Investing in Now. Competing against climate change

Revised 23 June at 0400 hours
MANILA (21 June) - Clean energy is climate change adaptation, which must be a global effort. It is an acknowledgment that mankind´s greenhouse gas emissions are the ones causing dramatic climate changes. The response must be in two forms: for unclean energy, higher efficiency; for clean energy, higher economics. The inventing must be now; the investing must be now.

Today, we had the "PFAN Philippines Clean Energy Investor Forum" at the EDSA Shangri-La Plaza in Manila. PFAN is the Private Financing Advisory Network, an initiative of the Climate Technology Initiative, CTI. PFAN is a global, multi-lateral public-private partnership for technology transfer and financing. "It identifies promising clean energy projects at an early stage and provides mentoring for development of a business plan, investment pitch, and growth strategy, significantly enhancing the possibility of financial closure" (cti-pfan.net).

The main sponsors of the whole-day forum were CTI, the US Aid for International Development (USAID), International Center for Environmental Technology Transfer (ICETT), Security Bank and Allied Bank. PFAN Philippines has a membership of 228 according to the Forum Directory distributed at the forum. The Funding Partners are CTI, USAID, Asia-Pacific Partnership on Clean Development and Climate (APP), Renewable Energy and Energy Efficiency Partnership (REEEP), and International Center for Environmental Technology Transfer (ICETT). The Resource Partners in the Philippines are the Development Bank of the Philippines, Land Bank, Department of Energy, LGU Guarantee Corporation, Allied Bank, Veterans Bank, Endesa Cardono, and Security Bank Corp. The In-Country Coordinator for the Philippines is Ms Laurie B Navarro (laurie@cleanergyasia.net).

Listening to the presentors, I thought the forum had a missing element, that it should have been labeled an "Investor-Inventor Forum." By the term inventor I mean project developers and entrepreneurs in clean energy. The theme of the one-day forum had it right: "Connecting Clean Energy Businesses With Financing." The connection was missing.

Peter Storey, Global Coordinator of CTI PFAN introduced the term and described "The Missing Middle" as groups looking for funding for projects on one hand and institutions looking for projects to fund on the other. Access to financing was missing.

CTI PFAN describes itself thus (cti-pfan.net)

CTI PFAN seeks to bridge the gap - by coaching and mentoring emerging clean energy businesses; by developing a network of investors and financial institutions who are interested in and informed about the clean energy markets, and by presenting these investors with projects that have been screened for viability, sustainability and environmental and social benefits.

Peter Storey was saying PFAN had global coverage with 4 regional networks: Latin America & Caribbean, Africa, Asia, CIS & Eastern Europe. It has more than 50 projects in the development pipeline, 40 already signed up and 3 under active negotiation. There are 40 projects already identified in 2010 for potential induction. He also said something about a pipeline for investors and direct access to investors for developers, including the establishment of a project preparation facility and an early-stage investment fund. PFAN open for business in Asia and the Philippines for "future opportunities."

Roger Carlson, Acting Mission Director of USAID, talked about the need to reduce greenhouse gas emission, a power plant that is "exactly the one we need," and farmers supplying the feedstock.

Mario Marasigan, Assistant Secretary of the Department of Energy, said the Philippines was blessed with resources for energy projects: sun, wind, water. "Starting today," he said, "we will be celebrating clean energy."

Alberto S Villarosa, President and CEO of Security Bank said, "I am a firm believer that a firm energy challenge cannot be met without firm investment." He said his bank has developed and will continue to develop technical expertise to allow its resources to be fully aligned with the project developer´s financial requirements. "The only way to continue to grow is to align our objectives and our interests with those of our investors. We cannot be merely spectators."

In the roundtable discussion on the future of compressed natural gas for transport in the Philippines, Marasigan said CNG was "not yet economically viable." Ankur Arora of Intermech Ltd of New Zealand pointed out the need to consider technical know-how from other countries. "Safety first," he said.

Eduardo M Olbes, EVP of Security Bank, said the bank is trying to understand, holistically, customers and regulators, emphasizing "prudent investments."

Marasigan mentioned the "huge capital investment in doing clean energy" and EVP Cecilia C Borromeo of the Land Bank replied, "We have funds."

These were 7 investment pitches:

(1) Biogas - First Commercial Multi-Feedstock Anaerobic Digester In Southeast Asia, presented by SURE - This makes use of biogas technology from Denmark with a proven track record of over 50 plants worldwide. Designed to transform manure from over 30 farms within a 10-km radius producing over 50,000 pigs per annum, located in Pampanga.

(2) Hydropower - 18 MW Timbaban Hydropower Project by Oriental Energy and Power Generation Corp - This is a mini-hydropower plant located along the Timbaban River in Aklan Province in Central Philippines. According to hydroworld.com, this is 1 of 5 small hydro projects set to be developed by Oriental Energy.

(3) Tricycle - Etrike by E Save Transport Systems - An etrike is a battery-operated tricycle costing each about PhP 190,000. ESTS is seeking funding to expand manufacturing and distribution.

(4) Gasification - 10 MW Pangasinan W2E Gasification Facility by Greenergy Solutions - "We are the alternative to the dumpsite," Greenergy Chair Ruth P Briones said. "We will bring the garbage to the facility."

(5) Hydropower - 10 MW Inabasan Mini-Hydropower Project by Ormin Power - Located in San Teodoro, Oriental Mindoro; construction projected in 2011, commissioning in 2012, for Phase 1. The expansion potential is 30 MW. To use Norwegian turbine technology. Committed with the LGU for conservation of the watershed where the water for the river comes from.

(6) Biofuel - Philippine Biodiesel Initiative by Ecolife Group - This is a project based on Jatropha curcas, which is non-edible and therefore does not compete with the food supply of the country. As far as this reporter knows, the technology for the catalytic conversion of jatropha oil has not been perfected.

(7) Design - Green Building by Italpinas - The proposed building is called Primavera (top truth), to be the first green building in Mindanao, located in Cagayan de Oro City. The building addresses both energy needs reduction and energy efficiency.

The Etrike was declared the winner in the competition. I had mixed feelings about it.

PFAN explains that "projects are competitively selected though calls for proposals and receive intensive coaching on the preparation and presentation of their business plans before they are showcased at the forums." During the forum, "the focus is on the business plan competition, to showcase the most promising clean energy investment opportunities in CTI PFAN´s development pipeline."

I was hoping all the while that the 10 MW W2E gasification project by Greenergy Solutions would win. It is much better than the winner of the 1st PFAN Philippines Clean Energy Investor Forum in June 2009, Asea One Power Corp´s biomass power plant in Aklan Province. I was thinking of tons and tons of garbage in metropolitan districts being turned into power and the cities being cleaned of trash, simultaneously producing clean energy and clean air, as well as preventing soil & water contamination. The social impact of this project was tremendous, incalculable.

Of the 6 finalists in the 2009 forum, 2 have secured financing, both biomass power plants: the one in Aklan Province using all sorts of crop refuse from rice, sugarcane and coconut, and the one in La Union Province using rice hulls and wood chips.

After today´s forum, I must say we are not doing enough. We are not investing enough for now. The future is dark and all we´re doing is light work. We are proposing too few clean energy projects - and we are funding even fewer clean energy proposals. I do not see The Missing Middle - what I see is The Missing Will - political will, both on the side of inventors-proponents and on the side of investors-financiers. He who hesitates is lost. Where is the proof of what Villarosa said, that "Clean energy makes and is good business."

At the very least, yesterday I was also hoping that all 7 proposed projects get the funding that they deserved and become all winners in a non-competition. It must be remembered:

We are not competing against each other - we are competing against climate change.