Investment Climate for Climate Investments: Mobilizing Private Resources through Public Commitments Jan Kappen, Regional Coordinator - Climate Change United Nations Environment Programme Regional Office for Latin America And the Caribbean Latin American Carbon Forum 2011 San Jose de Costa Rica, Sept 29, 2011

* Average Actual Investment * (Annually, averaged ) $183.4 billion $84.1 Billion $31.8 billion ** Based on IEA WEO annualised investment needed in power sector renewables to achieve 450 scenario * Based on BNEF data Forecast Investment Requirement** (To Achieve 450 Climate Stabilisation Scenario ) Investment scale-up has begun, but mostly just in China, India and Brazil. Investment scale-up has begun, but mostly just in China, India and Brazil. Developing Country Investment in Power Sector Renewables – View from the Top

Corporate & Compliance Investors Sponsor / Developer Private Equity & Infrastructure Funds Capital Markets Mezzanine Capital Carbon Finance Early-stageMid-stage Development Construction Commissioning Operation Late-stage Financing Financial Close Debt Finance (Project Finance) Source: UNEP, Aequero (2010) Private Finance for Clean Energy Ventures - View from the Ground Early-stage funding gap = Lots of funds but lack of deal-flow… Early-stage funding gap = Lots of funds but lack of deal-flow…

Theory suggests we should be crowding-in investors from the very early stage of the project development cycle… Theory suggests we should be crowding-in investors from the very early stage of the project development cycle… Leveraging Private Climate Finance in Theory

Developing Country Investment in Power Sector Renewables – Public vs. Private Share of Financing* * annually, averaged , based on BNEF data …while actual data suggests we might be crowding-out late-stage investors instead. …while actual data suggests we might be crowding-out late-stage investors instead. Leveraging Private Climate Finance in Practice

Part 1: Private Funding for Climate Investment - Experience throughout the LAC Region. Part 2: Multilateral Mechanisms for Climate Finance – The CIF's approach in leveraging private investment. Part 3: Climate Investments in the LAC Region – Entrepreneurs & Private Equity Perspective. Finale: Scaling up Private Climate Finance – Wish list of innovative approaches and mechanisms. Game Plan for Panel Discussion:

Key questions for discussion: Question 1: How to bridge the early-stage funding gap and create greater deal flow? Question 2: How to complement Carbon Finance to cover incremental costs? Question 3: How to make sure capacity building efforts are more demand/business driven? Bonus question: How to better measure and track leverage of private capital?

Backup Slides

Source: Project Catalyst Sept. 2009, Finance Briefing Paper Everyone is obsessed with this part… …when we should also be looking at this part! Need to look beyond abatement cost … Need to look beyond abatement cost … Funding Needs for CC Mitigation – Estimates Estimated funding needs [bn EUR ]

Additional Capital Costs incremental cost of low carbon infrastructure Business as Usual Capital Costs cost of conventional infrastructure Readiness/Transaction Costs Barriers Unattractive financial returns Lacking Access to finance Lack of experience Learning-by-doing Solutions Carbon markets and NAMA- linked subsidies Mobilization of Local/Domestic finance, FDI and ODA Very significant additional costs that need to be addressed individually. Very significant additional costs that need to be addressed individually. Funding Needs for CC Mitigation – Looking beyond Abatement Cost