Climate Change Connection to Profitability Climate Change Connection to Profitability Jitendra (Jitu) Shah, World Bank, July 15, 2009 Outline: Climate Change Climate Change High awareness – Responses to-dateHigh awareness – Responses to-date Profitability Angles Profitability Angles Financial, Social Responsibility, Environmental, Sustainability, etc.Financial, Social Responsibility, Environmental, Sustainability, etc. Examples Examples What has been done: success and profitsWhat has been done: success and profits Role of the World Bank Role of the World Bank How can we helpHow can we help Conclusions Conclusions

Responses To Date Long term planning now usually includes CC Long term planning now usually includes CC New institutions (Climate Cord. Committee, Thailand Greenhouse Gas Management Organization - TGO) New institutions (Climate Cord. Committee, Thailand Greenhouse Gas Management Organization - TGO) New energy conservation measures and promotion of Renewable Energy New energy conservation measures and promotion of Renewable Energy Stabilized forest cover (in most areas) Stabilized forest cover (in most areas) Research on methane emissions, models, etc. Research on methane emissions, models, etc. CDM projects (10+ registered, 20+ submitted, 38+ approved) CDM projects (10+ registered, 20+ submitted, 38+ approved) EE and RE project experience growing EE and RE project experience growing

Profitability Dimensions: Difficult Balancing Act? Net Profit Political viability Financial feasibility Social Responsibility Pollution Reduction Profit or Effectiveness ?

Business Opportunities in Asia  Clean mass transport systems  Solar energy  Wind energy  Hydro-electricity  Green buildings  Energy Service Companies  Climate proofed infrastructure  Climate adapted crops and livestock  Methane capture from landfills and livestock operations  Recycling and re-use  Etc …..

Example of Business Opportunities in Asian Countries: Solar Energy Suntech Solar was founded in 2001 in Wuxi (China) Suntech Solar was founded in 2001 in Wuxi (China) It’s already a worldwide leader in solar energy: It’s already a worldwide leader in solar energy: Sales offices in North America, Europe, Asia, and AustraliaSales offices in North America, Europe, Asia, and Australia 4 production sites4 production sites 8,000 global employees8,000 global employees Revenues: USD 1,348 millionRevenues: USD 1,348 million Net Income: USD millionNet Income: USD million Net margin: 12,7%Net margin: 12,7% Total Assets: USD 1,957 millionTotal Assets: USD 1,957 million 364 MW installed, good forecast364 MW installed, good forecast

Example of Business Opportunities in Asian Countries: Wind Energy Suzlon began in 1995 with just 20 people. Suzlon began in 1995 with just 20 people. In a little over a decade has become a global leader: In a little over a decade has become a global leader: 5th World turbine manufacturer (market share of 10.5%)5th World turbine manufacturer (market share of 10.5%) Asian leader (50+% market share in India).Asian leader (50+% market share in India). Operations in 20 countries and manufacturing units across America, Asia, Australia and EuropeOperations in 20 countries and manufacturing units across America, Asia, Australia and Europe Order book of $4,304 million (equivalent to 3,454 MW)Order book of $4,304 million (equivalent to 3,454 MW) Employees: nearly 14,000Employees: nearly 14,000 Revenues: USD 2,808 millionRevenues: USD 2,808 million Net Profit: USD millionNet Profit: USD million Net worth: USD millionNet worth: USD million

Carbon Compliance Markets Source: State and Trends of the Carbon Market 2008, Up 56%

World Bank Group’s Role Multi-sectoral perspective; Multi-sectoral perspective; Financial resources and leveraging power; Financial resources and leveraging power; Working with the private sector through IFC; Working with the private sector through IFC; Building partnerships with a wide range of institutions and stakeholders; Building partnerships with a wide range of institutions and stakeholders; Knowledge base and policy advice; Knowledge base and policy advice; Convening power, global reach, and local presence; and Convening power, global reach, and local presence; and Fiduciary, environment, and social safeguards. Fiduciary, environment, and social safeguards.

Evolving New Financial Architecture Current Current IBRD, IDA, Investment GuaranteesIBRD, IDA, Investment Guarantees Global financing mechanisms: GEF, CFGlobal financing mechanisms: GEF, CF Bilateral TFs: e.g. AUSAid – Infrastructure for Growth TF; PHRD Climate Change Window, TFESSD, ESMAP, EASTE…Bilateral TFs: e.g. AUSAid – Infrastructure for Growth TF; PHRD Climate Change Window, TFESSD, ESMAP, EASTE… New/planned New/planned Climate Investment Funds – UK, US, Japan, >$5 billion total capital for Clean TechnologyClimate Investment Funds – UK, US, Japan, >$5 billion total capital for Clean Technology Carbon Partnership Facility ($5b/5yrs)—programmatic CF investmentsCarbon Partnership Facility ($5b/5yrs)—programmatic CF investments Forest Carbon Partnership Facility ($300m initially)—TA and CF for REDDForest Carbon Partnership Facility ($300m initially)—TA and CF for REDD UNFCCC Process (approved in Bali)- funds in GEF: UNFCCC Process (approved in Bali)- funds in GEF: Technology Transformation Fund— focus in MICs, support of low carbon economy strategies)Technology Transformation Fund— focus in MICs, support of low carbon economy strategies) Adaptation Fund ($80-300m)— from 2% tax on CDM dealsAdaptation Fund ($80-300m)— from 2% tax on CDM deals

Leveraging: GEF, CTF, & CPF can Result in Transformation of a Clean Energy Market GEF CTF CPF

CC is a reality CC is a reality Thailand is going to be affected Thailand is going to be affected Think Big, Take Small Steps Think Big, Take Small Steps Actions to combat Climate Change can be a profitable business Actions to combat Climate Change can be a profitable business Concluding Remarks The World Bank can help The World Bank can help We have to act now: the Green Planet is in our hands We have to act now: the Green Planet is in our hands

Thank You For further information and suggestions contact: For further information and suggestions contact: Jitendra (Jitu) Shah Country Sector Coordinator, EASES, SE Asia Jitendra (Jitu) Shah Country Sector Coordinator, EASES, SE Asia The World Bank 30th Floor Siam Tower, 989 Rama I Rd, Pathumwan, Bangkok Thailand ' DIRECT LINE Bangkok Thailand ' DIRECT LINE ' Cell phone ' Cell phone