THE DIVEST-INVEST MOVEMENT STOPPING CLIMATE CHANGE BY MOVING THE TRILLIONS TBLI EUROPE NOVEMBER 2015

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1 THE DIVEST-INVEST MOVEMENT STOPPING CLIMATE CHANGE BY MOVING THE TRILLIONS TBLI EUROPE NOVEMBER

2 Global environment deteriorates further with growth global energy consumption, CO 2 emissions and real GDP energy consumption CO2-Emission 2 emissions real GDP *) = *) 2015 IMF estimate sources: BP Statistical Review of World Energy June 2015, IMF; own calculations 75 2

3 Emission risks for us, our children, the poorest The health and economic implications of severe pollution are significant (air & water) Beijing Air Quality Index (AQI) of PM2.5 often above 200 Compared to London AQI of 35 The Beijing Municipal Bureau of Environmental Protection has estimated it will cost China $817 billion to clean its air, and $163 billion for Beijing alone Photo: CBS Article/Kyodo News/AP 3

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5 The size of the arctic ocean ice (Sep. minimum) [Mn. square km] Climate change is ACCELERATING Collapse of the arctic ocean summer ice actual vs IPCC forecast The mean and band-width obtained through the Intergovernmental Panel on Climate Change (IPCC) Model Actual measurements: 2012: 3.61m km2 a level expected after 2060! Over 50% loss 50 years faster Rapid acceleration of global warming due to Albedo effect, methane, self-reinforcing, etc Year Source: WBGU, the German Federal Government Scientific Advisory Council on Global Environmental Change 5

6 Arctic summer ice cover down to 25% Source: NASA 6

7 Greenland s surface ice: Summer 1992 vs 2012 (fully melted) Melted surface ice in Greenland during summer Source: NASA 7

8 3000m deep cracks with melted water on Greenland

9 See levels could rise 67m, on top of 100m so far Source: 67m water level increase (7m Greenland, 60m Antarctis) 9

10 2m higher sea levels => 1.2 billion displaced people 10

11 Space needed to supply the whole word with solar power 11

12 The elephant in the room: solar below grid parity 12

13 STRATEGY Decentralized solar power fell from 600/MWh to 4/MWh Dubai set a new global benchmark in Dec 2014: at 5.84 US cents per kwh, the bid for Dubai Electricity and Water Authority s 200 MW solar PV plant was cheaper than oil at US$10/barrel and gas at US$5/MMBtu Cheapest solar ever? Austin Energy Buys PV from SunEdison at 4 US cents per kwh in August 2015 => oil competitive only at $7 / barrel! 13

14 Electric vehicles 95% efficient vs. 15% for diesel 14

15 GREEN GATEWAY FUND 1 PORTFOLIO COMPANIES The Mobility House: Moves battery cost to ZERO The leading European player in the electric mobility services market Location Products & services Customer base Entrepreneurial team with long-term experience in energy management, headquartered in Munich, Germany Electric charging services, battery and energy management Leading car manufacturers, utilities and large fleet owners 15

16 STRATEGY but in some rich countries, the trend has turned German energy consumption, CO 2 emissions and real GDP *) energy consumption **) CO2-Emission 2 emissions **) real GDP ***) = *) West Germany until **) 2013, 2014 own estimates - ***) 2015 own estimate sources: US Energy Information Administration, AMECO; own calculations 75 16

17 Carbon Bubble bursts due to market forces Carbon Tracker has 'allocated' to the listed fossil fuel companies a Carbon Budget to 2050 with 80% likelihood of staying below the 2 C threshold. Such carbon Budget could be broken in few decades.

18 $21 trillion will be written off CO2 intensive fossil fuel assets are likely to be written off when uncompetitive with renewable power. They already exceed 2008 s US mortgage-backed security bubble. Stranded Fossil carbon fuel related assets assets at risk in 2014 of being written off, end 2014 US mortgage backed securities in 2008 Fossil fuel related assets in 2014 US mortgage backed securities, US mortgage backed securities in

19 7 good years, 7 bad years, the next crisis will come Number of countries in financial crisis 19

20 How to avoid the next global crash? A global price on CO2 emissions ECB buy CO2 Emission Reduction Units to keep price at Euro 30/ton We the impact investors act: Move $1 trillion to renewables per annum 20

21 Europe is leading the global energy transition Energiewende developing in Germany: shutting down nuclear power plants, coal and gas increasingly unsustainable >30% renewable power per annum summer peaks decentralization of supply + demand grid parity of renewables moving to market model Increasing energy efficiency growth with less energy Diesel Gate & Smart Batteries move to 100% electric mobility possible without additional power capacity SMEs world champions in export and resource efficiency, 21

22 Transition from centralized to sustainable decentralized Denmark ies Denmark Confidential; e2cleantech 2011 Source:

23 APPENDIX MACRO ENVIRONMENT Germany: 100% renewable by 2025 is possible Germany 2013: 25% renewable On summer days: 70% renewable The world is watching the resource efficiency and new energy leader Existing onshore wind repowered + solar + DHPPs = 100% renewable 30bn, 1.2% of GDP pa is all required EIB already financing part of it End 2012 Current plan Smart plan # wind mills 23,000 40,000 25,000 capacity 31,000 MW 160,000 MW 80,000 MW Average size 1,350 kw 3-5,000 kw 2 4,000 kw capacity 2,000 h 2,000 h 4,000 h Generation pa 62 TWh 320 TWh 320 TWh % of demand 10% 60% 60% solar 5% 25% 25% hydro 4% 5% 5% Biofuel/waste DHPP 6% 10% 10% 23

24 UN Principles of Responsible Investing (PRI) signatories 1260 signatories with $45 trillion of assets under management committed but hardly anywhere to invest! Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr Assets under management (US$ trillion) (lhs) Number of Signatories (rhs) Source: 24

25 Carbon tracker + Grass roots + Market forces => 3000 $ bn divest-invest commitments $ bn divest-invest commitments

26 Impact First Impact investing seen as low return and non-institutional Target financial return HIGH Return Target: 20-25% IRR FinanceFirst HIGH RETURN WITH IMPACT Return-maximizing without regard for externalities Impact investing NONE Negative return Negative impact Philanthropy NEGATIVE NEGATIVE NONE Sources: Monitor Institute; Investing for Impact report, Bridges Ventures/The Parthenon Group, 2010 Impact target: CO 2 emission reduction POSITIVE Target impact 26

27 Revenue Opposite true: eg Green Gateway Fund portfolio companies x 2.8 x Almost 4x their revenues in three years And had EBITDA swing from negative to positive

28 We are in the middle of a new industrial revolution Source: Rocky Mountain Institute

29 Addressable markets Information technology enabled resource efficiency Technologies/ applications for power generation Energy storage Distributed / off-grid power generation, smart grids Industrial resource efficiency e.g. decentralized point of sale production and servicing Mobility/ transportation e.g. autonomous electric cars Built environment e.g. smart buildings Agriculture / soil remediation (Waste) water treatment systems Urban mining 29

30 Diversified asset allocation across all alternative asset classes 2 Buy Out 1 Macro Long/ Short Growth Green Credit Venture Resource Efficiency & Energy Firm Real Estate 1 billion 5 Power, Grid and Storage Agro and Forestry 1 Transport Water Waste

31 IMPACT Impact of recycling of capital & gains => emissions cut > Germany s bn of equity invested, leveraged and re-invested with capital gains at 15% IRR over 25 years => CO2 emission cut by 1.2bn tons or 3% of global emissions bn investments mt CO2 emission cut German CO2 emissions BREF equity EIB first loss debt other project debt 81 total project investment principal recycling (4x in 20yrs) 404 total lifetime investments total with capital gains recycling 31

32 WERMUTH ASSET MANAGEMENT GMBH Jochen Wermuth Founding Partner & Chief Investment Officer Skype: jowermuth Johannisstrasse Berlin, Germany Tel: Peter Romanowski Structuring Partner peteratwermutham.com 32