Cities, Regions Get Smart About Financing Low Carbon Technology

Cities, Regions Get Smart About Financing Low Carbon Technology

An international roster of leaders from city and state governments and business shared their best strategies for financing large-scale deployment of low carbon technologies today at the Climate Week NYºC 2010.

In panels hosted by The Climate Group on the second day of the week-long event in New York, discussion focused on already available smart information and communications technologies (ICTs) that can make the growing urban infrastructure in cities around the world more efficient. 

The Climate Group’s 2008 report, SMART 2020, showed that smart grids, buildings and transport systems could reduce global emissions by 15 percent in 2020.
Climate Week Inset
This represents a significant proportion of emissions or energy/carbon intensity reduction targets currently on the table -- Europe’s 20-20-20 emissions reduction target, India’s 20-25 percent emissions intensity target and China’s 40-45 percent carbon intensity target by 2020.

"We must unlock our potential to promote technological innovations and behavioral changes aimed at delivering a low-carbon future," said Dr. Han Seung-soo, former prime minister of the Republic of Korea and chairman of the board of directors of the Global Green Growth Institute.

Han and Alan Salzman, chairman and founder of VantagePoint Venture Partners, were keynote speakers in the morning-long program.

"Some remarkable changes are already taking place all over the world," Han said in prepared remarks. "While there is no silver bullet to dealing with the climate challenge, I am heartened to see a broad coalition from all sectors of society striving to achieve green growth within their own respective realms.”

Cities represent large and growing markets for smart technologies -- with the global urban population of more than three billion predicted to grow to five billion by 2025, cities are currently responsible for 70 percent of global emissions. But cities and regions must find ways of financing rapid large-scale deployment of smart technologies to meet their energy efficiency and renewable energy goals.

The financial community is already recognizing smart technologies as a good investment opportunity.

“Low carbon technologies are now identified as significant investment opportunities by the global financial industry -- they are already providing highly attractive returns on investment," Salzman said in a statement.

"But we need to greatly increase the pace and scale of financing to reach our societal goals. City and state governments have the power to accelerate the adoption of low-carbon solutions and make them even more attractive to the private sector.”

The two panels and their speakers were:

Deborah Ifrah, executive director of investment banking at JPMorgan Chase, who moderated a discussion on smart solutions in Europe, Canada and the U.S. with:

  • Klaus Chavanne, managing director and vice president of quantitative risk management, MEAG New York Corporation
  • Bernabé Unda, regional minister of Industry, Innovation, Energy and Tourism, Basque Government
  • Clay Nesler, vice president of Global Energy and Sustainability, Johnson Controls Inc.
  • Frans-Anton Vermast, advisor on public and international affairs, Physical Planning Department, city of Amsterdam

 Rutu Dave, climate change specialist for the World Bank Institute, who moderated a discussion on smart solutions in India, China and Korea with:

  • Dimitri Zenghelis, director of the Climate Change Practice for Cisco Systems, IBSG
  • André Andonian, director, McKinsey
  • Samir Menon, head of client relationships, Eco-Sustainability Services, Tata Consultancy Services
  • Dr. Stephen Hammer, Executive Director of the Energy Smart Cities Initiative, JUCCCE

“The evolution and adoption of smart technologies across grids, commercial and industrial environments, and homes has created one of the largest and fastest growing global markets we have seen in quite some time," Ifrah said in comments offered before the sessions. "Global legislation, public and private financing, as well as consumer education have proven critical to forming the industry's foundation and revolutionizing world-wide energy consumption practices. JPMorgan is excited to be a part of this important global effort.”

Chavanne said, “With over €1 billion invested in sustainable buildings, MEAG’s experience is that sustainable buildings provide a better value for investment. We will continue to pursue investment opportunities in sustainable buildings as they arise.”

The technology industry is actively involved in helping to find solutions to financial barriers to the deployment of smart technologies.

“Smart Buildings not only employ information and communications technology to reduce energy use, but also to continuously measure and verify energy savings," said Johnson Controls' Nesler. "This is a key enabler for energy efficiency financing models that help building owners make investments in large-scale energy efficiency retrofit projects."

Zenghelis of Cisco said, “Strong, effective and timely action to protect growth, support poverty reduction and create new economic opportunities is needed now to avoid substantial risks from climate change. At Cisco, we’ve found that creating smart cities is a key enabling action to support the world’s emission reduction goals.”

City governments are also increasingly keen to invest in the deployment of smart technologies as a way of achieving their emissions reduction targets.

“Through a unique collaboration between citizens, businesses and governments we can achieve huge energy savings now and in the future through innovative technologies that combine electricity and connectivity," said Vermast of Amsterdam. "Smart Policy, government orchestration and initial public funding can trigger large private investments to boost a regional economy and stimulate new products and services that meet the ultimate goal of CO2 emissions reductions.”

Unda of the Basque Government said, “Direct grants to users and consumers and innovative public procurement are helping us meet our energy efficiency targets.”

One size does not fit all, and promising ideas can be stalled, as seen with PACE financing in the U.S. Many thought PACE would unlock many of the financing barriers to building retrofits and small scale renewable energy, but the tax assessed financing mechanism has been ruled too risky by the Federal Housing Financing Authority and has left many states, local governments and homeowners frustrated.

Without many of the hurdles of retrofit, developing economies in Asia have been successful in attracting finance for energy efficiency and renewable energy projects. Regional governments there regard the deployment of low carbon technology to reduce emissions associated with rapid urbanization as closely tied to economic development and raising the quality of life for thousands of citizens.

“The role of finance has never been more important in tackling global challenges like poverty and climate change," said Dave. "But it is not just about providing money -- it is also about the know-how on how to use the money in a way that is smart and innovative to support local communities. By understanding the impact of climate change at the local level, we can help countries to use their resources more effectively, for example by blending traditional development funding with climate and carbon finance.”

Hammer of JUCCE said, “The rapid growth in real estate development, automobile use and energy use in cities around the world presents an unprecedented challenge for public officials. As the world’s population moves to cities, we have a unique opportunity to set the world on track for a clean technology future by integrating energy-efficiency, renewable energy and intelligent transportation options into local growth plans and economic development. If we can create energy smart cities in a timely and cost efficient matter, we will be well on our way to solving climate change.”

The panel discussion during Climate Week NYºC was presented as part of The Climate Group’s SMART 2020 Cities & Regions Programme, which aims to share learnings from 10 global, urban demonstration projects involving innovative partnerships, policies and financing mechanisms.

Molly Webb is head of smart technology for The Climate Group. Articles, analyses and resource material about Climate Week NYºC are available at www.greenbiz.com/topic/climate-week-nyc-2010. For more information and event developments, visit www.climateweeknyc.org and Twitter @ClimateWeekNYC.

Images of the Kraanspoor in Amsterdam courtesy of Ontwerpgroep Trude Hooykaas bv.