Landscapes of Domestic Climate Investment & Finance Experience from five years of tracking in France 26 June Ian Cochran – Senior Advisor, I4CE 2019 Study Authors Projects supported by: Hadrien Hainaut Lola Gouiffes Ian Cochran Maxime Ledez 1 I4CE – Institute for Climate Economics
Introduction I4CE – Institute for Climate Economics 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 is an initiative of Caisse des Dépôts and Agence Française de Développement and is also supported by Morocco’s Caisse de Dépôts et Gestion. 2 I4CE
What is a landscape of domestic climate investment and finance? 3 I4CE
What is a landscape? Tracking investment and financial flows in domestic low-emission tangible assets 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 GHG SUSTAINABLE ENERGY RENEWABLE EMISSIONS NUCLEAR INFRA- OUTSIDE FUEL EFFICIENCY ENERGY STRUCTURE COMBUSTION 4 I4CE
Results Digging Deeper than Totals Climate investment in Gap with investment Fossil-fuel climate- 2017 needs adverse investments 41.2 +10 - 30 73 billion euros Billion euros/year billion euros in 2017 5 I4CE
2018 Study Results Households and private companies are the principal project developers, followed by public entities 6 I4CE
Example of France From reporting to decision-making why keep track of domestic climate finance? • 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 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) 7 I4CE
Introduction The results of the Landscape correspond to the “new needs” of French decision makers • Energy Transition Act: Article 174 France’s energy transition act • Contributions to Finance Bills mandates tracking and (PLF): DPT Climate and Energy mapping climate finance flows transition draft budget The government is to present • Reports for French Strategy on an annual report to the green finance: defining the Parliament which “ quantifies "business plan" for the energy transition and analyses public finance , • Economic, Social and assesses private finance , Environmental Council: opinion on and measures their the energy transition of February adequacy with the financial 2018 requirements to achieve the • CGDD and Eurostat: national objective and transition pace climate change mitigation of the law ”. expenditure account • Art. 174 of the Energy transition for French National Energy and green growth act (LTECV, 2015) Climate Plan (SNBC) 8 I4CE
France climate neutrality by 2050 goal means zero emissions from fossil fuel Evolution of GHG emissions in France from 1990 to 2017 and national climate objectives (based on CITEPA inventory) Résidentiel-tertiaire Déchets Agriculture Energy generation Industry Buildings Transport Waste Land-use and forestry Agriculture Energie Industrie Transport UTCF Objectifs 700 Kyoto objective for France : stabilise 2012 emissions at their 1990 levels 600 EU 3X20 package for France : 500 reduce 2020 emissions by 14% against 1990 baseline 400 Energy Transition Act and new EU objective: bring MtCO2eq 300 2030 emissions 40% below their 1990 levels 200 « Facteur 4 » : divide 100 emissions by 4 between 1990 and 2050 0 « Carbon neutrality » : reach a -100 balance between emissions and sinks -200 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 9 I4CE
What data and insights can it provide for sectoral policy making and planning? 10 I4CE
Landscape of climate finance 41 billion euros invested in 2017, increasing by 17% since 2014 Total climate investment Billioneuros 40 41.2 35 35.3 34.4 30 Energy efficiency 19.8 20 14.4 13.8 15 10.0 9.9 Sustainable infrastructure 10 8.7 6.6 6.3 Renewable energy 7.7 5 2.8 2.7 2.6 Nuclear Forestry and non-energy 1.5 processes 2.0 2.0 0 2011 2012 2013 2014 2015 2016 2017 2018p 11 I4CE
Landscape of climate finance Public authorities are increasingly intervening to fund low-carbon investments 45 A. Total climate investments A Billion euros 40 B. Public authorities ’ intervention 35 1. Investment of public project developers 30 Infrastructure management co. 25 Social housing companies B Central and local government 20 2. Public cofinance for households and private companies 15 Subsidies and grants 10 Concessional debt 3. Redirection of private resources 5 Other instruments, such as white certificates 0 2011 2012 2013 2014 2015 2016 2017 12 I4CE
2017 French Landscape Results Funding instruments vary depending on project developer and project size (2016 data) 13 I4CE
Renovation of Residential Buildings Assessing investment levels across different types of renovation Investments in housing renovation, by segment and type of action (private individual dwellings only) 16 Climate investments in 2017 14,3 14 logements sociaux Billion euros 12 logements collectifs solaire thermique 10 Gap compared to chauffe-eau thermodynamique Billion euros 2016-2020 investment pompes à chaleur needs 8 bois-énergie + 5 to 8 chaudières à condensation 6 isolation des ouvertures Billion euros isolation des toitures Publically driven finance 4 isolation des murs 4,2 isolation des façades 2 Billion euros 0 2011 2012 2013 2014 2015 2016 2017 2018p 14 I4CE
Renovation of Residential Buildings The amounts contributed by the main public instruments have been stable since 2015 Public support for financing the renovation of private dwellings TVA taux réduit Crédit d'impôt (CIDD/CITE) Climate investments in 2017 Eco-prêt à taux zéro Certificats d'économie d'énergie 14,3 Fonds d'Aide à la Rénovation Thermique Aides de l'ANAH 3.5 Billion euros 3.0 0.4 0.4 0.3 Gap compared to 0.2 0.2 0.3 2.5 2016-2020 investment 0.4 0.4 0.3 Billion of euros needs 0.4 0.3 2.0 + 5 to 8 0.2 0.3 0.7 1.5 0.5 0.3 Billion euros 0.3 1.7 1.7 1.7 Publically driven finance 0.6 1.0 0.5 4,2 0.9 1.1 0.5 0.7 0.6 Billion euros 0.5 0.4 0.4 0.4 0.1 0.1 0.1 0.0 2011 2012 2013 2014 2015 2016 2017 15 I4CE
Landscape of climate finance A gap of 10 to 30 billion euros per year compared to estimated needs to achieve national climate goals Climate investment documented in the Landscape of climate finance in France Billion euros Estimated range of investment needs based 80 on the SNBC and the PPE Gap 70 60 50 40 bewteen 2016 and 2023 Trajectory catching up 30 Initial trajectory Initial trajectory 20 10 2024-2030 2011 2012 2013 2014 2015 2016 2017 2018p 2019-2023 (per year) (per year) 16 I4CE
Landscape of climate finance Investment gaps vary across sectors 22 Billion euros Climate investment documented in the Landscape of climate finance in France 20 (2016 - 2018 average) Estimated range of investment needs 18 based on the SNBC and the PPE (average 2016-2020) 16 Gap 14 12 10 8 6 4 2 New homes Housing New tertiary Tertiary Low-carbon Transport Renewable District retrofitting buildings buildings vehicles infrastructure electricity heating retrofitting generation 17 I4CE
Landscape of climate finance Investment gaps vary across sectors Renewable Low carbon Transport Housing District electricity vehicles infrastructure retrofitting heating Climate 4 1.4 9.6 14.3 0.3 investment in 2017 billion € billion € billion € billion € billion € Gap with 2016- +1 - 2 +5 - 6 +0.3 +5 - 8 +2 - 4 2020 investment needs billion € billion € billion € billion € billion € 1.8 0.4 9.5 4.2 0.3 Publicly-driven finance in 2017 billion € billion € billion € billion € billion € 18 I4CE
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