Session 9 Naoyuki Yoshino

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<ul><li><p> How to boost green energy </p><p>development ? </p><p>Role of Financing </p><p>Farhad Taghizadeh-Hesary, Ph.D. Faculty member, Keio University Visiting Professor, The University of Tokyo </p><p>Oct 14, 2016 </p><p>ADBI - OECD </p><p>1 </p><p>Naoyuki Yoshino, Ph.D. Dean, Asian Development Bank Institute (ADBI) Professor Emeritus, Keio University, Tokyo, Japan </p><p>10/14/2016 </p></li><li><p>10/14/2016 2 </p><p>Outline: </p><p>1- ADB report on sustainable energy for all </p><p>2, Asian Situation of renewable energy </p><p>3- How to cope with the current slowed growth in the </p><p>renewable energy supply? </p><p>4, Financing method of Renewable Energy </p><p> and Green bond </p></li><li><p>1. </p><p>10/14/2016 3 </p></li><li><p>4 10/14/2016 </p></li><li><p>10/14/2016 5 </p></li><li><p>6 10/14/2016 </p></li><li><p>10/14/2016 7 </p></li><li><p>10/14/2016 8 </p></li><li><p>10/14/2016 9 </p></li><li><p>10 </p><p>3. How to cope with the </p><p>current slowed growth in </p><p>the renewable energy </p><p>supply? </p><p>10/14/2016 </p></li><li><p>1. Raise the renewable energy subsidy </p><p> by raising tax on CO2, NOX etc. </p><p>2, Raise the governmental R&amp;D expenditures </p><p>on technologies related to the renewable </p><p>energy resources </p><p>3. Introducing new way of financing </p><p> HTIT = Hometown Investment Trust Fund </p><p> Green bond </p><p>4. Removing trade barriers (FTA,..) </p><p>10/14/2016 11 </p></li><li><p>Wind Power Fund </p><p>Construction costs = 2 million US $ </p><p>Future Environment Relies on You </p></li><li><p> &gt; </p><p>PRODUCTS </p><p> Various Wind power generators were constructed in Japan </p><p> The fund constructed more than 16 regions of wind powers </p><p>Tsunami and earthquakes Accident of Nuclear power </p><p>FUKUSHIMA 2011-3-11 </p><p>http://www.cwp.co.jp/index.htmlhttp://www.cwp.co.jp/message/index.htmlhttp://www.cwp.co.jp/products/map.htmlhttp://www.cwp.co.jp/products/history.htmlhttp://www.cwp.co.jp/company/index.htmlhttp://www.cwp.co.jp/contact/index.htmlhttp://www.cwp.co.jp/index.htmlhttp://www.greenfund.jp/http://www.h-greenfund.jp/http://css-holdings.com/http://www.c-energy.co.jp/http://www.cwp.co.jp/products/area/mukai.htmlhttp://www.cwp.co.jp/products/area/nishime.htmlhttp://www.cwp.co.jp/products/area/huumin.htmlhttp://www.cwp.co.jp/products/area/yumekaze.htmlhttp://www.cwp.co.jp/products/area/kazeru.htmlhttp://www.cwp.co.jp/products/area/notorin.htmlhttp://www.cwp.co.jp/products/area/kazami.htmlhttp://www.cwp.co.jp/products/area/namimaru.htmlhttp://www.cwp.co.jp/products/area/wanzu.htmlhttp://www.cwp.co.jp/products/area/magurun.htmlhttp://www.cwp.co.jp/products/area/kantaro.htmlhttp://www.cwp.co.jp/products/area/kazekomachi.htmlhttp://www.cwp.co.jp/products/area/tenpumaru.htmlhttp://www.cwp.co.jp/products/area/kanami.htmlhttp://www.cwp.co.jp/products/area/karinpu.htmlhttp://www.cwp.co.jp/products/area/hamakaze.htmlhttp://www.cwp.co.jp/index.htmlhttp://www.cwp.co.jp/message/index.htmlhttp://www.cwp.co.jp/products/map.htmlhttp://www.cwp.co.jp/products/history.htmlhttp://www.cwp.co.jp/company/index.htmlhttp://www.cwp.co.jp/contact/index.html</p></li><li><p>Private Financial Scheme of Wind Power Collected by Individuals (started in 2001-Sept) </p><p> Hokkaido Green Fund </p><p> Construction </p><p>Costs = 2million US $ </p><p>Investors 2000 </p><p>people </p><p> Each person </p><p>1000 US$ </p><p>Sell to Power </p><p>Company </p><p>Final User </p><p>PE 1+0.05 </p><p>5% surcharge </p></li><li><p>Financial Scheme of Wind Power </p><p>Collected by Individuals </p><p> Hokkaido </p><p> Green </p><p> Fund </p><p> (60%) </p><p>Senior Bank Loans </p><p>(20%) </p><p>Donation </p><p>Investors </p><p>(249) </p><p> Sell to Power </p><p>Company </p><p>Final User </p><p>PE=5% surcharge </p><p> Sales </p><p>Of Power Government </p><p>Fund, Carbon Tax (20%) </p></li><li><p>Structure of Wind Power Fund </p><p>249 people participated (donation and investment) </p><p>Total cost of one wind power = 2 million US $ </p><p>5% extra price is charged = (1+0.05)X PE </p><p>People should reduce Energy consumption by 5% </p><p> so that total energy costs remain the same </p><p> Revenue : sales price of electric power supply </p><p> cannot set the price based on MC (Price=MC) </p></li><li><p>Revitalization of Tsukubane Hydro Power </p><p> (Nara state) </p><p>250 investors, total 525 thousand US dollars, Japan </p><p>Original </p><p>Dam was </p><p>constructed </p><p>more than </p><p>100 years </p><p>ago </p></li><li><p>Solar Power Panel </p><p>Funds </p><p>in Japan </p><p>(Iida city) </p></li><li><p>Scheme of Financing for Power Panel </p><p>Local Government </p><p>Subsidies (2/3) </p><p>Private Individuals </p><p> Hometown Trust Funds </p><p>1000 US$ - 5000 US $ </p><p>Power </p><p>Company </p><p>377 power panels </p></li><li><p>8-years-Fund - per person 1000 US $: </p><p> Expected Dividends </p><p>125 US$ 140 US$ </p><p>Total = 1090 US $ </p></li><li><p>Solar Powers in Japan </p></li><li><p>Government Financing (Externality Effects) </p><p>1, Measure the negative external effects of CO2 and NOX </p><p>2, Levy Tax on CO2 and NOX </p><p> Transfer to renewable energy </p><p>3, Provide R&amp;D subsidy to renewable energy projects </p><p> Injection of tax revenues to investors in renewables </p><p> R&amp;D (renewable energy sector) </p></li><li><p>Infrastructure Investment </p><p>Highway </p><p>Railway </p><p> Non-affected region </p><p>Non-affected region </p><p>Private investment </p><p> SME development </p><p> Agricultural farmers </p><p>Employment </p><p>Human capital </p><p>Positive </p><p>Spillover </p><p>effect </p><p>Spillover effect </p><p>23 </p></li><li><p>10/14/2016 24 </p></li><li><p>10/14/2016 25 </p></li><li><p>Spillover effects Return to investors 1956-60 </p><p>1961-65 </p><p>1966-70 1971-75 1976-80 1981-85 </p><p>Direct Effect (Kg) 0.696 0.737 0.638 0.508 0.359 0.275 </p><p>Indirect Effect (Kp) 0.453 0.553 0.488 0.418 0.304 0.226 </p><p>Indirect Effect (L) 1.071 0.907 0.740 0.580 0.407 0.317 </p><p>20% Returned 0.3048 0.292 0.2456 0.1996 0.1422 0.1086 </p><p>%Increment 43.8 39.6 38.5 39.3 39.6 39.5 </p><p>26 </p><p>1986-90 1991-95 1996-00 2001-05 2006-10 </p><p>0.215 0.181 0.135 0.114 0.108 0.195 0.162 0.122 0.1 0.1 0.193 0.155 0.105 0.09 0.085 </p><p>0.0776 0.0634 0.0454 0.038 0.037 </p><p>36.1 35.0 33.6 33.3 34.3 </p></li><li><p>Financing for Energy Projects </p><p>Accumulation of long term domestic saving is required </p><p>Renewable Energy </p><p>Government Subsidy </p><p>Government Loan </p><p>Tax on CO2, NOX </p><p>Postal Insurance </p><p>Institutional Investors </p><p>(Pension Funds </p><p>and Insurance) </p><p>Individual contributions </p><p>Hometown Trust Fund </p><p>Green Bond (Patient Investors) </p><p> long-term bonds </p><p> revenue bonds (rate of return) </p></li><li><p>Long term and Patient investors are required </p><p>(Institutional Investors) </p><p>1, Bank deposits Bank loans (2-5 years) </p><p>2, Life insurance (20 years, 30 years) </p><p>3, Pension funds (20, 30, 40 years) </p><p> Long term financing </p><p>4, Utilize post office network to Insurance etc. </p><p>5, Post office receives commissions and fees </p><p>6, Sell private bank deposits and insurance </p><p>7, Financial education has to be developed </p><p>8, Tsunami and earthquake Big increase </p><p>28 </p></li><li><p>Asset Allocation (USA, JAPAN, Europe) </p><p>29 </p></li><li><p>Green Bond and Revenue Bond 1, Frequent Issue </p><p>2, Various maturities (5 years, 10 years, 20 years) </p><p>3, Rate of return and Principal guarantee </p><p>4, Secondary Market (Retail government bond) </p><p>5, Credit Rating of each green bond </p><p>6, Sales channels (Post office, Regional banks) </p><p>7, Internet, mobile phone </p><p> Hometown Investment Trust Funds </p><p>8, Small scale renewable energy </p><p> (sell through Internet) 10/14/2016 30 </p></li><li><p>31 </p></li><li><p>Mutual Funds Holding Period Fee Structure is important </p><p>32 </p></li><li><p>33 </p><p>Holdings of Mutual Funds By family Ratio of US and Japanese households holdings </p><p>Investment trusts and Mutual Funds </p></li><li><p>34 </p><p>Possible Solutions Financing for renewable energy </p><p>10/14/2016 </p></li><li><p>Hometown investment trust funds a new way to </p><p>finance for Wind power generators, solar power </p><p>panels etc. </p><p>10/14/2016 35 </p></li><li><p>Financial Scheme of Wind Power </p><p>Collected by Individuals </p><p> Hokkaido </p><p> Green </p><p> Fund </p><p> (60%) </p><p>Senior Bank Loans </p><p>(20%) </p><p>Donation </p><p>Hometown Investment </p><p>Trust Funds (HTIF) </p><p> Sell to Power </p><p>Company </p><p>Final User </p><p>PE=5% surcharge </p><p> Sales </p><p>Of Power Government </p><p>Fund, Carbon Tax (20%) </p></li><li><p>No Efforts Efforts to improve </p><p>No Efforts (50, r) </p><p>Operating Company investors </p><p> (50, r) </p><p>Operating Company investors </p><p>Efforts to improve </p><p> (100, r) </p><p>Operating Company Investors </p><p> (100, r) </p><p>Operating Company investors </p></li><li><p>Removing Trade barriers: i.e. TPP </p><p>-TPP and Energy </p><p>10/14/2016 38 </p><p> The TPP negotiations initially included four countries with which the </p><p>United States already has bilateral FTAs (Chile, Peru, Singapore, </p><p>and Australia, which is also Japans largest supplier of coal and </p><p>LNG), </p><p> Two oil and gas exporters: Brunei and Malaysia </p><p> And New Zealand and Vietnam. </p><p> Canada and Mexico, neighboring U.S. energy trading partners and </p><p>members of the North American Free Agreement (NAFTA), joined </p><p>negotiations in October 2012. </p><p> Japan joined in July 2013. </p><p> Prior to that, however, the leaders of the then nine TPP countries on </p><p>November 12, 2011, announced that they had achieved agreement on </p><p>numerous issues and released a detailed outline of the TPP framework, </p><p>which never once mentioned the word energy. </p></li><li><p>The Energy Products Sector includes products such as turbines, solar cells, </p><p>static convertors, civil nuclear equipment, and high-voltage electric </p><p>conductors </p><p>Removing Trade barriers: i.e. TPP </p><p>Source: International Trade Administration, Department of Commerce, U.S. </p><p>10/14/2016 39 </p></li><li><p>TPP Implementation Offers </p><p>New Opportunities for U.S. Exporters </p><p>Japans efforts to diversify its energy sources is expected </p><p>to generate significant growth in the renewable energy </p><p>sector, including solar power, wind power, geothermal, </p><p>and biomass. Projections indicate that Japan will install </p><p>more renewable energy capacity over the next two years </p><p>than any country but China. While the Japanese renewable </p><p>energy market has always been important to U.S. </p><p>companies, Japans decision to use policy incentives to </p><p>adjust its energy mix has increased the demand for </p><p>renewable energy technologies over the last three years, </p><p>providing additional opportunities for U.S. exporters </p><p>Market Opportunity Spotlight </p><p>Japan Renewable Energy </p><p>10/14/2016 40 </p></li><li><p>Reference </p><p>10/14/2016 41 </p><p>1. Monetary Policy and the Oil prices (2016). N. Yoshino and F. Taghizadeh-Hesary. eds. Tokyo: Springer </p><p>2. N. Yoshino and F. Taghizadeh-Hesary. (2016), Causes and Remedies of the Japan's Long-lasting Recession: Lessons for China. China &amp; World Economy, 24: 2347. doi: 10.1111/cwe.12149 </p><p>3. F. Taghizadeh-Hesary. and N. Yoshino and (2015) Macroeconomic effects of oil price fluctuations on emerging and developed economies in a model incorporating monetary variables. Economics and Policy of Energy and the Environment. Issue 2: 51-75, DOI: 10.3280/EFE2015-002005 </p><p>4. N. Yoshino and F. Taghizadeh-Hesary (2015) Effectiveness of the Easing of Monetary Policy in the Japanese Economy, Incorporating Energy Prices. Journal of Comparative Asian Development. 14(2): 122. DOI:10.1080/15339114.2015.1059059 </p><p>5. N. Yoshino and F. Taghizadeh-Hesary (2015) An Analysis of Challenges Faced by Japans Economy and Abenomics. The Japanese Political Economy. 40: 126. </p><p>6. DOI: 10.1080/2329194X.2014.998591 7. Yoshino, N. and Taghizadeh-Hesary, F. (2014), Monetary Policies and Oil Price Fluctuations </p><p>Following the Subprime Mortgage Crisis. Int. J. Monetary Economics and Finance, 7(3), 157-174, 10.1504/IJMEF.2014.066482 </p><p>8. Taghizadeh-Hesary, F. and Yoshino, N. (2014), Monetary Policies and Oil Price Determination: An Empirical Analysis, OPEC Energy Review, 38 (1): 1-20, DOI: 10.1111/opec.1202 </p><p>9. Taghizadeh-Hesary F., Yoshino, N., Abdoli, G. and Farzinvash, A. (2013), An Estimation of the Impact of Oil Shocks on Crude Oil Exporting Economies and their Trade Partners, Frontiers of Economics in China, 8(4): 571591, DOI: 10.3868/s060-002-013-0029-3 </p></li><li><p>Thank you for your Attention </p><p>nyoshino@adbi.org </p><p>farhadth@keio.jp </p><p>10/14/2016 42 </p></li></ul>