The Climate Policy Initiative (CPI), Fondazione Eni Enrico Mattei (FEEM) and the International Center for Climate Governance (ICCG) organized an international workshop on the “Challenge of Financing Low-Carbon Growth”, held on the Island of San Giorgio Maggiore, Venice on Thursday 15 April and Friday 16 April 2010.

The workshop brought together policymakers, academics, and experts from industry and the finance and energy sectors to explore the financing of climate policy. Using lessons from infrastructure development projects in renewable energy and in gas networks, financing was considered as one of the primary drivers of successful policy implementation.

After an outline of the importance of finance in climate policy, the workshop focused on relevant cases of infrastructure finance, illustrating the need for CPI’s core competence on performance review through analyses that assess implementation of specified policies, diagnosed the reasons for poor performance, and identified opportunities for improvement. Experts discussed how the experience of financing practices associated with gas networks on diversification of natural gas supplies might raise an analogue to performance questions in the context of the transition to a low-carbon growth future. Experiences were highlighted in the renewable energy sector, both at the national and international levels, and explore both public and private funding practices.

This workshop provided a platform for energy sector industrial firms, researchers, policymakers and financial institutions to start a concrete dialogue on how incentives between policies and investors could be aligned in order to pave the way for a low-carbon transition.

Agenda and Presentations

Welcome

• Bernardo Bortolotti, Executive Director, Fondazione Eni Enrico Mattei
• Thomas Heller, Executive Director, Climate Policy Initiative
• Barbara Buchner, Director, CPI Venice

Panel 1: What role for finance in climate policy?

This panel reviewed recent analyses of the climate financing problem and provides calculations of the financing costs performed by a number of institutions. The presentations aimed at outlining the challenge and specifying both the role for international finance (e.g., international market mechanisms) and national finance (e.g., national stimulus programs at the public level).

• Chair: David Nelson, Climate Policy Initiative
• Carlo Carraro, Chairman, Scientific Advisory Board of Fondazione Eni Enrico Mattei and President, University of Venice
• Emanuele Massetti, Senior Researcher, Fondazione Eni Enrico Mattei and Euro‐Mediterranean Centre for Climate Change
• Richard Bradley, Head, Energy Efficiency and Environment Division, International Energy Agency
• Guy Turner, Director of Carbon Markets, Bloomberg New Energy Finance
• Nick Robins, Head of Climate Change Centre, HSBC

Panel 2: Lessons on funding practices from developing gas networks

This panel used historical cases of infrastructure finance to highlight lessons for renewable energy and low-carbon growth. Panelists discussed three topics: a description of comparable policies; analyzing and diagnosing the outcome of these policies; and verifying the lessons from these policies for the purpose of shifting towards a low-carbon path. The focus of the discussion was on lessons from infrastructure finance practices in transnational gas networks and the role of public and private funding practices in facilitating transitions to low-carbon technologies in energy sector.

• Chair: William Ramsay, Director of the Energy Program, Ifri 
• Richard Jones, Deputy Executive Director, International Energy Agency
• Peter Hughes, Peter Hughes Energy Advisory
• Thomas Birr, Head of Strategies Department, RWE

Panel 3: Lessons from infrastructure finance in the renewable energy sector

This panel will presented a standard case from the U.S. perspective of how an energy developer makes its investment decisions, with an overview of the cost and risk factors involved, exploring which criteria investors take into account when financing conventional plants (e.g., fossil fuels) and how these criteria change when applied to unconventional (e.g. renewable) plants. Criteria including the characteristics of actors, organizational aspects, risk structure, and cost structure was analyzed in depth, in order to paint a better picture of the investment analysis that lies behind the infrastructure finance practices. Panelists provided perspectives from the developed and the developing world to compare and contrast these factors with those in the US, with a focus on determining what mechanisms can be used to make renewable cost competitive and drive greater development.

• Chair: Andrei Marcu, Head of Regulatory Affairs, Environment and Climate Change, Mercuria Energy Group
• Paolo Frankl, Head of Renewable Energy Division, International Energy Agency 
• Mark Ellis, Climate Policy Initiative
• Perspectives from the developed and developing world
• Roberta Bowman, Senior Vice President and Chief Sustainability Officer, Duke Energy
• Gonzalo Saenz de Miera, Director of Regulatory Prospective, Iberdrola
• Jonas Kollberg, Group Asset Management, Vattenfall

Concluding Panel: Technology innovation and diffusion

This concluding panel brought experts from the policy, research, business and finance communities together to focus on a specific financing question: how to design and implement policies that manage technology innovation and diffusion? Using the lessons learned from the workshop, panelists added their perspective on the incentives needed to pave the way for a low-carbon transition and the application to technology risk in developing new sources of energy.

• Chair: Thomas Heller, Executive Director, Climate Policy Initiative 
• François Dassa, Head of Corporate International Relation, EDF
• Ben Guest, Managing Partner, Hazel Capital
• Jeremy Oppenheim, Director, McKinsey Climate Change Special Initiative 
• Closing of the workshop by Thomas Heller, Executive Director, Climate Policy Initiative