Financing clean energy conference

Opening address by Jean Lemierre, President of the EBRD

Financing Clean Energy: A Framework for Public-Private Partnership to address Climate Change

EBRD, London, 13-14 March 2007

Good afternoon and welcome to the EBRD.

Allow me a few words to open the discussion and to share with you some of the views of the EBRD and those of our colleagues in the other multilateral institutions, including Paul Wolfowitz with whom I had long discussions this morning.

Is it necessary to explain in detail the global warming agenda? I think not.  There are many debates about this. There was a very important EU Council at the end of last week. Gordon Brown is going to join us at the end of the afternoon and I am sure he will explain much better than I can the global warming agenda from the political point of view. It is a crucial one.

My second comment is that in 2006 in the EBRD region and elsewhere in the world, we saw the combination, the mixing, of two different agendas: the global warming agenda and the energy security agenda. These two agendas make this conference very important and very powerful. No-one can avoid dealing with these, which are merging into one agenda. 

Third, we have to be honest and try harder. I am not sure that we, in the EBRD, and, if I may expand my remarks to include some of you, have done enough in the past. If we are in the situation we know about today on the global warming question, it is because over the years, we have accumulated a liability, as bankers say. We must improve what we are doing. This is the EBRD’s view. As we try to do better, we still have a lot to learn.

I will not give you too many figures because that would be boring but I would like to quote two. In 2005 the volume of EBRD investments relevant to clean energy and climate change represented just five per cent of our commitments.  We have tried to increase this and last year it represented four times more, now 20 per cent of our commitments. I am not talking about targets here but about what we have delivered. We are beginning to understand more fully that addressing energy waste and climate change is not just a need but also an opportunity for everybody.

That brings me to my fourth remark. In 2006-07 we are seeing not only an increasing challenge but also an increasing opportunity for investors and for countries to engage in initiatives with positive climate impact. In the EBRD region, there are countries which depend on imported energy and others with abundant energy resources, much of which they export. Regardless, it is clear for both sets of countries that the benefit of acting now, immediately, on the legacy of energy inefficiency in our region is tangible and concrete and will have an impact not just in terms of global warming and the environment, but also in terms of economic competitiveness and energy security. If you put all of these together, you have a very strong incentive to move forward.

We in the EBRD see a major challenge in the area of energy efficiency. If the region in which we operate, which is the eastern part of Europe, were able to achieve the energy efficiency standards already realised in western Europe, world energy consumption would fall by 7.2 per cent. We are talking about concrete actions which could have a huge impact very quickly.

Up until now political leaders, multilateral institutions and investors have probably paid more attention to the production of energy -- the supply side -- and less to the demand side and how to make energy use more efficient. I could outline examples of how, at the micro level, we can achieve quite a lot. This is true in business, in municipalities and in transport. In the EBRD region you can get huge success in the short term and it has a big impact.  With a loan of a few hundred thousand euros to a medium-sized company in Bulgaria, you can reduce its energy bill by 85 per cent. The case in point was an industrial bakery. So you can achieve a lot in this way. I will not add examples to examples; I am sure you understand what I am saying.

The second point is about renewables. I think there is still a lot to do to produce new sources of energy through hydro, wind, geothermal, using the extraordinary capacity in the EBRD region, as well as in Latin America’s extraordinary agricultural capacity. I am sure this must be developed and my colleague from the Inter-American Development Bank will certainly explain this to you.

If there is such a need and such potential, and if we can demonstrate that clean energy investments are good business, why are more companies not engaged in these activities? This is a serious question for all of us and it’s why we’re holding this unique conference. Today we’d like to have a good, in-depth dialogue with you, official leaders, multilateral institutions and, in terms of the EBRD, even more so with the private sector because it is with you that we work most closely to understand the difficulties you have in financing clean energy projects. 

Clearly there is a need to do more. There are successes but we are not yet moving with the necessary speed. We have the capacity to do more. We certainly have the political incentive to do more, and we need to better understand the obstacles and the difficulties impeding financing for clean energy. 

We can see a few of them. From the EBRD point of view, there are four pillars that will underpin increased financing for clean energy. The first one is building awareness: are people aware of the potential for clean energy projects? This is a key question. In the region in which we operate, many people are not yet aware of this. They will see it when their companies and governments undergo energy audits, making people understand the potential gains that can be achieved through more efficient energy use. The second pillar has to do with regulatory questions, energy tariff questions.  Addressing these requires policy dialogue, and I think we should take advantage of the presence here of Ministers from the G8 to convey a message to other political leaders about the fact that there is a need to improve, across the world, regulations for energy efficiency, to implement renewables and to implement a sound carbon credit system.

The third point is about risk-taking. We in the MDBs can take risk on our books. That is why we have taxpayers’ money. But we need to engage more, and more deeply, to understand how to do it, when it is necessary, and for which types of risks. 

The fourth pillar is innovation. We need more innovation. We need to speed up innovative processes to make them efficient and to bear fruit in a shorter time horizon than currently anticipated. I am talking about questions such as carbon sequestration, coal, all these questions which are very important for the future.

I hope today’s and tomorrow’s discussions will be concrete, specific, dealing with these types of questions, to help all of us to better understand what we have to do.

I have done policy work before, and I think this is no longer a time for generalities and policy discussions. This is more a time for implementation, concrete results, actions, moving forward and building a very good track record to show everybody that we can deliver. 

I thank you all for coming here. Ministers, I am very grateful that you are here. My colleagues from the multilateral development banks are here and they are very committed to this agenda. I very much appreciate the presence of our colleagues from the private sector, the banking sector, from industry, transport, utilities, investment funds, all of us thinking about these questions. Clean energy is good business but you are not yet doing enough.  Please tell us what you need. That would be a really good result from today’s meeting. We are here to listen to you. 

Thank you for being here. I hope you enjoy your time here at the EBRD. We shall try to make it as comfortable as possible. In addition, I hope it will be useful for all of us. Thank you.

(Applause)

Overview of the Gleneagles Dialogue on Climate Change, Clean Energy and Sustainable Development

PRESIDENT LEMIERRE: We are very privileged to welcome today the representative of the current chair of the G8 and the EU. Mr Stather has agreed to come here to share with us the views of the German presidency of these two groupings. We are also very privileged to have here Mr Tanaka from Japan, who will share the views of a different part of the world and the views of the next presidency of the G8. Thank you for being here and I will now give Mr Stather the floor.