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GGGI recently published a report titled, Green Public-Private Partnerships for Public Infrastructure in Mongolia: PPP Model and Technical Guidelines for Green Education Buildings’. This report recommends Public-Private Partnerships (PPP) models and technical guidelines for green and energy efficient public education buildings tailored for Mongolia.

The PPP models provide detailed illustrations and comparable global practices for the contractual modalities through which the Government of Mongolia may effectively engage the private sector in the provision of public education infrastructure and services. The technical guidelines provide initial guidance to the government and various public and private stakeholders in the design and construction of green educational facilities. In the report, validation of various green design options against the baseline model was conducted through simulations in order to assess impacts of green design and technologies recommended in the guidelines. Compared to the baseline model, green options for new education buildings is expected to result in an GHG reduction of 47-67%, O&M savings (including energy costs) of 34-78%, whereas upfront construction costs increase by 13-65%. The recommended green option presents that its incremental costs can be recovered from lower operating costs within 22 years. In conclusion, the report recommends various policy measures in the legal/institutional, operational, and financial aspects in order to better facilitate the use of PPP schemes in the construction of green education buildings.

Increased investment in green infrastructure is an area where government efforts are essential for the transition to the green development model under the National Green Development Policy adopted in 2014 in Mongolia. Mongolia seeks to expand its use of PPP to improve the delivery of public infrastructure services, however, challenges in implementation remain. Since 2015, GGGI has collaborated with the Government of Mongolia in developing and implementing PPP models and technical guidelines for greener, pro-poor PPP applications. This report is the first effort to address policy and investment challenges through close collaboration between the Government of Mongolia and GGGI.

pic 2Building on the work on green infrastructure PPP models, GGGI’s support will focus on helping the Government access low-cost finance for green public buildings and infrastructure projects by designing a financing structure that is most beneficial for Mongolia and enhancing public and private capital flows into the program, in partnership with development partners such as the Asian Development Bank. GGGI is currently working with the Ulaanbaatar City Municipality for designing and preparing pilot PPP projects starting from public education buildings.

Read the full report here.

Read GGGI Director-General, Frank Rijsberman’s latest blog discussing clean disruption in the energy and transportation industries. This blog was originally posted on The Huffington Post on February 23, 2017

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In 2016, solar power became the cheapest form of energy in 58 lower income countries, including China India and Brazil. In Europe, in 2016, 86% of the newly installed energy capacity was from renewable sources. Solar power will likely be the lowest-cost energy option in almost all parts of the world in less than 10 years. Is it all over for fossil fuels?

Tony Seba, Author of “Clean Disruption of Energy and Transportation,” predicts that the industrial era of centralized fossil-fuel based energy production and transportation will be all over by 2030. Solar energy and self-driving electric vehicles will take over. New business models will allow people to call a self-driving car on their phone for a ride, ending the need for private car ownership. This change will occur as quickly as the transition from horse-drawn carriages to cars a century ago. The Grantham Institute for Climate Change and the Environment at Imperial College London, and independent think-tank the Carbon Tracker Initiative echoed Seba’s prediction in their recent report, stating that electric vehicles and solar panels could dominate by 2020, sparking revolution in the energy sector and putting an end to demand growth for oil and coal.

GGGI Breakfast Roundtable

The Global Green Growth Institute (GGGI) invited experts to debate Seba’s “clean disruption” last month at the World Economic Forum in Davos (see short summary of our conclusions here). We discussed what are the main impediments to a 100% clean energy infrastructure. The most immediate barriers are fossil fuel subsidies and current government legislation. The G20 countries pledged in 2009 to eliminate these subsidies, yet they continue to this day. Significant volumes of investment are shifting away from fossil fuels and towards alternative energy services, particularly in countries with binding renewable energy targets such as in Europe. The energy transition can accelerate through the removal of fossil fuel subsidies. Globally fossil fuel subsidies still amount to some $450 billion per year. Even African governments, with limited budgets and many competing priorities still subsidize fossil fuels to the tune of $20-25 billion per year according to Dr. Frannie Laeutier of the African Development Bank, speaking in Davos. The best way for governments to attract the private sector is to stand aside (i.e., remove impeding policies such as fossil fuel subsidies and enable market access) and let the market develop by itself. Easier said than done, of course, for countries with monopolistic power utilities, with large political influence; or for countries with heavy subsidies on electricity prices. GGGI supports its member governments to navigate this narrow path – to transform their economies towards a model of “green growth” that is sustainable and inclusive.

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For the immediate future the technological impediment is energy storage. Current government and utility concerns relate to “baseload” supply offered by conventional energy sources restrict the potential seen for expanding the share of renewables. Falling Lithium-Ion battery prices and rapid developments of energy storage systems, including smart grid software, are changing the landscape. Energy storage deployments in emerging markets could increase by 40% annually over the next five years. There are two implications of cheap energy storage in the form, of the large batteries that power electrical vehicles, for example. First, in developed countries with full grid connectivity the motivation comes at the point of “god parity” as Tony Seba puts it – when the cost of local renewable energy generation and storage goes below the cost of transmission and distribution through the grid. We may reach this point in 5-10 years. After this there is no economic sense to purchase from the grid, and thus households will voluntarily detach from the grid. Second, in non-grid connected rural areas of developing countries – low income household power consumption peaks in the morning and after dark, thus solar power without storage does not yet replace current forms of power. Once 15-hours of daily energy storage becomes affordable, decentralized solar power systems become the primary energy source, disrupting centralized grid-based energy systems.

At the IRENA Ministerial Conference in Abu Dhabi, also last month, the mood was remarkably upbeat on the technological potential of off-grid energy: investments in grid expansion are about to become less attractive than distributed energy systems to reach those that are currently still off-grid. But despite the annual doubling of installed solar capacity seen in recent years, renewables still only account for 7% of total energy generated globally. The key impediment is financial rather than technology. Because technology is changing at such a rapid pace, it is difficult for investors to accurately quantify technology risk and thus value finance offerings, which holds back competitive investment flows. For developing countries, the obstacles multiply as the finance issues are compounded with additional risks – foreign exchange as well as political –  plus fragile grid connectivity. Domestic lenders (i.e., banks and other financial institutions) remain wary of lending to niche sectors like off-grid energy. This limits the growth and scale of operations for companies as they continue to rely on grants and equity to finance their operations. For example, in India, although the off-grid energy sector has been active for more than 3 years, very few companies have achieved a meaningful scale in their operations. A combination of smart technologies with innovative financing – and possibly risk reduction through government or international climate finance support – is seen as critical for these markets. While many large investors and companies are reluctant to enter developing country markets, there are interesting developments, such as the provision of packaged off-grid solar energy, with TV, cable programming and mobile payments to 750 thousand households in Kenya, or the installation of roof top solar for over 4 million homes in Bangladesh. Another common challenge is access to debt capital from domestic financial institutions due to the complexities earlier noted around valuation of technology and new market risk.

So, can governments do more than stand aside? Yes, returns that exceed the cost of capital are needed, so support may be needed in the form of concessional finance initially where cost of capital is high. Public capital is critical for accelerating private investment in emerging markets by providing appropriate risk coverage for investors. Governments can show commitment to clean energy to instill confidence in investors and political stability. At GGGI we help our Members and partner countries to accelerate their renewable energy targets through improved energy planning, development of bankable projects, and access to concessional finance such as climate finance through a number of sources including the Green Climate Fund. Blending international finance with domestic government sources can create the environment to reduce risk and attract private investment.

In short, rapidly falling prices of renewable energy, particularly solar PV, combined with cheaper energy storage systems, are not just transforming the energy markets but disrupting them. Changes are not gradual, but abrupt, creating tremendous opportunity, as well as introducing significant risks for incumbent power companies and ministries of energy. Many governments are still planning to build new coal-fired power plants – investments that have an economic life of 20 or more years. Will these become obsolete before they are paid off? Should governments invest to expand energy grids, or switch to solar powered minigrids? These are critical questions many governments are struggling with – and the answers today are likely different then what they would have been just 3-5 years ago. From where we sit at GGGI, for investors looking for sustainable investment opportunities, the smart money is on renewable energy in emerging markets.

GGGI Breakfast RoundtableOn January 19, at the World Economic Forum in Davos, GGGI organized a Breakfast Roundtable engaging renewable engergy experts from around the world. Hosted by Hanwha Q Cells, and moderated by GGGI Director-General, Dr. Frank Rijsberman, the Roundtable featured Keynote Speaker, Tony Seba, author of “Clean Disruption of Energy and Transportation”.

Below is a summary of the key questions and discussions held during the Roundtable.

The premise

A disruption occurs when a new service or product displaces an existing product, market category or industry – the incumbent – quickly.  Tony Seba’s analysis demonstrates that when costs of a specific product or service fall by more than 10% per year consistently, a disruption occurs. Cost curves of solar photovoltaic cells and lithium-ion batteries demonstrate that a disruption is occurring for solar energy and self-driving electric vehicles. In 2016 of solar became cheaper than coal. At the low price for solar energy of 2.5 cts per KWh in UAE, no other energy source can compete. Presuming costs keep falling as they have for the last 15 years, solar energy and electric vehicles will start to displace incumbents by 2020 and these will be obsolete by 2030. Solar energy with distributed battery-based energy storage will displace fossil fuels and “the grid” as we know it. Electric self-driving shared vehicles will displace combustion-engine driven cars, like cars displaced horses a century ago.

Discussion

What are the main impediments to a 100% clean energy infrastructure?

Fossil fuel subsidies and government legislation are the most obviously impediments. Frannie Leautier of the African Development Bank estimated current fossil fuel subsidies in Africa alone at 25-30Bn$ per year at the HSBC breakfast yesterday. For the immediate future the technological impediment is “storage” – thus maintaining the importance of grid connections for solar energy (with net metering or feed-in tariffs as key supporting policies). Current government and utility concerns related to “baseload” supply offered by conventional energy sources restrict the potential seen for expanding the share of renewables – but the rapid developments of Energy Storage Systems – and related smart grid software – are rapidly changing the landscape. At the IRENA Ministerial Conference in Abu Dhabi earlier this week, on the potential of off-grid energy, the mood was remarkably upbeat: investments in grid expansion are about the be displaced by distributed energy systems. Lastly, despite the annual doubling of installed solar capacity seen in recent years– renewables only account for 7% of total energy generated globally and technology is changing so fast that it is difficult for investors to see a steady track record of reliability of some technologies. Monitoring of performance is essential to address this.

For developing countries, the impediments increase as the finance issues are compounded with additional risks as well as fragile grid connectivity issues. The cost of capital, FX risk as well as perceived political risk are all impediments. While many large investors and companies are reluctant to enter developing country markets, there are interesting developments, such as the provision of packaged off-grid solar energy, with TV, cable programming and mobile payments to 750 thousand households in Kenya, or the installation of roof top solar for over 4 million homes in Bangladesh. A combination of smart technologies with innovative financing – and possibly risk reduction through government or international climate finance support – is seen as critical for these markets.

Can developing countries leapfrog to a clean distributed energy infrastructure and achieve 100% energy access for all by 2030?

Developing countries have a proven track record of leapfrogging across markets such as banking / mobile payments and telecoms. There is no reason why energy infrastructure cannot be the same. Most of these jumps have been led by private sector and certainly, for distributed off grid energy to households this model could again be followed. It must however go hand in hand with the availability of credit. The conversion from horse to car could only happen in such a short space of time due to the availability of consumer credit (introduction of car leasing by GM), same as the smart phone. Cheaper products generate lower returns; the vast majority of profits are retained by the luxury end of the market. Consumer credit allows access to a wider array of products.

It is the job of institutions such as the Green Climate Fund to take the initial risk on these projects to help show other investors the way. There is a difference of opinion however as to whether after that developing countries need to offer higher returns to entice investors – at least initially, or whether they could, with initial risks reduced, offer similar to developed countries. In practice, banks often find a track record the most reassuring comfort for future investments.

What does private sector need most from governments to switch to a clean energy future?

Overwhelming most are agreed on the view that the best way for governments to attract the private sector is to largely stand aside (that is, remove impeding policies such as fossil fuel subsidies and enable market access) and let the market develop by itself. This can be difficult with monopolistic power utilities, with large political influence; or for countries with heavy subsidies on electricity prices. It is the role of advisors such as GGGI to help governments navigate this path in order to allow them to make the switch. Returns that exceed the cost of capital are needed, so support may be needed in the form of concessional finance initially where cost of capital is high. Governments need to show commitment to clean energy to inspire confidence in investors and political stability is a necessity.

How critical is innovation in Energy Storage Systems, including batteries, for clean energy disruption?

Essential. As already mentioned, the main argument by countries against the installation of solar is the inability to store energy as they can’t run 24/7 and therefore they require baseload generation in the form of coal or oil to balance their grids. With storage this argument is removed and power can be distributed at any time. From a domestic perspective there are two requirements for storage. Firstly, in developed countries with full grid connectivity the motivation come at the point of ‘GOD Parity’ (Tony Seba), when the cost of generation goes below the cost of transmission; after this there is no economic sense to purchase from the grid if energy can be stored and thus households will voluntarily detach from the grid. Secondly, in non-grid connected rural areas of developing countries – low income household power consumption peaks in the morning and after dark, thus solar power without storage does not replace current forms of power. As soon as storage is available at a cost that matches the affordability of customers, the argument is compelling to switch.

What will it take for Asian governments to switch from investing in new coal-fired power plants to clean energy?

Much of this argument is political. Korea, China, India, Malaysia, Indonesia and many other Asian governments are currently still planning to expand coal fired power plants which have a high risk of becoming redundant in under half of their lifespans. Air quality in many Asian cities such as Beijing, Delhi and Seoul has now declined to such a level that it may catalyse action. The Mongolian government declared a national state of emergency last Friday, because air pollution has become the worst in the world in the capital Ulaan Bator, and called on GGGI for help. Similar situations may spur investments that accelerate the transition to clean energy in Asia.

 


Keynote Speaker

Tony Seba, Author of “Clean Disruption of Energy and Transportation”, USA

 

Moderator

Frank Rijsberman, Director-General, Global Green Growth Institute (GGGI), Republic of Korea

 

Participants  

Eicke Weber, Director, Fraunhofer ISE, Germany

Fenella Aouane, Principal Green Finance Specialist, Global Green Growth Institute (GGGI), United Kingdom

Dong-Kwan Kim, Chief Commercial Officer and Executive Vice-President, Hanwha Q CELLS, Republic of Korea

Michael Bonte-Friedheim, Chief Executive Officer, Next Energy Capital, United Kingdom

Abid Kazim, Managing Director, Next Energy Capital, United Kingdom

Y. Bhg. Dato’ Azman Mahmud, Chief Executive Officer, Malaysian Investment Development Authority, Malaysia

Jason Ellsworth, Chief Executive Officer, Clenera, United States of America

Kristen Panerali, Director, Head of Electricity Industry, World Economic Forum, Switzerland

Kim Sang Hyup, Visiting Professor, KAIST/Chairman, Coalition for Our Common Future, Republic of Korea

Riccardo Maria Monti, Chairman, Italferr, Italy

GroupNAY PYI TAW, MYANMAR – February 9, 2017 – The Ministry of Natural Resources and Environment (MONREC) in Myanmar and the Global Green Growth Institute (GGGI) today signed a Memorandum of Understanding (MoU) to promote and facilitate collaboration on programs, research and joint activities that advance green growth in Myanmar.

The opening up of Myanmar’s economy in recent years has accelerated growth –  the World Bank projects the country’s medium term GDP growth at an average of 8.2 percent per year. However, this growth relies heavily on natural resources such as energy, forests, minerals and agriculture for exports and industries, which makes it essential that the growth pattern is environmentally sustainable.

H.E. U Khin Maung Yi, Permanent Secretary, Natural Resources and Environment said, “Myanmar is at a juncture in its development. We are welcoming foreign investment and stimulating SMEs. We see rapid urban development and industrialization. This will affect natural resources. It is crucial that we safeguard a green, sustainable development pathway. Therefore, we are glad to be signing a six-year agreement with GGGI today. “

The MoU signing took place in the capital Nay Pyi Taw during the Green Growth Potential Assessment (GGPA) workshop. The GGPA is a diagnostic tool which is used to identify areas where green growth has the highest potential of supporting the economic development of Myanmar. The exercise aims to select priorities for cooperation between GGGI and the government of Myanmar for the next five years.

“Myanmar has the potential to establish the foundations for strong, low-carbon economy that is sustainable in the use of natural resources, and resilient to climate change,” said Dr. Frank Rijsberman, Director-General of GGGI. “GGGI is committed to partnering with the government to identify green growth opportunities and leverage green investment.”

GGGI’s first project in Myanmar will focus on supporting the government in setting up a monitoring, reporting and verification (MRV) system for its Nationally Determined Contribution (NDC). This will allow the Government of Myanmar to monitor progress against the commitment it made to the Paris Agreement in 2015 to mitigate and adapt to climate change.

About the Global Green Growth Institute (GGGI)

Based in Seoul, GGGI is an intergovernmental organization founded to support and promote green growth. The organization partners with countries to help them build economies that grow strongly, are more efficient and sustainable in the use of natural resources, less carbon intensive, and more resilient to climate change. GGGI works with countries around the world, building their capacity and working collaboratively on green growth policies that can impact the lives of millions. To learn more about GGGI, see http://www.gggi.org and visit us on Facebook and Twitter.

presidentBOGOTA – February 01, 2017 – The President of Colombia, H.E. Juan Manual Santos, today launched an expert Green Growth Task Force to develop a national policy framework that combats deforestation and other environmental challenges by promoting sustainable economic development, environmental conservation and social inclusion.

Over 400 participants attended the roll-out of the Task Force, which includes high-level advisors, opinion leaders and experts, and is sponsored by international organizations such as the World Bank, the French Development Agency, KfW, and the Global Green Growth Institute (GGGI).

According to recent studies, Colombian economic growth has led to the depletion of natural resources, such as forests, water and minerals, and has also caused environmental pollution. Further, productivity in Colombia has been limited by the inefficient use of natural resources.

The Task Force, under the guidance of the Colombian Government’s National Planning Department (DNP), will conduct approximately 10 technical studies on these issues focusing specifically on water and soil productivity, energy efficiency, circular economy, bioeconomics, forestry economics and labor productivity.

“Economic growth must not deplete our natural resources,” said Simón Gaviria Muñoz, Director of the DNP. “We must work toward preserving Colombia’s natural capital while at the same time generating climate compatible growth.”

The DNP is seeking to position Colombia as a green growth reference in Latin America by 2030 through the development of a Long-term Green Growth policy or road map. This Green Growth Task Force will contribute to policies that should be implemented to boost green growth in Colombia in the next 15 years.

“Colombia is eager to demonstrate the benefits of green growth and attract job-creating investments that help meet long-term objectives associated to sustainable development and climate change mitigation,” said Carolina Jaramillo, GGGI Country Representative in Colombia. “We are very encouraged to be a part an in-depth process that will lead Colombia to greater low-carbon, more sustainable and inclusive development in the coming decades.”

croppedIn 2016, GGGI conducted a Green Growth Potential Assessment study in partnership with the DNP and the United Nations Environment Programme, to identify the scope of work and priority issues the Task Force will address in 2017.

GGGI will support the technical secretariat of the Task Force, providing guidance and supervision of the sectoral studies and ensuring that feedback is provided by line ministries and other relevant entities under each priority area to be addressed.

GGGI has been a strategic partner of the DNP since 2014, working to mainstream green growth into Colombia’s planning instruments.

 

About the Global Green Growth Institute (GGGI)

Based in Seoul, GGGI is an intergovernmental organization founded to support and promote green growth. The organization partners with countries to help them build economies that grow strongly, are more efficient and sustainable in the use of natural resources, less carbon intensive, and more resilient to climate change. GGGI works with countries around the world, building their capacity and working collaboratively on green growth policies that can impact the lives of millions. To learn more about GGGI, see http://www.gggi.org and visit us on Facebook and Twitter.

croppedBANGKOK – January 20, 2016 – Thailand’s Ministry of Natural Resources and Environment (MNRE), with the collaboration of the Global Green Growth Institute (GGGI), and other national and international partners, today launched the Roadmap for Nationally Determined Contribution (NDC) to reduce the country’s greenhouse gas(GHG) emissions under the Paris Agreement.

As part of the global effort to address climate change, last year Thailand submitted its plan to the United Nations Framework Convention on Climate Change to reduce its GHG emissions by 20-25% from a business-as-usual level by year 2030, and ratified the Paris Agreement which entered into force on 4 November 2016.

General Surasak Kanjanarat, Minister of MNRE, presided over the opening ceremony of the Launching Thailand’s NDC Roadmap – Post 2020 Contribution event, which was attended by the Director-General of GGGI, the Secretary-General of the Office of Natural Resources and Environmental Policy and Planning (ONEP), the Director of Thailand Greenhouse Gas Management Organization (Public Organization) (TGO), the Deputy Resident Representative of United Nations Development Program (UNDP) and the Project Director of German International Cooperation (GIZ). Approximately 500 participants attended the launch event.

“Now that Thailand has revealed its strong commitment to tackling climate change, this engagement among different sectors on NDC Roadmap development confirms how we commit to this challenge,” said General Surasak Kanjanarat. ”The NDC Roadmap serves as a long-term policy framework to be converted into real activities by formulating NDC action plans for specific sectors.”, said General Surasak Kanjanarat.

Thailand’s NDC is a national commitment and economy-wide effort to lessen GHG emissions through green growth, renewable energy, energy efficiency, and sustainable transport. To achieve such ambitious targets, strong collaboration from all relevant government agencies, private sector, civil society, and all-walk-of-life is needed.

GGGI has been working with the Royal Thai Government since 2014 to assist the country to reduce the country’s GHG emissions through green growth development. GGGI worked with ONEP to develop a practical and implementable GHG Reduction Roadmap for the industrial sector, which represents 38% of GDP and at least 23% of emissions.

Group“GGGI is determined and committed to assisting Thailand achieve its NDC and green growth objectives, by working in partnership to implement the actions and deliver goals within the Roadmap,” said Dr. Frank Rijsberman, Director-General of GGGI.

Currently, GGGI is working to develop the NDC Action Plan for the Industrial Sector that with take clear steps towards achieving the NDC targets, which will play a major role in GHG reduction. In 2017-2018, GGGI will be assisting Thailand in NDC implementation and capacity development.

Thailand became the twenty-sixth Member country of GGGI in January 2016.

About the Global Green Growth Institute (GGGI)

Based in Seoul, GGGI is an intergovernmental organization founded to support and promote green growth. The organization partners with countries to help them build economies that grow strongly, are more efficient and sustainable in the use of natural resources, less carbon intensive, and more resilient to climate change. GGGI works with countries around the world, building their capacity and working collaboratively on green growth policies that can impact the lives of millions. To learn more about GGGI, see http://www.gggi.org and visit us on Facebook and Twitter.