Transcript Global Infrastructure Basel

Sustainable Cities and Infrastructure
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Low Carbon Manufacturing, Technology
Innovation and the Quality Standard of Industry
André Schneider
Vice President, GIB Foundation
Chairman, World Climate
Vice President, EPFL
Global Infrastructure Basel
Global Infrastructure Basel Foundation is the globally leading
organization dedicated to scale up the financing of
sustainable infrastructure development. The independent,
not‐for‐profit organisation is funded by diverse sources,
among them the Swiss Government and the City of Basel in
the framework of their promotion policy for market based
sustainable development around the world.
Based in Basel, Switzerland, GIB Foundation aspires to make
accessible the added value of (environmental, societal and
economic) sustainability of selected, high value infrastructure
projects to contractors, clients and investors. For that purpose
it develops and applies specific methods of project design,
finance and rating as well as capacity development.
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Introduction
What is the relationship between sustainable
infrastructure, low carbon manufacturing,
technology innovation and quality standards of
industry ?
It is all about sustainable lifestyles !
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Sustainable Lifestyles
Is it possible to improve human health and life quality while at the
same time reducing current levels of energy, transport and resource
use?
Social innovation and significant changes in consumption patterns and
lifestyles will be vital to achieve long-term economic prosperity for all
within the bio-capacity of our planet.
Knowledge on sustainable lifestyles is scattered as are sustainability
projects and initiatives.
There is an immense need for advancement through bringing together
current knowledge, experience and relevant stakeholders in a dialogue
process to articulate and clarify the challenges that society faces in
achieving the goal of sustainable lifestyles.
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How do we support sustainable lifestyles ?
1. Sustainable consumption (integrating the
hidden cost into our consumption)
2. Sustainable infrastructure (energy, mobility,
water, and other utilities)
3. Sustainable housing (a new approach to
housing development)
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Sustainable Consumption
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Sustainable Consumption
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Sustainable Consumption
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Planned Obsolence
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Food Waste
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Sustainable Infrastructure
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Why is Sustainable Infrastructure so Important?
Confronting the challenges of climate change
mitigation and adaptation, resource scarcity and
energy security will require massive investment in
the fundamental reconfiguration of the
infrastructure that supports modern society.
By 2050, nothing will function as it does today. This
challenge presents huge opportunities both for
investors, general contractors and for projects
owner.
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Why is Sustainable Infrastructure so Important?
700
100%
90%
Clean Energy Investments in Billions USD
600
Annual Investment in Clean Energy
required to achieve "2020 Peak
Scenario", stabilizing emissions by
2019
500
80%
70%
60%
56%
400
50%
300
40%
37%
30%
200
20%
15%
100
7%
10%
0%
0
0%
2005
2006
2007
2008
2010
2015
2020
2025
2030
Source: Bloomberg New Energy Finance 2010
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Why is Sustainable Infrastructure so Important?
40.00%
Share of World
30.00%
20.00%
Clean Energy Investment 2008
Clean Energy Demand 2006
10.00%
0.00%
EU
North America
South and
Non-EU Europe Middle East and
Central America
Africa
Asia
Oceania
Source: Bloomberg New Energy Finance (2009), IEA (2008)
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10 Themes for Sustainable Infrastructure
The following ten themes clearly affect the performance
of sustainable infrastructure projects and their
governance:
Accountability
Transparency
Customer Focus
Results Orientation
Poverty Responsiveness
Power-Balanced Partnerships
Shared Incentives
Sound Financing Mechanisms
Proactive Risk Management
Resource Protection
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Sustainable Housing
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Situation
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Around 40% of the CO2 emissions are coming from housing.
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Energy efficient buildings and measures to improve energy efficiency for
buildings are technically and financially feasible and can be based on
existing and available technology as well as proven design concepts.
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In many cases the necessary capital, to fund such measures to extend
energy efficiency, is missing and not easily available.
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In order to move beyond demonstration and scale up to mainstream
implementation, we need to create
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new policy frameworks to find new sources of financing (like grid reductions
or peak reductions);
public private partnerships that allow the financing of such measures based
on the cost reduction and performance contracts.
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A Case
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Housing Complex, Larger City in Northern Germany
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CAPEX: 45.100.000 € (205.000€ in average per unit for 220 building units)
OPEX for Energy: 370.260 € / year (1.683€ per unit for 220 building units)
Increase in CAPEX from applying EE measures: 6.600.000 €
Decrease in OPEX from applying EE measures (energy efficiency and energy selling to the grid) :
382.000 € / year
Financing of increase in CAPEX for applying EE measures: 4% interest on long-term loan
Payback Period based on the full use of the decrease of OPEX for interest and payback: 30 years
In conclusion:
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The future users of these houses will spend the reduced energy costs of 1.740 € per year for a
period of time (30 years) on paying back the investment for the EE measures (or a total of 52.200
€), before they profit fully of the cost reduction of 1.740 € per year.
The owner will have a much more energy efficient building with no further investment but pay the
full energy costs as without EE measures for 30 years.
The financier will get the required return on their investment of 4%.
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Barriers
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LOW ENERGY PRICES: Causing a very long payback period.
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CAPEX: Higher upfront capital cost while savings come in at a later time.
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MISALIGNMENT: Misaligned financial incentives between landlord/owner
(investor of the energy saving and reduction measures) and tenants (receiver of
cost savings). (not in the case of owner occupation)
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TECHNOLOGY RISK: Perceived risks of energy efficiency measures and positive
energy buildings are high (new to the market).
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INSTABILITY: Instability of energy prices over the long investment horizon
although prices in general have been increasing over time.
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PERFORMANCE RISK: Owners or tenants cannot be certain on energy
performance in the long run.
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Opportunities for Implementation
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LOW ENERGY PRICES: Realistic or not, tax on externalities, targeted subsidies, and/or laws stimulating
energy efficiency measures.
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FINANCING: If low energy prices are addressed, financial tools that provide money to pay for such energy
efficiency investments, where a shared energy cost reduction provide interest payment.
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CROSS FINANCING: Find ways to use such solutions to reduce grid extensions and peak performance and
use this as new sources of financing.
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SOLUTIONS: Find the right solutions that addresses the type of buildings, economic context, capabilities
of the project owner, the climatic context, and the opportunity for long term renewable energy systems.
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PERFORMANCE ASSURANCE: Solution providers need to guarantee the energy savings generated to
allow for a steady cost savings flow.
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PROJECT DESIGN, SET-UP AND MANAGEMENT: Institutional set-up, where an agency or operator seek
the best solutions, best providers of technology and of finance, develop economic model with definition
of roles.
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BEST PRACTICE: Solutions Directory; Financing Directory; Solutions and Financing Community; Document
successful projects.
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Conclusions
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Conclusions
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We need to go from low carbon to sustainable development.
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Low carbon manufacturing and production has to integrate concepts of
sustainability and cover the hidden sustainability costs and must address
over consumption.
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Low carbon manufacturing and production has to provide solutions for
sustainable infrastructure and housing.
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We need to approaches to financing of sustainable infrastructure and
financing looking at
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Rethinking infrastructure and housing planning;
Financing through institutional investors providing long term fixed income
financing;
Financing integrating all elements like cost of grids and cost of. peak energy
need.
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Conclusions
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We need technology innovation to reduce energy use, to create
smart mini grids and to develop new consumption models.
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We need industry quality standards to define frame conditions for
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sustainable consumption;
sustainable infrastructure; and
sustainable housing;
to assure quality, common levels and protection for investments.
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We need to develop sustainable life styles.
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Thank you for
your attention!
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Contact
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