This presentation was held during the 5th GIB Summit, May 27-28 2015. The presentation and more information on the Global Infrastructure Basel Foundation are available on www.gib-foundation.org

1. This presentation was
held during the 5th GIB
Summit, May 27-28 2015.
The presentation and
more information on the
Global Infrastructure
Basel Foundation are
available on
www.gib-foundation.org
The next GIB Summit will take place in Basel,
May 24-25, 2016.
The information and views set out in this presenation are those of the author(s) and do not necessarily reflect the opinion of the Global
Infrastructure Basel Foundation. Neither the Global Infrastructure Basel Foundation nor any person acting on its behalf may be held responsible
for the use of the information contained therein.

2. © Z/Yen Group
2015
Z/Yen Group Limited
90 Basinghall Street
London EC2V 5AY
United Kingdom
tel: +44 (20) 7562-9562
“When would we know our financial system is working?”
5th GIB Summit
Financing the Transition:
Sustainable Infrastructure in Cities
Thursday, 28 May 2015
Basel, Switzerland

3. © Z/Yen Group
2015
Financing the Transition:
Sustainable Infrastructure in Cities
♦ A Long Finance & WWF
report
♦ Published in March 2015
♦ Following six months of
research
♦ Full report available
online -
http://
www.longfinance.net/lf-
research.html?id=915

4. © Z/Yen Group
2015
♦ Rising urban population
Ø Expected 75% of world population of projected 9.6
billion people to live in cities by 2050
♦ Increasing infrastructure needs
Ø Upgrading existing vs. building new infrastructure
♦ Global infrastructure investment need is huge
Ø e.g. between USD 57 trillion (S&P) and 82 trillion by
2030 (OECD)
♦ Significant environmental impact
Ø Cities account for about 75% of global CO2 emissions
♦ How to finance and deliver the required urban
infrastructure sustainably?
Challenges facing cities

5. © Z/Yen Group
2015
♦ Provide an overview of financing instruments
commonly used to finance infrastructure
♦ Assess their potential to support sustainable
infrastructure development
♦ Focus on energy efficiency and renewable
energy projects
♦ Methodology
Ø Desk research
Ø 20 semi-structured interviews
Ø >180 responses to an online questionnaire
Ø A webinar to discuss preliminary findings
Research objectives & approach

6. © Z/Yen Group
2015
InterviewsFinancing the Transition: Sustainable Infrastructure in Cities
Fig. 3 Interviews
Sector Interviewees
Public cities Cape Town, Western Cape (South Africa)
Chicago (USA)
Gothenburg (Sweden)
Pune (India)
Sao Paulo (Brazil)
Vancouver (Canada)
Finance
multilateral
Asian Development Bank (ADB)
European Bank for Reconstruction and Development (EBRD)
European Investment Bank (EIB)
Finance
private, investors,
advisors
Allianz SE, Allianz CP
Inderst Advisory
GreenCape
Private other
infrastructure, technology
Siemens
CSOs, networks &
initiatives
C40
Cities Development Initiative Asia (CDIA)
Global Infrastructure Basel (GIB)
ICLEI
A questionnaire was issued online to gain insight
perception of sources of finance and financial instruments (see Appendix 3). 184

7. © Z/Yen Group
2015
♦ Defining sustainable infrastructure - infrastructure
assets or projects that
Ø reduce the environmental impact of urban infrastructure
(e.g. energy efficiency or renewable energy projects);
Ø improve the ability of such infrastructure to cope with the
consequences of climate change;
Ø help to protect biodiversity and ecosystem services;
Ø enable the integration of nature-based assets into urban
development.
♦ Challenges
Ø Conventional vs. sustainable infrastructure
Ø Unique vs. common issues facing cities
Ø New vs. common financing approaches & instruments
Sustainable infrastructure

8. © Z/Yen Group
2015
♦ Governments - local, provincial, national
♦ Financial services e.g. commercial banks,
specialist funds
♦ International financial institutions, regional and
national development banks, export credit
agencies
♦ Institutional investors - pension funds,
insurance companies, sovereign wealth funds
♦ Capital markets - e.g. traded debt and equities
♦ Other - corporate finance, angel investors,
community
Sources of finance

9. © Z/Yen Group
2015
Finding #1
Some financing instruments have higher
potential to enable investment in
sustainable infrastructure

10. © Z/Yen Group
2015
• instrument design and scope;
• the integration of sustainability into investment or lending criteria;
• conducive and stable public policies.
Fig. 1 – Financial instruments with significant potential to support investment
in sustainable infrastructure
Type Instruments
Public Public private partnerships (PPPs)
Tax incentives
Land value capture mechanisms
Building rights and permits
Grants and subsidies
Debt Loans (incl. concessional loans or loans blended with grants)
Special purpose bonds (e.g. green city bonds)
Targeted guarantees and credit enhancement
Debt refinancing mechanisms (e.g. asset-backed securities,
forfeiting)
Equity Listed infrastructure equity
Infrastructure funds
Thematic/targeted private equity structures and funds
Equity-funded direct investments (SPVs and JVs)
Financing instruments with potential
for sustainable infrastructure

11. © Z/Yen Group
2015
Finding #2
The lack of investable projects seems to
be the main issue preventing sustainable
infrastructure investment at scale rather
than the lack of finance

12. © Z/Yen Group
2015
Overcoming barriers to investability
Barriers
♦ Lack of robust funding
streams
♦ Lack of expertise and
market capacity
♦ Lack of scale
♦ Balanced risk-returns
Possible solutions
♦ Quantifying & monetizing
sustainability impact
♦ Demonstration &
capacity building
♦ Project aggregation
♦ Project prioritisation &
preparation
♦ Sound governance

13. © Z/Yen Group
2015
Finding #3
Cities can develop an attractive investment
proposition in sustainable infrastructure
based on a ‘product & marketing
approach’

14. © Z/Yen Group
2015
financing structure of sustainable infrastructure projects; public sector tools
incentives to leverage alternative sources of finance while meeting sustaina
objectives and targets; and sound governance and best practice in order to b
investor and stakeholder confidence.
Fig. 2 ancing
Firstly, cities should seek finance through external sources for projects that h
reasonable prospects of meeting inve -return requirements. P
resources should be targeted primarily at priority projects which lack clear
Project
preparation
&
pipeline
development
Mapping
public
tools &
incentives
Sound public
governance
&
best practice
Opportunities
for learning &
multi-
stakeholder
collaboration
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A ‘product & marketing’ approach

15. © Z/Yen Group
2015
♦ Tying low-carbon requirements to planning
application processes and tax incentives
Ø E.g. Vancouver (Canada), Pune (India)
♦ Leveraging economies of scale
Ø E.g. GreenCape (South Africa), Solar Energy
Corporation (India)
♦ Capturing increases in land value
Ø E.g. CEPACs, Sao Paulo (Brazil) or Crossrail,
Greater London Authority (UK)
♦ Green bonds – improving transparency and
disclosure
Ø E.g. Gothenburg (Sweden)
Early signs of city innovation

16. © Z/Yen Group
2015
Wealth of initiatives & resources
Research & data Best practice,
innovation & policy
Finance & sustainable
infrastructure
Africa Infrastructure
Knowledge Programme
(AIKP)
Global Commission on
the Economy & Climate
– New Climate
Economy
LSE Cities
New Cities Foundation
World Bank’s
Urbanization Knowledge
Partnership
WRI Ross Centre for
Sustainable Cities
C40 Cities Climate
Leadership Group
Cities Alliance
Compact of Mayors
ICLEI
Metropolis
United Cities and Local
Governments (UCLG)
WBCSD’s Urban
Infrastructure Initiative
WWF’s Earth Hour City
Challenge
Cities Development
Initiative for Asia (CDIA)
Energy Efficiency
Finance Institutions
Group (EEFIG)
Global Fund for Cities
Development (FMDV)
Global Infrastructure
Basel (GIB)
ICLEI’s Solutions
Gateway
SDI’s Urban Poor Fund
International
World Bank’s Low-
Carbon Liveable Cities
Initiatives

17. © Z/Yen Group
2015
1. Guidance on what sustainability means for
infrastructure (incl. how to measure impact)
2. Framework to guide cities in the process of
identifying and mapping relevant public sector
tools, incentives and financing instruments
3. Global database of sustainable infrastructure
projects and financing structures
4. Recognition for innovation and best practice
Recommendations

18. © Z/Yen Group
2015
♦ About the research project -
http://www.longfinance.net/lf-research.html?
id=915
♦ Report available online -
http://www.longfinance.net/images/reports/pdf/
Financing_the_transition_March2015.pdf
♦ Comments on the report welcome! Contact:
chiara_vongunten@zyen.com
THANK YOU!
More information