Climate finance for development The experience of KfW Development Bank

Transcription

1 Climate finance for development The experience of KfW Development Bank The Role of National Development Banks in Mobilizing International Climate Finance Day 2, Session II Washington D.C. April 18 & 19, 2012 Christoph Sigrist / Pablo Obrador KfW

2 Contents 1. Climate finance at KfW: overview 2. Opportunities and challenges for national and regional development banks 3. Project examples

3 A Bank With a Wide Array of Functions Domestic promotion International Business We promote Germany We ensure internationalisation We promote development Business Area Mittelstandsbank Promotion SMEs, business founders, start-ups Business Area Privatkundenbank Promotion construction of new housing and modernization as well as education Business Area Kommunalbank Financing municipal infrastructure projects and global loans Germany/Europe agency business for Federal Government Business Area Export and Project Finance International project and export finance Business Area Promotion of Developing and Transition Countries Promotion of developing and transition countries Promotion of environmental and climate protection 2

4 Focal Activity of KfW Group: Environment and Climate Finance Instruments Grants Concessional and Commercial Loans Equity - Mezzanine Finance Technical Assistance Worldwide Environment Finance Commitments 2010: EUR 25.3 bln (32% of total)

5 KfW Development Bank Source of financing / Mechanisms Financing mechanisms with KfW support Facilities, Initiatives Funds Carbon Fund / Kyoto Mechanisms -International Climate Initiative of the GG (IKI) -Initiative for Climate and Environment Protection (IKLU) -German Climate Technology Initiative (DKTI) -Regional initiatives e.g. EU Blending Mechanism Bilateral Funds- -Global Climate Partnership Fund -Green for Growth Fund (GGF) Multilateral Funds- -Clean Technology Fund (CTF) -New Market Mechanisms -Program of Activities (PoA) -Financing CDM and JI projects -Sales and auctioning EUS on behalf of the German Government 5

6 KfW Development Bank Key topics and areas of activity Energy efficiency and small-scale renewable energy: Promotional programs for households, SMEs and municipalities through credit line by partner institutions. Large scale renewable energy: project financing a.o. geothermal, wind, solar thermal, CSP, building sustainable energy systems Protection natural resources / biodiversity / forest management through subsidies, loans, foundations and equity funds, REDD Financing waste management and & recycling, environmental friendly transport systems Adaptation, focus on high risk regions Environmental, social and climate assessment of all projects 6

7 KfW Development Bank Commitments: Climate and Environment Financing New Commitments in 2011: 2,75 bn EUR (Total: 4,5 bn EUR) million...regions Asia / Oceania Europe / Caucasus Latin America Minderung Mitigation Sub-Saharan Africa 61% Nord Africa / Middle East Anpassung Adaptation 451 Regional Umwelt Environment (nicht Klima) Andere Others Sectors Energy Multi-sectoral Water & Waste Finance Sector Forest & Agriculture Social infrastructure & transport Sonstige

8 KfW Development Bank Commitments: Climate and Environment Financing Commitments: Total / Climate and Environment Financing ,5 bn. EUR / 2,75 bn. EUR Rio marker Mitigation (KLM) Riomarker Minderung (KLM) Non climaterelated projects Weitere Vorhaben ohne Klima-/Umweltkennung Climate and Environment Financing: Mitigation projects account for 65 % of the commitments in 2011 in the fields of climate and environment. About 50% of them were marked as KLM 2, meaning that mitigation is the main goal of the project. 1,77 1,78 0,45 0,52 Adaptation projects account for 16% of the commitments in 2011 in the fields of climate and environment. Approx. 90% of them was marked as KLA1, being adaptation just a secondary objective. Riomarker Anpassung (KLA) Rio marker Adaptation (KLA) Umweltkennung (UR) (nicht Klima) Environment projects (no climate-related) (UR)

9 KfW Development Bank Commitments: Climate and Environment Financing Expected CO 2 savings from commitments 2011 t CO2eq p.a. 7.2 million...regions...sectors Asia / Oceania Latin America Europe / Caucasus Sub-Sahara Africa Regional North Africa / Middle East Forest & Agriculture RE-Projects Multi-sectorall Waste & Water EE-Projects RE/EE-Credit lines

10 Contents Opportunities and Challenges for national and regional development banks 2. Opportunities and challenges for regional and national development banks Opportunities and Challenges for national and regional development banks

11 Opportunites and challenges for national and regional development banks Cooperation model for promotional programs: KfW National & Regional Development Banks Capital Market refinancing loan & technical assistance refinancing loan & technical assistance refinancing loan & technical assistance Financing Development bank Commercial bank Promoters EE/ ER Subsidized interest rate Interest rate + risk margin and transaction costs Interest rate + risk margin and transaction costs Interest rate + risk margin and transaction costs German Government

12 Supporting the overall environment KfW s experience Evaluating the market Supporting the development banks Development and introduction of environmental and social management systems (ESMS) Support in designing, marketing and monitoring climate and environmental finance Introducing risk mitigation mechanisms Supporting the financial intermediaries Training for the financial intermediaries in developing products and evaluating project risks Development of guides for investments in RE in specific countries Supporting the sub-borrowers and project developers Grants for feasability studies Energy audits Events and marketing to generate awareness of the benefits, market opportunities Cofinancing and exchange of experiences ALIDE, BID, IBRD, EIB, and others 12

13 Key issues in designing green credit lines for GHG mitigation 1. Regulatory environment Green Credit Lines 2. Environmental impact, MRV 3. Eligible investments 4. Distribution channels 5. Financial incentives, risk mitigation 6. Technical assistance

14 3. Some project examples KfW Development Bank

15 Effects Approach Problem Ukraine: Energy Efficiency Credit Lines in Housing Increasing demand for energy High energy intensity: - Out-dated production technology - Low energy-efficiency of houses Economic performance of the Ukraine heavily depends on energy prices KfW Credit Line for the local ProCredit Bank ProCredit provides low interest financing to households and small and medium enterprises for energy efficiency measures KfW also provides consultancy services Increased competitiveness of firms Generation of know-how in the financial sector Decreasing wastage of energy has positive effect on climate

16 Effects Approach Problem India: Concentrated Solar Power (CSP) Increasing demand for energy due to economic development and population growth Barriers to the exploitation of solar energy - Higher investment costs - Lack of financial resources and know-how Installation of the first CSP plant in Asia Additional revenue via CDM certification Transfer of knowledge from implementation of CSP technology in Spain and USA (IPEX) Supply of clean energy for 50,000 people CO 2 savings of more than 25,000 tons p.a. First experiences with this innovative technology

17 Status of the portfolio in 2011: > 2 billion USD 16 countries > 40 programmes Subsidies: ODA, OOF (other official funds) New programmes : ~ 250 million USD p.a.

18 Wirkung Ansatz Problem Mexico: Energy Efficiency Program for Households High energy consuming old appliances in households. None incentives for energy efficiency investments KfW concessional loan energy efficiency fund FIDE via national development bank NAFIN FIDE provides attractive financing conditions for end consumers when acquiring appliances. Repayment though electricity bill. Obligatory removal of old appliances (scrapping) Energy saving of households Raising awareness for energy efficiency Improving distribution and commercialization of energy efficient appliances.

19 Wirkung Ansatz Problem Brasil: Promoting Wind Energy Fast growing energy demand in Brazilian emerging market High untapped potential for wind energy KfW concessional loan to national development bank BNDES for financing wind farms. Favorable financing conditions (low interest rate, longer lifetime) for 4 wind farms, respectively 120 MW Ambitious social and environment guidelines by the project selection Efficient and environmental friendly electricity generation Mitigation of CO2 emissions Improving supply guarantee through diversification of energy mix.

20 Effects Approach Problem Peru: Protecting the Forest Destructive exploitation of the rain forest - Lack of incentives for sustainable use of forests - Insufficient protection of nature reserves Loss of biodiversity and CO 2 storage Investments in infrastructure of nature reserves to improve protection and administration Support for the forest management Integration of the local population into the project Improved protection of biodiversity Preservation of CO 2 storage Long term support for the local economy through sustainable exploitation plan

21 The role of national and regional developement banks (NRDBs) in promoting climate friendly development KfW s experience and issues for discussion 1. In practice, what role do NRDBs play in: Channelling resources for climate friendly investments Acting as policy advisor for their respective governments/shareholders for shaping national climate policies and NAMAs. Acting as a broker for bringing together public and private investors at national and subnational levels 2. What adequate mix of financial and non-financial instruments may NRDBs offer to promote climate friendly growth? 3. What potential do NRDBs have to leverage and blend: Bilateral and multilateral public finance including global climate funds (e.g. CTF, GCF) Private capital (recommendation B20 taskforce) 4. Do NRDBs need improve coordination mechanisms to follow up international climate negotiations? If so, what kind of plattforms offer best value added? (e.g. ALIDE, IDFC, Durban Plattform, this conference, Rio +20) 13

22 Thank you for your attention! Contact: Christoph Sigrist Pablo Obrador Energy and Economic Development Division Latin America and the Caribbean KfW Development Bank Palmengartenstrasse Frankfurt/Main Germany KfW Office Building Westarkade, Electricity Consumption: 98 kwh/p.sqm/p.a.