electricity bill, which lowers the risk for local banks that are then willing to finance SWH projects with reduced interest rates.
An interest rate subsidy was available during the first phase of PROSOL (2005-2006) that reduced the interest rate of the loan to zero per cent for the final end user. The Tunisian government provides a subsidy of 20 per cent of the system cost. This was initially a temporary measure funded by UNEP to “prime” the market, but was later made permanent by the Tunisian government. Thanks to PROSOL more than 80.000m² of solar collectors are installed every year.

Source: Re-blogged from http://www.unep.org

Help Save The Earth, There Is No Life Elsewhere

Cleaner cars with the Global Fuel Economy Initiative

THE PROBLEM

The global vehicle fleet is set to grow from less than one billion to 2.5 billion or more by 2050. Ninety per cent of this growth is taking place in non-OECD countries. At the same time the average vehicle efficiency of non-OECD countries is getting worse and carbon dioxide (CO2) emissions per vehicle are increasing. Even though vehicles in OECD countries are, in contrast getting more efficient, CO2 emissions of the global fleet are increasing and are set to increase even more sharply in the years to come.

Cleaner cars with the Global Fuel Economy Initiative

Improving fuel economy has many co-benefits for human health, the natural environment and the economy. These include the reduction of black carbon emissions and the subsequent improvement of urban air quality, a reduction in a country’s dependence on oil and cheaper transport for consumers.
Many countries have put policies in place that promote cleaner and more efficient vehicles and have adopted ambitious long-term targets. Cost effective cleaner technologies such as smaller engines (with more power), lighter cars and low resistance tyres have improved vehicle efficiency. Hybrid, plug-in hybrid and electric vehicles are now entering many markets.
The policies that have been successful are a mix of fiscal measures (taxes for polluting cars and tax breaks for cleaner cars), communication (such as labeling showing the efficiency of the car) and standards (for example restricting the importation of used vehicles). Regrettably very few developing countries and economies in transition have put in place these policies and thus there is an urgent need to transfer knowledge and technologies in this area.

THE SOLUTION

UNEP, the FIA Foundation, the International Transport Forum, the International Energy Agency and the International Council for Clean Transportation launched the Global Fuel Economy Initiative (GFEI) in 2008. The GFEI promotes and supports automotive fuel economy aiming at a doubling of automotive fuel economy by 2050 (roughly going from 8l/100 km to 4l/100 km). The GFEI has started promoting the issue of fuel efficiency globally and is supporting more than 20 countries around the world in establishing policies.

THE IMPACTS

Over the coming decades over US$400 trillion is expected to be invested in fuels and vehicles. By putting in place fuel economy policies in all countries, more than a gigatonne of CO2 emissions per year can be avoided by 2030 and over two gigatonnes by 2050. By saving six billion barrels of oil per year in 2050, with an oil price of US$125/ barrel this would come close to US$800 billion.
Over the past years the GFEI has started 13 country projects. For example in Kenya UNEP has established the fuel efficiency baseline of the existing fleet, allowing the government to develop fuel economy strategies. In Ethiopia UNEP is working with the Government to develop fuel economy policies. In Chile, the Congress just adopted new labeling requirements showing the fuel efficiency of vehicles. The GFEI is in talks with another 18 countries that are keen to also develop national automotive fuel economy policies.

SUPPORT

Five GFEI partners; EU and Global Environment Facility Trust Funds; Experts and representatives from oil and vehicles industry; NGOs.

WEBSITE

• www.globalfueleconomy.org

SUCCESS STORY

In Chile, transport is one of the most rapidly growing end-use energy sectors, and emits about one-third of Chile’s energy related GHG emissions. In the context of the GFEI initiative, the Congress just adopted new labeling requirements showing the fuel efficiency of vehicles. With UNEP’s support, Chile is also preparing a system of incentives for low emission and fuel efficient vehicles, and disincentives for inefficient vehicles to promote a vehicle fleet transformation towards more efficient vehicles that present less local and global pollutant emissions. It is estimated that the incentive and disincentive system will imply a 5 per cent reduction of CO2 emissions from the total national vehicle fleet in 2014, obtaining a total CO2 reduction of 2.15 million tons in 5 years.

Source : Re-blogged from http://www.unep.org

Help Save The Earth, There Is No Life Elsewhere