ravi menon : blended finance for the net - zero transition opening remarks by mr ravi menon, managing director of the monetary authority of singapore, at the " transition finance towards net zero " conference, singapore, 4 october 2022. * * * good morning and welcome to the inaugural transition finance towards net zero conference. cop27 will be held in sharm el - sheikh, egypt, in a little over a month. we are privileged to have with us dr rania al - mahsat, egypt's minister for international cooperation, who will set out the egyptian cop27 presidency's priorities to turn climate ambition into climate action. why are we gathered here? let me briefly lay out the problem statements and then set out how this conference hopes to contribute in specific ways to help the situation. first, the world is currently not on a trajectory to achieve net zero emissions by 2050. and we know this is what is required to prevent or avoid catastrophic climate change. to reach net zero by 2050, the world needs to reduce greenhouse gas emissions by 45 % by 2030, relative to 2010 baseline levels. but emissions today are still rising, not falling. and according to the un emissions gap report 2021, based on our current policies in place, the world is 55 % short of the emissions reduction target for 2030. second, the world is investing nowhere near what is required to get to net zero by 2050. according to mckinsey, net zero by 2050 would require about us $ 9. 2 trillion of investment per year but only about us $ 5. 7 trillion per year is being invested today. we are more than 35 % short of the annual investment required for net - zero. let's keep these two numbers in our minds throughout our discussions today : we are 55 % below the emissions reduction required by 2030 and 35 % below the investments required for net zero by 2050. filling these two gaps will require a concerted and collaborative effort across the ecosystem. and it needs to be done now. climate change is already happening and beginning to devastate lives and livelihoods. just ask the people in pakistan. there is no collective human endeavour more urgent than climate action. delaying mitigation efforts to avoid short - term costs will incur a much larger economic and human loss in future. this conference will focus on three key dimensions : transition, asia, collaboration. let me elaborate. transition - to reach net zero by 2050 we need effective and inclusive

are marginally bankable. it is also about combining financing with capacity building, technology transfer, and institutional support, to reduce risk and enhance bankability. in short, it is about taking an ecosystem approach to solving a problem of the global commons. blended finance is not new but catalysing and scaling it requires a fresh approach. the use of public funds and development guarantees to reduce risks and encourage participation by private capital has been around for many decades. but such programmes are too few and too small. globally, annual flows of blended finance have averaged less than us $ 10 billion since 2015. we need a more systematic and coordinated approach to mainstream blended finance. first, we need to build a pipeline of shovel - ready transition projects. there is insufficient capacity and expertise to prepare projects that are attractive to the private 2 / 4 bis - central bankers'speeches sector. this is specially so in emerging markets, where regulatory and political risks heighten the likelihood of default, transaction lead times are long, projects require prohibitively large amounts of start - up capital, and there is limited access to expertise in project development and financing. second, we need to reduce the risks in marginally bankable transition projects to attract private capital. the return profile on many such projects is not commensurate with the risks facing private financiers or investors. to reduce overall risk and improve bankability, we need more catalytic and concessional funding from the public sector, multilateral development banks, and philanthropic sources. such funding can be in the form of grants, risk - sharing arrangements, debt at below - market rates, technical assistance, and structuring advice. they can help crowd in additional multiples of private sector funding. but while public capital can potentially do more to mitigate risk, private capital must still bear a fair share of project risk and exercise the appropriate due diligence on project viability and performance. third, we need to make the financial ecosystem work more synergistically. banks play a key role as lead managers for financing sustainability projects. however, with limited balance sheets and regulatory capital and liquidity requirements, banks need to offload these loans to institutional investors who have more absorptive capacity. but institutional investors prefer larger deal sizes with a diversified pool of assets to reduce concentration risk. we need to shift towards a portfolio approach to blended finance deals, through the structuring and securitisation of typically illiquid green and transition assets. there are some promising global