MAIN Asia Dialogue 1 - Leading in Climate & Air Quality Policyccap.org/assets/5th-MAIN-Asia-Dialogue-Summary-2016.pdf · international climate finance and believe they are on track

5th MAIN Asia Dialogue 1

1

Department of Meteorology,

Hydrology & Climate Change

Meeting Summary: 5TH MAIN Asia Dialogue Da Nang, Vietnam November 30-December 2, 2016

Overview and Key Takeaways

The fifth Asia regional dialogue of the Mitigation Action Implementation Network (MAIN-Asia) took place

from November 30 to December 2, 2016, in Da Nang, Vietnam. The event was organized by the Center for

Clean Air Policy (CCAP) and co-hosted by Vietnam’s Ministry of Natural Resources and Environment’s

Department of Meteorology, Hydrology and Climate Change (MONRE/DMHCC), with generous support

from the Danish Ministry of Energy, Utilities and Climate.

The Dialogue brought together senior government officials, climate finance experts, and private sector

representatives to accelerate the conversion of Nationally Determined Contributions (NDCs) into low-

carbon development programs, projects, and investment strategies, including Nationally Appropriate

Mitigation Actions (NAMAs). The sessions and ensuing discussions highlighted key considerations to

mobilize financing to develop and implement these actions, and delved into policies and programs

specifically in the energy sector to promote a transition to clean energy.

Representatives from Indonesia, Malaysia, the Philippines, Thailand, and Vietnam shared experiences and

discussed country strategies to implement their NDCs, programs, and actions to achieve mitigation

targets and mechanisms to promote private sector investments in low carbon technology. Donor

countries, development banks and climate finance institutions, including the Green Climate Fund (GCF),

shared how their institutions are supporting the financing of ambitious mitigation actions. The dialogue

also engaged the private sector and discussed how NDCs create new opportunities for private sector

investment and highlighted ways to engage the private sector in NDC implementation.




Key points from the dialogue include the following:

- Paris delivered the first climate agreement with shared responsibility across developed and

developing countries and a long-term planning framework with periodic milestones to increase

ambition as technologies evolve, costs diminish, and capacity is built.

- Countries are moving forward on NDC implementation, integrating climate into national

development plans and strategies and starting the tracking of progress through national

monitoring and evaluation systems. Some have already modeled costs for mitigation actions

across sectors and are looking for assistance with implementation.

- Engaging ministries of finance and planning is critical to ensure climate policy is integrated into

national planning and climate investments are mainstreamed throughout the economy.

- There are a growing number of resources available to support NDC implementation. The NDC

Partnership works to enhance cooperation for NDC implementation to maximize synergies among

donors and organizations that provide implementation funding and targeted technical assistance.

- Money is not the scarce resource. It is the lack of bankable projects and limited local capacity

that restrains investments in low-carbon development. The GCF, NAMA Facility and others are

working to fill this gap by increasing financing and technical support for project preparation,

pipeline development, financial mechanism design, and project implementation.

- NAMAs are a tool that can create enabling conditions for low-carbon investments and attract

private sector investment by improving policy and institutional frameworks, addressing financial

risks and returns, and identifying bankable projects that demonstrate project feasibility.

- Aligning domestic policies to encourage private sector investment is critical. Building confidence

and encouraging investments requires consistent, long-term signals delivered by coherent policy

frameworks and proactive institutions that support policy, increase transparency, and reduce

implementation time.

- Tailored financial mechanisms, such as guarantee funds, complemented by targeted technical

assistance, can overcome financial barriers and encourage local financial institutions to enter

new markets, including clean energy and other low-carbon infrastructure markets. Stronger

support from government to enhance the policy and legal frameworks will further enable banks

to unlock investments in clean technologies.

- Engaging domestic financial institutions is critical to mainstreaming low-carbon development.

The Philippines is an example of a country that has successfully leveraged financial mechanisms

to mobilize domestic private sector investments in climate-friendly projects.

- Continued downward trending prices for clean technology are creating a huge opportunity to

green the energy sector. Beyond reducing GHGs, investing in renewable energy (RE), distributed

energy resources (DER) and smart grid technologies provides multiple co-benefits. These include

increased energy independence, improved resilience, increased operational efficiency, reduced

electricity bills, job creation in new markets, and meeting growing energy demand without having

to invest in expensive new generating resources. A growing variety of tools are being used to

attract investment in RE, including feed-in-tariffs, net metering policies, and reverse auctions.




Meeting Summary

Day 1: Implementing the Paris Agreement- From Nationally Determined Contributions to

Action on the Ground

Welcome, Opening Remarks, and Introductions

Nguyen Khac Hieu, Vietnam (Deputy Director General, DMHCC, MONRE, Vietnam) welcomed participants

and highlighted the important role of the fifth MAIN Asia Dialogue in promoting collaboration and

knowledge sharing between countries to achieve the goals set out in their NDCs. Mr. Nguyen Khac Hieu

also called for strengthening international cooperation and capacity to catalyze projects in Asia toward

realizing the Paris agreement and achieving a low carbon future.

Henrik Breum, Denmark (Special Advisor, Danish Energy Agency) highlighted Denmark’s commitment to

support the transition toward a low-carbon development pathway through Denmark’s Climate Change

Centre for Global Development and Cooperation, which works with partner countries to achieve the Paris

targets. Mr. Breum emphasized that creating the right policy framework is central to enabling the

transition to low-carbon development and a green economy, at a reasonable price and in a way that

benefits both consumers and companies. As an example, he highlighted Denmark’s recent completion of

an offshore wind project at a price that only a couple of years ago would have been very attractive for

onshore wind.

Bill Tyndall, CCAP (Chief Executive Officer) set the

stage for the dialogue by sharing its main objectives:

to showcase countries’ implementation strategies for

NDCs, to present opportunities for financing and

technical support, to identify key elements of

transformational and bankable projects and

programs, and to highlight new opportunities in the

clean energy sector that contribute to GHG mitigation

and NDC implementation. The dialogue also provided participating countries the opportunity for peer-to-

peer learning on NDC implementation strategies and plans, and how to leverage their own resources to

attract multilateral and private sector financing.

Speaker presentations can be found on CCAP’s event page.

Session 1: International Climate Policy - Outcomes from Marrakech and Progress in

Implementing the Paris Agreement

Session 1 provided an overview of the recent United Nations Framework Convention on Climate Change

(UNFCCC) Marrakech Conference of the Parties (COP 22) and took a comprehensive look at Paris

implementation issues.

http://ccap.org/event/fifth-main-asia-regional-dialogue/




Trigg Talley, U.S. State Department (Deputy Special Envoy for Climate Change) provided the global

political context by sharing his perspective on the Paris Agreement and the latest developments coming

out of the Marrakech COP. The Paris Agreement was a watershed moment because it provided global,

high-level political support for pursuing low-carbon development and green growth. With 163 Nationally

Determined Contributions (NDCs) submitted representing 190 countries and 98.9% of global emissions,

Paris has become a true expression of shared responsibility across developed and developing countries.

The NDCs will result in significant reductions, but are still short of what we need to reach the 2°C and

aspirational 1.5°C degree warming target. The key to the Paris Agreement is the so called “ambition

cycle”, a cycle of upward revision to NDC commitments every five years, with the first stock take on

progress to take place in 2018. COP-22 in Marrakech celebrated the entry into force of the Paris

Agreement, significantly earlier than anticipated. Parties agreed to complete detailed guidance by COP-

24 in 2018 to put the Paris Agreement into effect. Donor countries presented their progress on growing

international climate finance and believe they are on track to meet and surpass the 100 billion USD per

year by 2020 goal.

Syamsidar Thamrin, Indonesia (Deputy Director of Climate, Ministry of

National Development Planning) presented Indonesia’s progress toward

implementing its NDC and mainstreaming climate change into national

planning. The country has set a target to mitigate emissions by 26% below BAU

by 2019, 29% by 2030 (unconditionally) and 41% by 2030 with international

support. Indonesia has integrated its climate change targets into its Mid-Term

Development Plan (2015-2019). Next steps include developing a Roadmap for

Low Carbon Development for achieving the NDC by 2030, finalizing the climate finance strategy for pre-

and post-2020, increasing public-private partnerships and continuing to advance the national monitoring

and evaluation system called PEP Online to improve accountability and transparency and measure the

progress of implementation of mitigation actions.

Franck Portalupi, Canada (Manager, Technology Partnerships, Environment and Climate Change Canada)

presented on Canada’s November 2015 climate finance pledge of CAD 2.65 billion over five years. The

pledge will help support the implementation of developing countries’ NDCs and National Action Plans.

CAD 35 million will be focused on reducing Short Lived Climate Pollutants (SLCPs), including methane,

hydrofluorocarbons and black carbon. Canada has decided to focus on SLCPs as scientific evidence has

shown that they have a higher global warming potential than CO2 and addressing them will be essential to

achieving the 2°C warming target. Canada funds the Climate and Clean Air Coalition (CCAC) Trust Fund to

support actions to reduce SLCP emissions, and recently announced CAD 14 million to significantly reduce

methane from the waste sector in Chile and from the oil and gas sector in Mexico. Canada is looking to

also support projects in Asia to reduce SLCPs. The clean technologies adopted and projects implemented

with these funds will have significant potential for regional replication, assisting countries to implement

their NDCs and delivering direct environmental and health co-benefits.




Session 2: Converting NDCs into Policies, Measures, and Finance-Ready Investment Strategies

Session 2 looked at the steps involved in converting NDCs into policies, measures and finance-ready

investment strategies, identified different technical assistance resources available to countries, and took

stock of countries’ progress.

Leila Yim Surratt, CCAP (Chief Operating Officer) presented on NDC conversion. To achieve real impact,

NDCs must be converted into policies, measures and financeable investment strategies. Beyond helping

countries move toward implementation, the process of conversion can promote ambition, identify

synergies between mitigation and development goals, optimize the use of domestic and international

resources, and attract greater private sector investment. NDC implementation plans will also contribute

to strong GCF and other funding proposals by demonstrating consistency with national planning and

priorities. Strong proposals can accelerate financing, which is ultimately necessary to make the case for

additional GCF replenishments. Many countries have identified key capacity needs for NDC conversion.

The UNDP released a report in April 2016, outlining countries’ highest priority needs. Those identified as

extremely relevant are mobilizing resources, developing an implementation plan, developing a

monitoring system and building institutional structures, and estimating implementation costs. Finally,

developing a “National Climate Finance” strategy can help clarify the strategic basis for requesting

international support by estimating investment costs to meet NDC goals, outlining the availability of

domestic finance, identifying financing gaps, and providing an integrated picture of available international

finance.

Anna Pia Schreyoegg, GIZ (Project Director) presented on the recently launched NDC Partnership, which

aims to help countries achieve their national climate commitments and ensure financial and technical

assistance is delivered as efficiently as possible. The Partnership is open to developing and developed

countries as well as national and regional institutions. It offers three types of support: (1) access to the

online Knowledge Portal with global knowledge and information to support NDC implementation, (2)

light-touch support to identify country priorities and to match-make support to country needs, and (3)

targeted technical assistance and capacity building for access to large scale investment. In Marrakech, 33

countries and 8 institutions joined the Partnership. Countries are invited to become members.

Nguyen Van Minh, Vietnam (Deputy Head, Division of GHG Emissions Monitoring and Low Carbon

Economy, DMHCC, MONRE) presented on Vietnam’s NDC Implementation Plan, developed by MONRE in

coordination with 8 other ministries. The comprehensive plan was approved by the Prime Minister in

October 2016, and identified reduction options for the energy, agriculture, waste and LULUCF sectors. It

also modeled marginal abatement costs in each sector. Vietnam is now looking for private sector

investments and international funding to support implementation. From 2016-2020, Vietnam will review

and revise the policies related to GHG mitigation, update the national GHG inventories, develop a

national MRV system, and develop and implement prioritized NAMAs. From 2021-2030, Vietnam will

focus on implementation.

http://www.ndcpartnership.org/knowledge-portal




Nguyen Quang Huy, Vietnam (Deputy Head of Climate Change Division, Industry Safety Techniques and

Environment Agency, Ministry of Industry and Trade (MOIT)) presented on Vietnam’s NDC action plan for

the energy and industrial sectors. Within Vietnam’s NDC Implementation Plan, MOIT’s responsibilities

include the development and implementation of policies to encourage the development of renewable

energy (RE), and to operationalize the GHG mitigation activities, MRV system and GHG inventory in the

trade and industry sectors. For the action plan, MOIT assessed mitigation options in terms of mitigation

potential, incremental costs and co-benefits compared to the BAU, and identified 17 priority mitigation

options focused on energy savings and RE deployment in industry, transport and electricity production.

In the ensuing discussion, participants noted the importance of organizations such as the NDC Partnership

and CCAP to provide targeted technical assistance, as well as assistance linking NDC-related projects and

programs to finance. From the donor perspective, tools and initiatives such as the NDC Partnership help

coordinate development program overlaps, identify synergies and maximize the impact of technical

support. A developing country participant commented that while the NDC Partnership will play an

important role in enabling the sharing of experiences and South-South learning, the biggest need is to

increase dialogue between developing countries, development partners and international organizations.

Dialogues such as this provide a much-needed platform to engage.

Session 3: Climate Finance to Support Developing Countries’ Programs, Projects, and

Measures to Achieve their NDCs

Session 3 looked at the effective use of climate finance and its role in supporting developing country

efforts to drive low-carbon development. The session focused on how the GCF and other bilateral and

multilateral sources of climate finance are ramping up operations at a time of unprecedented opportunity

for climate action.

Rémi Genevey, French Development Agency (AFD) (Country Director, AFD in Vietnam) presented on

AFD’s climate finance commitments. AFD has invested EUR 18 billion in projects having demonstrably

positive climate impacts since 2005. In 2015, total investment equaled EUR 8.1 billion, with EUR 2.1

billion focused on projects with positive climate impacts. In Asia, 71% of AFD’s financing focused on

climate-friendly projects. In Vietnam, AFD primarily uses loans and guarantees, and to a more limited

degree, grant funding and technical assistance to support green economic development, including

sustainable energy development and sustainable urban development. Examples of recent projects include

rural electrification in the Mekong Delta, the 520 MW Hoi Quang Hydropower plant, and the

establishment of a roadmap for energy efficiency in the steel sector. AFD looks for opportunities to blend

their financing with other sources of finance, especially grant finance, to increase the effectiveness of

their projects. AFD is also a GCF Accredited Entity for implementing projects, and has one project

authorized by the GCF in Senegal focused on flood protection, with blended finance from AFD and the

GCF.




Henrik Breum, Denmark (Special Advisor, Danish Energy Agency) presented on Danish bilateral energy

and climate cooperation programs which leverage Denmark’s experience in renewable energy, energy

efficiency (EE), system integration and energy system optimization to de-couple economic growth from

energy consumption and GHG emissions. Mr. Breum also presented on the Green Investment Facility

(GIF), a Danish-Vietnamese support scheme to promote the use of high-potential energy efficiency

technologies in small and medium enterprises (SMEs). The GIF combines technical and financial

assistance for EE technology by building the capacity of industry and EE technology suppliers to

implement EE projects, and providing financing support to local banks and industry. The ultimate goal of

the program is to increase the competitiveness of Vietnamese industry and reduce the carbon footprint

through EE market transformation. The GIF uses financial guarantees and performance premiums to

mobilize local lending banks, and incentivize successful EE project implementation and operation.

Vietnam MOIT and Denmark are working with HSBC as the GCF accredited entity to seek funding from the

GCF to expand the program and create a permanent trust fund to ensure sustainability.

Binu Parthan, GCF (Asia Advisor, Green Climate Fund Secretariat) presented recent

developments on the GCF, which serves as the primary financial mechanism under

the UNFCCC to support implementation of the Paris Agreement. The Fund continues

to support countries to build their capacity to effectively engage with the Fund

through its Readiness Support program. To date, 109 readiness funding requests

have been received and 55 requests have been approved to support National

Designated Authority (NDA) establishment, country program development, direct

access entity accreditation and project pipeline development. The GCF deploys its

resources through Accredited Entities, partner institutions that have been approved by the GCF Board to

act as channels for financing and implementing country projects. As of November 2016, 41 entities have

been accredited with 76 active applications in the pipeline. The Board has asked the GCF Secretariat to

prioritize applications from Asian and Eastern European entities to maintain a strong regional balance.

The development and preparation of low-carbon development projects is also supported through the GCF

Project Preparation Facility (PPF), which accredited entities can apply to for up to 10% of the full project

funding request or USD 1.5 million per project.

The GCF has been approved to use the following financial instruments: grants, debt, equity and

guarantees. Grant funding is limited, and will be used primarily for adaptation funding and for Least

Developed Countries (LDCs). The Private Sector Facility (PSF) can provide funding to private sector entities

to catalyze clean investments in line with the objectives of the Fund. The ability to obtain grant funding

from the PSF is very limited, and is generally meant to support technical assistance activities, with a

general maximum allowed of 5% of the total funding amount. The GCF’s current project portfolio contains

27 projects for a total of USD 1.17 billion in GCF funding and a total mitigation impact of 97 MtCO2e. An

additional 159 concept notes are currently in the pipeline. Transport projects currently represent only 1%

of the project portfolio and, given that the GCF strives to achieve balance in financing across sectors, it

would be strategic for countries to submit transportation projects in the near term.

http://en.lcee.vn/gioi-thieu/c28/about-us.html

http://www.greenclimate.fund/funding/readiness-support

https://www.greenclimate.fund/documents/20182/104167/Guide_for_project_preparation_facility.pdf/f8b62701-a9ca-4b1e-9e23-e67f1b88abd4

http://www.greenclimate.fund/ventures/private-sector




Respondent Dr. Pham Hoang Mai, Vietnam (Director General, Department for Science, Education,

Natural Resources and Environment, Ministry of Planning and Investment) shared that Vietnam receives

numerous types of support for different but complementary programs, for example, for Green Growth

strategies, NDC implementation, low emissions development strategies, and others, and highlighted the

benefits of being able to better harmonize the different programs to increase the impact of the country

projects and programming.

Respondent Dr. Kittisak Prukkanone, Thailand (Environmental Official, Office of the Natural Resources

and Environmental Policy and Planning (ONEP)), commented on ONEP’s experience as the office of the

NDA, the challenges of developing full proposals, and the importance of ongoing GCF readiness funding.

In the ensuing discussion, participants highlighted the challenge involved in coordinating projects

between ministries and especially the importance of engaging the ministries of finance and planning, who

are often the key decision makers regarding government funding and the prioritization of investments.

Session 4: The Big Picture: Renewable Energy and Distributed Energy Resources – Making a

Compelling Sustainable Development Case

Session 4 took a deeper dive into renewable and distributed energy policies and explored the possibilities

and tremendous advancements that many countries are making toward a clean energy transformation.

Sithisakdi Apichatthanapath, USAID (Program Development Specialist, Thailand) presented on the

policies and actions that have led to a rapid renewable energy (RE) increase, highlighting the following six

key “building blocks” for scaling up renewable energy, based on the experiences of China, Brazil,

Germany, India, South Africa, the UK and the U.S.:

Strategic energy planning, which focuses on setting goals, putting in place policies and actions to

meet those goals, and allocating resources for implementation. Examples include NDCs, Low

Emissions Development Strategies, Power Development Plans and Renewable Energy Targets,

such as India’s Solar Mission that will add 22GW of solar by 2022.

Smart RE incentives, including policies and tools to attract investment in RE generation, such as

accelerated depreciation, tax exemptions, loan guarantees, feed-in-tariffs, net energy metering

and “must take” requirements for utilities.

Grid integration, to optimize the use of variable RE resources, such as wind and solar, through RE

forecasting, strategic curtailment, residential and commercial demand response, ramping

baseload electricity generation and employing different forms of energy storage.

Competitive procurement, which focuses on securing the best possible price for RE generation

through competitive tenders such as reverse auctions. Prices have been decreasing over time,

across geographies, and are reaching grid parity.

RE Zones which allow for concentrating RE generation capacity in places that have better RE

resources and developing common transmission infrastructure to deliver energy to load centers.




Lowering the cost of finance for RE projects through standardized contracts, risk reductions, and

loan guarantees.

Bill Tyndall, CCAP (Chief Executive Officer) spoke on the historic opportunity to transform the energy

sector created by the convergence of dramatic cost reductions and technological advancements in RE and

EE technologies, with the global commitments to reduce carbon emissions under the Paris Agreement

and the growing availability of climate finance. Distributed energy resources (DER), including energy

efficiency, demand management, distributed generation and distributed storage, in conjunction with

advancements in smart controls, analytics, cloud computing and communication are delivering new

capabilities and benefits for both utilities and customers. These include reduced GHG emissions, lower

line losses, greater system resiliency, cheap and clean electrification, reduced consumer costs, new jobs,

business models and revenue streams, and increased customer choice. Between 2009 and 2012, DER

represented 35% of capacity growth in the US, or about 50 GW, highlighting the important role of non-

traditional resources in reducing the need for new and expensive investments in electricity generation.

Batteries and energy automation solutions deployed in commercial buildings are resulting in reduced

energy costs and demand charges, emergency power, payments for net energy produced and ancillary

services to the grid. Mr. Tyndall concluded by encouraging countries to use NDCs as a tool to bring about

this transformation in the power sector.

Sachin Gupta, Trilliant (Vice President, Sales) spoke on the important role of smart grids in addressing

energy challenges, meeting growing energy demand and delivering affordable and reliable power, while

improving efficiency, saving cost, and building a low-carbon future. Smart grids allow for real-time

communication for monitoring and control of the grid, which helps improve reliability and efficiency,

reduce losses and outage time, improve efficiency and balance demand. Smart metering, or the installing

and adoption of smart meters and advanced metering infrastructure, is often the beginning of the

“smart” journey. According to Pike Research, such improvements, including distribution and substation

automation and creation of a comprehensive smart grid structure, could cut demand by 15% by 2035.

Examples of successes abound. The U.S. Department of Energy has shown that giving customers access to

their usage information and implementing time-of-use pricing can cut power usage 15% during peak

hours and save consumers 10% on their power bills. In one example, by implementing advanced metering

integration, the province of Ontario, Canada, was able to reduce energy use by 25%. Trilliant is currently

working with Vietnamese utility EVN to build a communications platform to support energy efficiency

programs that can offset demand growth, improve reliability, reduce electricity losses, and enable better

decision-making. More broadly, the platform will support future smart grid and smart city applications.




Day 2: Meeting Ambitious NDC Objectives with Private Sector Investments in Clean Energy

Session 5: The Three Pillars - Framework for Transformational Climate Mitigation Programs

and Catalyzing Private Sector Investment in Low-Carbon Development

This session looked at how finance can help achieve the goals of the Paris agreement and introduced how

NAMAs, through three core pillars, can mobilize investments in low-carbon infrastructure. Sessions 6, 7

and 8 delved further into each pillar.

Trigg Talley, U.S. State Department (Deputy Special Envoy for Climate Change) introduced the session by

framing implementation of the Paris Agreement in the broader context of overall infrastructure spending.

Current global infrastructure investment is around USD 2-3 trillion per year whereas over the next 15

years, it is estimated to increase to USD 5.9 trillion per year under a high-carbon, BAU scenario or USD 6.2

trillion under a low-carbon scenario. With or without trying to address climate change, significant private

investment in infrastructure exists, and aligning domestic policies is critical to attract investment.

According to data from Bloomberg New Energy Finance, better enabling frameworks for clean energy

investment are strongly correlated with increased investment. To mobilize the required levels of

investment, governments can focus on a number of areas:

Continue to align bilateral and multilateral assistance to support the goals of the Paris Agreement

Promote policies and investment plans that stimulate low emission development

Ensure optimal use of multilateral funding to maximize their impact, for example, by supporting

project preparation to address the lack of bankable project pipeline, or utilizing different financial

instruments (such as guarantees) to de-risk capital markets

Mobilize institutional investors, including banks, investment companies, insurance companies,

private and public pension funds, sovereign wealth funds, and infrastructure developers.

Effective implementation of the Paris Agreement will involve a continuum of actions, starting with NDC

development and formulating climate investment policies, to developing bankable projects and securing

finance. Power Africa, led by USAID, offers an example of a comprehensive program to provide support

along this continuum, from capacity building and policy design support for governments, to project

preparation assistance and financing for project developers.

Leila Yim Surratt, CCAP (Chief Operating Officer) presented on how NAMAs can be designed to catalyze a

pipeline of bankable low carbon investments by incorporating three key elements into the NAMA:

Improving policy and institutional frameworks through policy mandates, regulations and/or the

strengthening of institutional arrangements for policy planning and implementation.

Addressing financial risks and returns through financial instruments, such as performance

guarantees, concessional loans and equity funds, which can boost returns and reduce risk relative

to BAU alternatives.

Identifying projects and demonstrating feasibility, including through the development of an

initial project pipeline.




These elements represent the three pillars of effective NAMAs that can drive private investment in low-

carbon technology. Engaging ministries of finance and planning is critical to ensure NAMA policy is

integrated into national planning and budgeting. Achieving a transformational program also requires

combining policy and technical assistance support with project financing support and sustained

stakeholder engagement.

Anna Schreyoegg, GIZ (Project Director) presented on the NAMA Facility, sharing results and lessons

learned to date. The NAMA Facility has made available EUR 262 million to support NAMA implementation

since its inception and has selected 14 NAMAs for support from the first three calls for proposals. In

analyzing the applications from the first three rounds, the NAMA Facility found certain shortcomings

often repeated, including:

The rationale for the technology and the business model is often lacking

The barrier analysis may be incomplete, focusing only on the NAMA support project rather than

the targeted sector or country context

The financial mechanism is not fully defined, including the proposed institutional set-up

GHG mitigation potential calculations are often not substantiated

As a consequence, the NAMA Facility modified a number of elements in its forth call for proposal,

including establishing a Detailed Preparation Phase for selected proposals of up to 18 months. The

Detailed Preparation Phase provides funding support to address potential shortcomings of the initial

proposal and to prepare a detailed proposal for NAMA implementation. The fourth call, which closed in

October 2016, received 75 proposals with many governments in their applications directly referring to the

Paris Agreement or their NDCs.

In the ensuing discussion, it was clarified that NAMAs submitted to the NAMA Facility but not selected for

funding may resubmit a revised proposal, incorporating and addressing any feedback from the Facility.

Session 6: Pillar 1 – Improving Policy and Institutional Frameworks

An effective policy regime can mobilize private investment in climate mitigation and create a multiplier

effect for international support. Session 6 illustrated how policy measures are key to unlocking private

investments, drawing on the experience of developing a renewable energy NAMA in Pakistan and on the

experience of a regional renewable energy developer.

Stan Kolar, CCAP (Director, Europe and Asia Programs) presented the Pakistan Renewable Energy from

Distributed Generation NAMA. Despite numerous incentives to promote renewable energy investments

including feed-in-tariffs (FIT), solar project development has been slow in Pakistan. The adoption of the

Net Metering (NEM) rules in September 2015 holds much promise for accelerated integration of

distributed generation from renewable energy (DG RE). To leverage this new policy, CCAP has been

working with the Pakistani government and key stakeholders to develop a comprehensive NAMA that will

remove barriers to investment in DG RE by creating a credit guarantee fund and providing technical

http://www.nama-facility.org/




assistance to implement a vendor accreditation program, a solar technology certification program, and

other capacity building activities.

Jay Mariyappan, Sindicatum (Managing Director) spoke on how national policies and institutional

frameworks influence decision making for renewable energy developers. Drawing on Sindicatum’s eight

years of experience in Asia, Mr. Mariyappan pointed to key policy and implementation challenges to be

addressed to build confidence and encourage investment. These are: increase coherence between policy

framework at state and national levels, reduce delays in policy implementation, increase transparency by

fostering proactive institutions that support government policy and enhance state electricity company

financial health. The sustainability of a policy regime aiming to incentivize renewable energy has been a

key concern for investors. Encouragingly, the Paris agreement may well lead to longer time frames for

policies and enable the private sector to better contribute to climate objectives. While public climate

finance has an important role in encouraging private sector investment, Mr. Mariyappan concluded,

sustaining the levels of investments required for scale up will require drawing on capital markets and

larger institutional investors.

In the ensuing discussion, a participant commented that in the Philippines, the FIT policy jump-started the

market and now the country seems poised to increase renewable generation. For developers who

pursued RE project development but were not awarded a FIT prior to the program being fully subscribed,

this proved a costly learning experience, but ultimately the FIT has helped initiate the RE industry in the

Philippines. One participant commented that while there is enough capital available to build significantly

more RE projects, inconsistent policy adds to perceived risk and can discourage investors.

Session 7: Pillar 2 – Design of the Financial Mechanism to Overcome Financial Barriers

Engaging domestic financial institutions is critical to mainstreaming low-carbon development. This session

discussed how credit guarantee programs, such as the one in the Philippines Distributed Generation

NAMA, contribute to building local bank capacity and increasing investments in renewable energy.

Allan Belgica, Local Government Unit

Guarantee Corporation (LGUGC), Philippines

(Senior Manager) presented on the LGUGC’s

experience building local financial institution

capacity to finance RE projects. The LGUGC

has developed and managed a variety of

guarantee programs over the years. These

offer technical assistance and partial loan guarantees to overcome perceived risks by local banks, allowing

local banks to offer project financing. In addition to LGUGC’s hired consultants, the Philippines

Department of Energy’s (DoE) involvement in several guarantee programs to support RE projects have

helped build local banks’ capacity to evaluate projects technically. Mr. Belgica also presented on the

Enabling Distributed Solar Power in the Philippines NAMA, which was developed by the DoE with support

from CCAP. The NAMA features a guarantee fund complemented by technical assistance to enable local




banks to enter the solar rooftop installation market and catalyze investments in distributed RE. The

Philippines is now seeking funding from international climate finance institutions to implement the

NAMA.

Teresita F. Solitaria, UCPB Bank, Philippines (Assistant Vice President), presented on the benefits of

guarantee programs and how LGUGC’s program allowed UCPB Bank to enter the renewable energy

market. For local financial institutions, guarantee programs offer an alternative to collateral

requirements, enabling creditors to provide loans for projects that do not have traditional assets and rely

on expected cash flow. Guarantees also present an opportunity for local financial institutions to

accommodate new borrowers, go into new markets, and to finance projects that seek to improve social

services.

In answer to a question on how the transition from guarantees to a competitive lending environment

operating without guarantees takes place, a participant commented that over time, banks acquire the

experience to feel comfortable lending without a guarantee. In LGUGC’s case, their success in engaging

local banks in new markets, has actually led to its losing customers who feel confident enough to no

longer need a guarantee. For example, some banks which originally used a LGUGC guarantee, are now

financing RE projects without a guarantee especially where a power purchase agreement is in place.

A participant inquired if the LGUGC could provide a guarantee across a portfolio of projects for a

company looking to finance a number of projects. Mr. Belgica answered that while the LGUGC helps

investors develop projects at every stage, including refinancing, given the limited capacity of currently

managed programs, they do not offer such a portfolio approach. It was suggested that, in addition to a

guarantee program and a strong project pipeline, project aggregation for distributed generation could

further engage the interest of banks.

Session 8: Pillar 3 – Development of Project Pipelines

Session 8 focused on the importance of identifying an initial pipeline of projects to demonstrate feasibility

in order to engage the interest of banks, provide confidence to investors and create a market.

Ingmar Stelter, GIZ (Program Director, Vietnam) presented the Vietnam Biomass NAMA, which has been

developed under the MOIT/GIZ Energy Support Program. The NAMA seeks to increase the utilization of

biomass for energy production and includes a risk sharing facility (i.e., a partial loan guarantee) to address

the lack of financing options for such projects. To validate the approach, the NAMA will initially focus on

the sugar sector, a well consolidated industry with readily available biomass fuel. In addition, sugar

companies have an interest in developing/expanding RE capacities based on the recent establishment of

a biomass combined heat and power feed-in-tariff. Based on these factors, an initial project pipeline for

the sugar industry is being developed to receive financial and technical support from the program to

facilitate access to loan financing for investors. Vietnam is now seeking implementation funding for the

NAMA.




Stan Kolar, CCAP (Director, Europe and Asia Programs) elaborated on the notion of a project pipeline,

which can be described as a portfolio of individual investment opportunities that will take advantage of a

financing mechanism initially seeded by climate funds. Individual projects must be economically and

technically feasible and replicable, and serve to demonstrate how barriers are being addressed. Building

the pipeline requires an on-the-ground presence to understand the sector context and what will be

feasible, identify opportunities, and maintain stakeholder engagement. In the Vietnam Biomass NAMA,

for example, GIZ support allowed for in-depth investigation of the biomass and sugar sectors, resulting in

the identification of individual investment opportunities and an in-depth understanding of barriers to

investment.

Do Diem Hong, Techcombank (Head, Financial Institutions) shared successes and challenges from a

leading joint stock bank in Vietnam in implementing energy efficiency and clean production projects in

Vietnam. Techcombank has participated in programs with funding from the World Bank, IFC and the GEF,

making use of grants and credit guarantees to encourage investment in energy efficiency, cleaner

production and new technology. In some cases, it experienced difficulties in developing project pipelines

due to: a lack of public awareness in opportunities for investment in new and clean tech machinery, the

perceived conflict between environmental and economic interests for companies making capital

expenditure decision, low risk appetite for borrowers and lending banks, and foreign exchange risks when

borrowing funding from foreign development institutions in a foreign currency. In addition to risk sharing

and technical assistance support from development finance institutions, these challenges call for stronger

support from the local government to enhance the policy and legal frameworks, provide enhanced

financial support through tax incentives, and actively promote public awareness for new, energy efficient

and clean technology.

Session 9: Accelerating Clean Energy Projects – Private Sector Panel

Session 9 took a deeper dive into exploring how countries can help the private sector play a larger role in

low-carbon development and accelerating clean energy projects.

Panelist Dato’ Leong Kin Mun, Malaysia (CEO, Primer Capital Sdn. Bhd. and

President of the Malaysia Biomass Industries Confederation) shared examples

and insights on trends in green financing and the breadth of financing

instruments available to fund clean energy. Malaysia created the Green

Technology Financing Scheme, which works as a guarantee fund, to drive

economic growth by promoting green technology. Hong Kong has established a

framework for Green Energy companies to raise funds through the financial

markets via Initial Public Offerings. In 2016, Hong Kong has also seen its first

issuance of a green bond to finance green buildings. Dato’ Leong commented on the importance of

producing bankable and fundable business plans to increase project financing from banks. This will also

be true for alternative sources of capital, such as angel investors, venture capital, private equity, and

crowd funding, which also should be drawn upon to scale up investments. Clean energy projects often

require more than just a single financing instrument for risk and fund management. There is no one-size-




fits-all financing mechanism, as each project and country has its unique characteristics. Applying lessons

learned in an iterative process to design increasingly innovative financing solutions is crucial to financing

the low-carbon transition.

Allan Belgica, LGU Guarantee Corporation (LGUGC), Philippines (Senior Manager) shared that, based on

input received during the dialogue, his institution will seek to better involve local government officials in

capacity building, awareness raising, and outreach activities, given local governments’ important role in

enabling investments in RE and distributed generation through approving and permitting projects.

Teresita F. Solitaria, UCPB Bank, Philippines (Assistant Vice President) suggested several solutions to

better enable banks to play their role in unlocking investments in green technologies, including potential

government requirements that a percentage of the loan portfolio be allocated to clean energy or low-

carbon development projects.

Participants shared that even with supportive policy frameworks in place, low electricity prices make it

difficult for renewable energy to complete in some countries, and that utility resistance to change

discourages developers, leading to some RE projects being dropped. Engaging incumbent utilities, sharing

opportunities and rethinking business models so that utilities continue to benefit as partners in the

energy transition will be essential to accelerating clean energy projects and low carbon development in

the energy sector.

Conclusion and Next Steps

Bill Tyndall, CCAP provided concluding remarks, summarizing the discussions and thanking everyone for

their participation. In the post-Paris world, the focus has shifted to NDC implementation and conversion

into low-carbon development programs, projects, and investment strategies. Many developing countries

are already integrating climate into national development plans, modeling costs for mitigation actions,

designing sectoral NAMAs, and outlining their needs for support.

Increased inter-ministerial collaboration will be essential to making progress and achieving NDC goals. In

particular, better engagement and collaboration with ministries of finance and planning will ensure that

policies are mainstreamed into national planning. This is also relevant because strong government

commitment, as evidenced in policy, is a key criterion for access to international climate funds. A growing

number of climate finance resources are available for NDC implementation, to support each stage of the

process. The GCF now has funding to help countries build domestic capacity, structure national programs

and prepare projects, as well as to implement full proposals. The new NDC Partnership is available to help

connect projects to finance, share information and maximize synergies among donors and organizations,

such as CCAP, that can provide targeted technical assistance. Such improved collaboration is essential to




ensure efficient and catalytic use of available funds and support, and to help promote replication of

successful NDC implementation models.

Money is not a scarce resource. The issue is how we create the mechanisms and frameworks for finance

to flow into bankable projects that have a climate impact. NAMAs are tools that can assist in this effort,

combining sector-specific policy and institutional reforms with financial mechanisms and an initial project

pipeline that can direct money to low-carbon development, and catalyze private sector investment to

achieve a country’s NDC. The energy sector, in particular, is entering into a unique and remarkable

moment in time where decreasing technology costs are creating new possibilities with a renewable

product that can compete with fossil fuels. RE NAMAs, including in Pakistan and the Philippines, are

helping to move these products into the mainstream.

The technology is here. The money is here. With the Paris Agreement, the political will is here. The

question is now: How do we accelerate progress? Future dialogues and technical support should continue

to build country capacity to develop strong project pipelines, enabling policies and innovative financial

instruments to lower risk and unlock private sector investment in low-carbon development.

Under the MAIN program, CCAP will continue supporting MAIN countries in NDC conversion and

implementation, and increasing bilateral, on-the-ground support for mitigation actions in the energy,

transport, agriculture, and waste sectors. Countries interested in technical assistance from CCAP should

contact Leila Yim Surratt ([email protected]) or Stan Kolar ([email protected]).

mailto:[email protected]

mailto:[email protected]



Documents

MAIN Asia Dialogue 1 - Leading in Climate & Air Quality Policyccap.org/assets/5th-MAIN-Asia-Dialogue-Summary-2016.pdf · international climate finance and believe they are on track