How Private Sector Engages with GCF in Japanese Private Sectors Perspectives Ichiro MAEDA

Member, Working Group on Global Environment Strategy Committee on Environment and Safety KEIDANREN (Japan Business Federation) General Manager, International Affairs & Environment The Federation of Electric Power Companies

Japanese Private sectors Perspectives(1)

The new fund should focus on development, transfer and diffusion of technology to developing countries Bilateral or multilateral governments (owners and recipients) agreements are necessary; - to promote the investment - to minimize the financial and other risks - to ensure measurement of emissions reduction,so that financial return should be ensured

Japanese Private sectors Perspectives(2)

One of the Private sectors advantages is; Energy Efficiency - The most important is to diffuse to the developing countries the most efficient technology that is still not in the market but to be sure to be brought to market if some conditions are met - expect to decrease the energy cost and increase the energy security of the developing countries Waste management - also important to reduce the utilization of natural resources and contribute to the sustainable development

Challenges to the energy efficient technology diffusion

Though there are more energy efficient technologies and products that can realize economic advantages from the life cycle viewpoint, low efficient technologies are often locked-in the market because of;
- lack of knowledge about the latest technologies - lack of capacity of feasibility study about their economics - lack of internationally recognized environmental policies and efficiency standards - lack of financial resources to cover the difference over the current technologies - lack of prioritized funding to the higher recoverable technologies

Basic ideas to utilize GCF from Japanese Private sectors Perspective

To establish positive lists of environment To establish positive lists benign and energy saving technologies worth GCF financial support To concentrate investment on the above list so that concerned technologies can diffuse (Examples are shown later) Leverage is expected by inviting private sectors through maximizing economic advantages under GCFs support Lock-in of the low efficient technologies is expected to be avoided

What is expected to receive technologies

To eliminate the challenges in place through cooperating in legislation to introduce technologies positive-listed and promoting green development policies To prepare Internationally standardized regulation To measure the CO2 reduction and to report

Private sectors are ready to promote co-operations to establish & implement relevant policies and to engage in building capacity

Electric Power Industry Ultra Super Critical Coal Firing Technology

In place of low-efficiency bu inexpensive sub critical coal firing technology (Sub) , dominant in developing countries, ultra super critical coal power plants (USC) is applicable due to its technological advantage. Incremental cost of USC can be covered by mobilizing governmental financial Optimal financing can be explored through energy conservation advantage and possible CO2 offset acquisition. Construction cost
Governmental financial institutions GCF

institutions loan and GCF. That can avoid lock-in problem in coal firing technology deployment.

Fuel reduction
Baseline USC

Energy saving advantage CO2 reduction

Baseline USC

In case of 600MW class USC approx.5% improvement of efficiency , we can expect; Fuel reduction approx.170,000/year CO2 reduction approx.400,000/year

Sub 538/16.6MPa

USC 600/24.5MPa

CO2 offset

USC Plant in Japan

Iron and Steel Industry Coke Dry Quenching(CDQ)

What is CDQ?
Instead, CDQ lets it cool by inert gas and recovers sensible heat as steam. This steam may be used on-site or to generate electricity.

Traditionally, hot coke from coke oven is cooled by water.

CDQs benefits 1) Energy saving by waste energy recovery 2) Decreasing dust, CO2 and Sox emissions 3) Massive saving of water 4) Producing better quality coke CDQs data (approximation) Capacity : 1 million t-cokes / year New plant cost : 50-100 million $ Benefits of energy saving : 10-20 million $ / year

Financial Moblization GCF can remove implicit barriers of appropriate Technical Transfer.
Implicit barriers
Lack of ; Knowledge about the latest technologies Capacity of feasibility study about their economics Financial resources to cover the difference over the current technologies Prioritized funding to the higher recoverable technologies Internationally recognized environmental policies and energy efficiency standards etc.
Energy cost of a steel mill 1,000 million$

Energy saving
20million $ 20 years

-400 million$

600 million $

Positive list, which will be made by bilateral or multilateral sectoral corporation based on PPP (Public and Private Partnership) in accordance with terms and conditions of each recipients country, will contribute to 130 million $ remove above implicit barriers.
Interest rate of CDQ
( in case of 10%)

Key Point 1. Cooperating legislation to introduce Technologies PositiveListed based on PPP

Projects revenue (20 years) *Investment recovery : 4-5 years

+130 million $
Capital cost 1,000 million$

Above Implicit barriers are removed by GCF scheme

Key Point 2.

CDQ GCF Grant / Concessional loan +150 million $ 1,150 million$ Lock in problem due to lack of funding in

short term will be removed.

Cost

Cost (After 20years)

Benefit

Cement Industry
Institutional Strengthening & Capacity Building are considerably important for the cement industry as well as an aid to an additional cost for low carbon investment.
[Case1: Waste Heat Recovery] Waste heat from kiln, a rotary manufacturing furnace, is utilized to generate power Substitution rate is 30-40% of total power. Barriers: Additional $2 billion for installing WHR facility (cf. US $20 billion for new standard cement plant) Operational know-how, Skills and Expertise [Case2: Co-processing Technology] Wastes as alternative energy sources are frequently used in the cement kiln to reduce fossil energy. Barrier: Lack of legislations on co-processing, incineration and land-filling. Following support is expected: 1. Establishment of internationally standardized legislation 2. Introduction of national/regional recycling system 3. Capacity building for know-how, skills and expertise

Eco-friendly Products
Eco-friendly products are relatively high cost compared with non Eco-friendly products but effective for global warming prevention.
[Case1: Double windows ] Cost of double windows is high because of double layers. However from the viewpoint of life cycle assesment, these products can reduce GHGs. Barriers: High initial cost Lack of awareness of these products Lack of legislations on support for eco-friendly products [Case2: Hybrid car and Electric Vehicles] Hybrid cars are cutting edge technology for new age Barrier: High Initial cost Charging station for EVs. Following supports are expected: 1. Establishment of national/regional legislation 2. Awareness for eco-friendly products Double window

Plugged-in Hybrid Vehicles