Landscapes of Domestic Climate Investment & Finance Experience - - PowerPoint PPT Presentation

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I4CE – Institute for Climate Economics

Ian Cochran – Senior Advisor, I4CE 26 June 2019 Study Authors

Hadrien Hainaut Lola Gouiffes Ian Cochran Maxime Ledez

Projects supported by:

Landscapes of Domestic Climate Investment & Finance

Experience from five years of tracking in France

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I4CE

A think tank providing public and private decision-makers with expertise on economic and financial issues related to the energy and ecological transition

Agriculture, Forest and Climate Industry, Energy and Climate Cities, Infrastructure and Climate Finance, Investment and Climate

I4CE – Institute for Climate Economics

Introduction

I4CE is an initiative of Caisse des Dépôts and Agence Française de Développement and is also supported by Morocco’s Caisse de Dépôts et Gestion.

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I4CE

What is a landscape of domestic climate investment and finance?

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I4CE

Tracking investment and financial flows in domestic low-emission tangible assets

What is a landscape?

ENERGY EFFICIENCY

RENEWABLE ENERGY SUSTAINABLE INFRA- STRUCTURE

NUCLEAR

GHG EMISSIONS OUTSIDE FUEL COMBUSTION

4-step methodology

• 1. Measure CAPEX in low-emission projects
• 2. Identify the project managers involved
• 3. Understand which financial tools they used
• 4. Map public and private channels supporting these

tools from capital source 5 key low-carbon domains

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I4CE

Digging Deeper than Totals

Results

Climate investment in 2017

41.2

billion euros

Gap with investment needs

+10 - 30

Billion euros/year

Fossil-fuel climate- adverse investments

73

billion euros in 2017

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I4CE

Households and private companies are the principal project developers, followed by public entities

2018 Study Results

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I4CE

• Reporting to decision-makers on the status of

climate-related investment and financial flows in a coherent manner;

• Measure the gap between current financial flows and

investment needs to achieve climate objectives

• Identify policy factors behind investment successes

and setbacks, recommend solutions to reduce the investment gap

• Provide national strategies with a tool to plan how to

raise and reorient public and private flows towards climate investment

From reporting to decision-making why keep track of domestic climate finance?

Example of France

From I4CE and EEA policy brief Landscapes of domestic climate finance in Europe : supporting and improving climate and energy policies for a low-carbon, resilient economy (2016)

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I4CE

• Energy Transition Act: Article 174
• Contributions to Finance Bills

(PLF): DPT Climate and Energy

transition draft budget

• Reports for French Strategy on

green finance: defining the

"business plan" for the energy transition

• Economic, Social and

Environmental Council: opinion on

the energy transition of February 2018

• CGDD and Eurostat: national

climate change mitigation expenditure account

• French National Energy and

Climate Plan (SNBC)

The results of the Landscape correspond to the “new needs” of French decision makers

Introduction

France’s energy transition act mandates tracking and mapping climate finance flows The government is to present an annual report to the Parliament which “quantifies and analyses public finance, assesses private finance, and measures their adequacy with the financial requirements to achieve the

• bjective and transition pace
• f the law”.
• Art. 174 of the Energy transition for

green growth act (LTECV, 2015)

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I4CE

France climate neutrality by 2050 goal means zero emissions from fossil fuel

• 200
• 100

100 200 300 400 500 600 700 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 MtCO2eq

Evolution of GHG emissions in France from 1990 to 2017 and national climate

• bjectives (based on CITEPA inventory)

Agriculture Energie Industrie Résidentiel-tertiaire Transport Déchets UTCF Objectifs Kyoto objective for France : stabilise 2012 emissions at their 1990 levels EU 3X20 package for France : reduce 2020 emissions by 14% against 1990 baseline « Carbon neutrality » : reach a balance between emissions and sinks « Facteur 4 » : divide emissions by 4 between 1990 and 2050 Energy Transition Act and new EU objective: bring 2030 emissions 40% below their 1990 levels  Agriculture  Energy generation  Industry  Buildings  Transport  Waste  Land-use and forestry

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I4CE

What data and insights can it provide for sectoral policy making and planning?

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I4CE

41 billion euros invested in 2017, increasing by 17% since 2014

Landscape of climate finance

13.8 14.4 19.8 8.7 6.3 6.6 7.7 9.9 10.0 1.5 2.6 2.8 2.7 2.0 2.0 5 10 15 20 2011 2012 2013 2014 2015 2016 2017 2018p

Energy efficiency Sustainable infrastructure Renewable energy

Nuclear Forestry and non-energy processes 34.4 35.3 41.2 30 35 40

Total climate investment

Billioneuros

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I4CE

Public authorities are increasingly intervening to fund low-carbon investments

Landscape of climate finance

5 10 15 20 25 30 35 40 45 2011 2012 2013 2014 2015 2016 2017 Billion euros

• B. Public authorities’ intervention
• 1. Investment of public project

developers Infrastructure management co. Social housing companies Central and local government

• 2. Public cofinance for households

and private companies Subsidies and grants Concessional debt

• 3. Redirection of private resources

Other instruments, such as white certificates

• A. Total climate investments

A B

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I4CE

Funding instruments vary depending on project developer and project size (2016 data)

2017 French Landscape Results

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I4CE

Assessing investment levels across different types of renovation

Renovation of Residential Buildings

Climate investments in 2017

14,3 

Billion euros Gap compared to 2016-2020 investment needs

+ 5 to 8

Billion euros Publically driven finance

4,2 

Billion euros

2 4 6 8 10 12 14 16 2011 2012 2013 2014 2015 2016 2017 2018p Billion euros

Investments in housing renovation, by segment and type of action (private individual dwellings only)

logements sociaux logements collectifs solaire thermique chauffe-eau thermodynamique pompes à chaleur bois-énergie chaudières à condensation isolation des ouvertures isolation des toitures isolation des murs isolation des façades

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I4CE

The amounts contributed by the main public instruments have been stable since 2015

Renovation of Residential Buildings

0.1 0.1 0.1 0.4 0.4 0.4 0.5 1.1 0.7 0.6 0.9 1.7 1.7 1.7 0.7 0.6 0.5 0.5 0.3 0.4 0.4 0.3 0.3 0.3 0.2 0.3 0.2 0.2 0.3 0.4 0.4 0.3 0.4 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2011 2012 2013 2014 2015 2016 2017 Billion of euros

Public support for financing the renovation of private dwellings

TVA taux réduit Crédit d'impôt (CIDD/CITE) Eco-prêt à taux zéro Certificats d'économie d'énergie Aides de l'ANAH Fonds d'Aide à la Rénovation Thermique

Climate investments in 2017

14,3 

Billion euros Gap compared to 2016-2020 investment needs

+ 5 to 8

Billion euros Publically driven finance

4,2 

Billion euros

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I4CE

A gap of 10 to 30 billion euros per year compared to estimated needs to achieve national climate goals

Landscape of climate finance

2011 2012 2013 2014 2015 2016 2017 2018p 2019-2023 (per year) 2024-2030 (per year)

Initial trajectory Trajectory catching up bewteen 2016 and 2023 Initial trajectory

Climate investment documented in the Landscape of climate finance in France Estimated range of investment needs based

• n the SNBC and the PPE

Gap

Billion euros 10 20 30 40 50 60 70 80

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I4CE

Investment gaps vary across sectors

Landscape of climate finance

Climate investment documented in the Landscape of climate finance in France (2016 - 2018 average) Estimated range of investment needs based on the SNBC and the PPE (average 2016-2020) Gap

Billion euros

New homes Housing retrofitting Tertiary buildings retrofitting Low-carbon vehicles Transport infrastructure Renewable electricity generation District heating

2 4 6 8 10 12 14 16 18 20 22

New tertiary buildings

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I4CE

Investment gaps vary across sectors

Landscape of climate finance Renewable electricity Low carbon vehicles Transport infrastructure Housing retrofitting District heating

Climate investment in 2017

4 

billion €

1.4 

billion €

9.6 

billion €

14.3

billion €

0.3 

billion € Gap with 2016- 2020 investment needs

+1 - 2

billion €

+5 - 6

billion €

+0.3

billion €

+5 - 8

billion €

+2 - 4

billion € Publicly-driven finance in 2017

1.8 

billion €

0.4 

billion €

9.5 

billion €

4.2 

billion €

0.3 

billion €

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I4CE

An illustrative funding plan for the private residential sector

Future development in France

1.3 1.5 2.1 3.0 2.8 5.9 2.8 1.8 3.9 12.1 3.9 8.2 3.9 5 10 15 20 25

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 scen 1 scen 2

Billion euros Current climate investment and climate investment needs in private dwellings in France Subsidies Concessional loans Commercial loans Own funds Scenario 1

• Constant leverage
• No significant change in

project profitability or cost

• Investment objectives

achieved through increase public funding with matching private cofunding Scenario 2

• Increased leverage
• Constant public funds
• Increase in project

profitability and reduced costs and risks

• Involvement of third party

private finance (e.g. loans)

? ? ?

Range of investment needs

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I4CE

France 2018 Results Executive Summary Full report Five years of application in France Article on Methodology in International Economics Annex comparing low-carbon asset taxonomies [LINK] [LINK] [LINK] [LINK]

Further documents and readings

Conclusion

21 I4CE – Institute for Climate Economics 24 Avenue Marceau 75008 PARIS www.i4ce.org | contact@i4ce.org

Thank you for your attention! Questions and comments welcome!

ian.cochran@i4ce.org hadrien.hainaut@i4ce.org