The Regulation on the Energy Union Governance requires the EU member states to design national energy and climate plans. The implementation of these plans demands the mobilization of significant capital by 2030. Czechia and Latvia introduced a package of financial incentives and fiscal policies to stimulate investment to decarbonize their economies. Still, their impact is not yet sufficient for achieving ambitious energy and climate targets. At the national and local level, know-how on structuring viable projects and experience with significant private capital mobilization are limited and the member states need new knowledge and capacity to raise this capital.
The Climate Investment Capacity project aims to address that challenge and build new capacity in Germany, Latvia and Czechia. The starting point is already existing knowledge and know-how which the project will transfer and adapt to national circumstances with the help of implementing partners.
The central outcome are the skills of the public and financial sector to address the investment challenge in the focus countries. Building on a learning-by-doing approach, the project will produce:
- analyses of investment need to reach the 2030 climate and energy targets,
- investment maps to track public finance and private investment flows into climate and energy transition actions, and
- capital raising plans to close the gap between the need and the current investment flows.
The countries will therefore be in a better position to invest in low-carbon solutions, contributing to successful completion of national plans for the 2030 targets. They will be able to inform the EU policy discourse about their transparency towards the implementation of the EU Energy and Climate Package 2030, international climate commitments e.g. EU “National Determined Contributions” under the Paris Agreement, as well as spending EU and national public budgets on climate-related action. This could inspire the EU level and other EU member states’ decisions on promoting sustainable finance.
Czech Technical University in Prague (CVUT)
Riga Technical University (RTU)
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CIC2030 project kick-off in Berlin, Germany on 27-28 November 2018
The German Kick-Off served to provide a first fine tuning for the project scope, workplan, and methodological approaches, which could be applied in the project core deliverables in line with the stakeholder interest, e.g. the German development bank KfW, the German Federal Ministry of Economic Affairs and Energy (BMWi), and the German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety (BMU).
COP24 Side-Event in Katowice on 10 December 2018
I4CE, Wise Europa, and IKEM hosted the COP24 Side-Event “From domestic climate finance tracking to climate capital investment plans: what’s next in France, Europe and worldwide?” on 10th December 2018. The event presented the existing and emerging practice on tracking climate investment and finance – and how it is being integrated into the policy and planning process.
The event featured an introduction and overview of climate finance landscapes through the case of France by Ian Cochran – Senior Adviser at I4CE followed by an extensive panel discussion with presentations by Maciej Bukowski – President, Wise Europa (Poland), Aleksandra Novikova – Senior Research Associate, IKEM (Germany), Ophélie Risler – Head of Climate Action Department, French Environment Ministry and Richard Baron – Executive Director, 2050 Pathways Project
The kick-off in Prague, the Czech Republic on 15 January 2019
The kick-off meeting in Prague aimed to introduce our project to the key beneficiaries in the Czech Republic, to discuss with them our outputs, and to merge in their expectations, data, and knowledge. Among the stakeholders participating were the Ministries the Environment, the Ministries of Finance and the Ministry of Industry and Trade. Insights from the workshop were the need to shift the energy transition from subsidies provided by EU funds to new innovative financial instruments. In particular, much more efforts have to be given to decarbonize energy supply, the buildings sector, and the transport sector.
The kick-off of the project in Riga, Latvia on 24 January 2019
The kick-off meeting in Riga aimed to introduce our project to the key beneficiaries in Latvia and receive feedback of key project beneficiaries to the scope, methodology and workplan of core deliverables. It furthermore aimed to establish a close cooperation with some of these stakeholders in order to involve them into the co-design of these deliverables. Among the participants were the Ministry the Environment and Regional Development, the Ministry of Finance, and the Ministry of Economics. They emphasized the need to understand how other countries are financing their energy transition and exchange on instruments and patterns that worked well. This was especially for the energy generation and infrastructure as well as the building sector, which are responsible for the majority share of emissions in the country.
Contribution to the EUKI Academy Webinar on 14 February 2019
As a part of the CIC2030 project, Aleksandra Novikova, PhD, held the third EUKI Academy Webinar on the importance of tracking energy and climate investment flows, how it is done and what are the obstacles to tackle. The webinar series is part of the EUKI Academy of the European Climate Initiative and was initiated as a response to various requests from project implementers to offer additional services with regard to capacity development, networking and sharing of information along EUKI-related topics.
On the 14th December, 40 participants followed the analysis of the Energy and climate plans, how climate and energy investment maps (CEIM) can serve tracking public finance and private investment flows and how to develop investment gap & need analyses and capital raising plans. Furthermore, Andreas Schneller / Adelphi spoken about the EBRD’s SlovSEFF as a successful example of a sustainable energy financing facility before the webinar finalized in a discussion with the participants.
Finalization of “Climate and energy investment map of Germany. Status Report 2016” on 28 February 2019
By the end of February 2019, the IKEM’s team finalized the report assessing the status quo of climate and energy investment in Germany for the year 2016. The report features a map illustrating the volume of climate and energy investment flows starting from the sources and intermediaries of finance, through financial instruments used, and recipient sectors including agriculture, buildings, energy, industry, and transport. The map supports the understanding about who invests how much into what kind of measures and it serves as an example for Latvia and Czechia for replicating this exercise.
The report: “How to Assess Investment Needs and Gaps in Relation to National Climate and Energy Policy Targets? A Manual – and a Case Study for Germany” was completed by the team of Juergens & Rusnok Advisors, as part of the EUKI project consortium. The report contains an overview of different methods for investment needs and gaps analysis, explains their fundamental differences and presents case studies for two sectors in Germany.
Climate finance workshop on 15 March 2019 in Berlin, Germany
On 15 March 2019, we co-organized a workshop on Tracking finance flows and investment needs for the energy and climate transition. The workshop was part of our project as well as part of the project “Landscapes of Climate Finance: Promoting debate on climate finance flows in Central Europe” supported by the European Climate Initiative (EUKI) and conducted by NewClimate Institute, WiseEuropa and I4CE – Institute for Climate Economics.
The workshop goal was the establishment of an exchange on methodologies for tracking climate finance and some new results from climate tracking in France, Germany, Czech Republic, Latvia and Poland. The other goal was the discussion of methodologies for analyzing investment needs, gaps and challenges, with the latest reviews from Germany and France. Finally, it aimed to discuss how climate finance tracking and an improved understanding of investment needs can support different types of decision and policy making, e.g. for processes such as for the National Energy and Climate Plans and Long-term Strategies and working towards long-term alignment with the Paris Agreement.
- Public Notes
- Session 1 – 2016 CEIM Germany – IKEM
- Session 1 – Domestic Climate Investment and Finance-Landscapes
- Session 1 – Domestic Landscape of Climate Finance – WiseEuropa
- Session 1 – Energy and Climate Investment in Czechia – CTU
- Session 1 – National Climate Finance Tracking – CPI – NewClimate Institute
- Session 2 – From the French national low carbon strategy to investment needs – I4CE
- Session 2 – How to assess investment needs and gaps in relation to the 2030 climate and energy targets – IKEM
- Session 3 – Criteria for Paris aligned investing – NewClimate Institute
- Session 3 – Tracking finance flows in the context of Article 2.1c of the Paris Agreement – OECD
Contribution at the Bennett Institute for Public Policy on 3 April 2019 in Cambridge, England
As part of the “Brownbag lunch” series at the Bennett Institute for Public Policy Dr Michaela Valentova held a talk about “Tracking energy and climate investment flows – Climate Investment Capacity 2030”. Special focus was put on the importance on climate tracking and on the coverage of investment flows by the NECPs.
Mapping climate finance: Lessons learnt from Czechia and German at IAEE 2019 from 25-28 August in Ljubljana, Slovenia
Dr Michaela Valentova will speak at the 16th European Conference of the International Association for Energy Economics (IAEE) about the similarities and differences of the Czech and German approach towards financing the energy transition. Thereby, focusing on lessons learned from the German Climate and Energy Investment Map and how to transfer them to the Czech analysis.
Climate and energy investment map of Germany. Status Report 2016
Addressing climate change will require the redistribution of investment towards climate-friendly solutions as well as an overall increase in such investment. As one important element in addressing this challenge in the European Union, the Regulation on the Energy Union Governance requires the EU Member States to create national energy and climate plans (NECPs). These must include details on current investment flows to the decarbonisation of Member State economies.
The climate and energy investment map (CEIM) for Germany for the year 2016 prepared as one of our key project outputs contributes to this discussion. Prepared through the evaluation of recent data, the map represents climate and energy investment flows starting from the sources of capital and the relevant intermediaries, through instruments used, and recipient sectors. To construct the map, we used a bottom-up approach tracking actual 2016 disbursements at a technology level, aggregating it on sector level and then on country level. The German CEIM 2016 is an update of the German climate finance landscape 2010 developed by Climate Policy Initiative and we made our best to compare the results as well as the methodological and data challenges of these assessments.
Considering the climate-specific investment flows that we were able to trace, we observe a 16% increase in the volume in 2016 (EUR 42.7 billion) relative to 2010 levels (EUR 36.7 billion). These volumes reflect the share of incremental investment in energy efficiency (EUR 8.5 billion), the total investment cost of renewable energy deployment (EUR 25.0 billion), and the total investment cost of non-energy-related mitigation and cross-cutting measures (EUR 9.3 billion). Relative to 2010 investment, the volume of flows to renewable energies decreased by 6%, while the volume of flows to energy efficiency increased by 18%. The private sector accounted for 83% of total investment; the remaining 17% originated in the public sector. Similar to 2010, both low-cost debt and grants offered by public actors played an important role in driving private investment in 2016. Sectors that attracted the largest share of investment were the buildings sector and the energy generation and transmission sector.
Investment Needs and Gap Analysis. A Manual – and Case Study for Germany
How to Assess Investment Needs and Gaps in Relation to National Climate and Energy Policy Targets? The report addresses this central question by providing a review of existing models and studies. Investment needs assessments are relevant to make long-term investment related decisions, both for the public and private sector. This is particularly the case when market failures and public goods require policy intervention to achieve a socially optimal level and allocation of capital. Investment needs assessments produce insights that can be instrumental in evaluating, legitimizing and motivating respective choices by private and policy decision makers.
To make the best use of model outputs representing, in our case, investment needs related figures, it is important to understand their underlying drivers. Across the different studies which model Germany’s investment needs to reach climate targets in 2030 or 2050, figures range from EUR 24.9 billion to EUR 58.5 billion annually. The wide range is determined by discrepancies in scenarios, and in underlying models and assumptions. This illustrates the importance of understanding the differing frameworks in investment needs assessment studies
Therefore, the report discusses the different rational and the analytical frameworks in the range of models that are used to analyse investment needs, their key elements and key factors, assumptions, and choices driving their results and outputs. Furthermore, presenting specific insights for Germany by exemplifying prototypes for assessing investment needs for energy efficiency investments in buildings and renewable energy investments in the energy sector.
- Climate investment capacity (CIC2030):
- Countries: Germany, Latvia, Czechia
- Project duration: 09/2018 – 12/2020
- Implementing Organization: Institute for Climate Protection, Energy and Mobility (IKEM).
- Implementing Partner(s): Czech Technical University in Prague (CVUT) and Riga Technical University (RTU)
- The European Climate Initiative (EUKI): This project is part of the European Climate Initiative (EUKI). EUKI is a project financing instrument by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU). The EUKI competition for project ideas is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. It is the overarching goal of the EUKI to foster climate cooperation within the European Union (EU) in order to mitigate greenhouse gas emissions.
The European Climate Initiative (EUKI)
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