Scaling up green finance. Jan-Willem van de Ven, Head of Carbon Market Development Austrian Climate Change Workshop 30 March 2017

Transcription

1 Scaling up green finance Jan-Willem van de Ven, Head of Carbon Market Development Austrian Climate Change Workshop 30 March 2017

2 What is the EBRD Multilateral financing institution established in 1991 to support transition to market economies Owned by 67 countries, the EU and the EIB 30 billion capital base 41 billion portfolio 8.9 billion average annual business in the past 3 years 3 key operational principles Sound banking Transition impact Environmental sustainability EBRD region of operations: Caucasus and Eastern Europe Central Asia and Mongolia Central and Eastern Europe Cyprus Greece Southern and Eastern Mediterranean Turkey Western Balkans Russian Federation 2

3 GET IMPLEMENTATION OVERVIEW THE GREEN ECONOMY TRANSITION STRATEGY The Green Economy Transition aims to address market opportunities, as well as market failures, related to resource use and environmental degradation. GET aims to: further scale-up the Bank s operational and policy activities to accelerate transition to low-carbon and climate resilient economies broaden the environmental dimension of investments supported by the Bank including elements of environmental compliance and remediation align the transition impact rating of the Bank with the objectives of promoting a green economy, including recognising scale of impact and related elements of policy change and innovation. innovation and new areas: promoting green technology transfer and innovation and engaging in new areas like green logistics, irrigation, bioeconomy. flexible financing channels: engage private as well as public financing channels when opportune to accelerate low-carbon transition. 17 March 2017 GET IMPLEMENTATION BIS 3

4 Mainstreaming green financing: Results in FINANCED 1,200+ projects and credit lines SIGNED 22.2 billion of green financing REDUCED 84 million tonnes of CO 2 /year >900 directly financed projects with green components, and >280 credit lines to locals financial institutions for onlending to smaller projects For projects with a total value of 1,122 billion In green financing represented 36% of EBRD s total business, up from only 15% in Emission reductions equal to twice the annual energy emissions of Sweden Plus annual water savings of 62 km 3 since 2013 equal to 2/3 Prague s water needs 4

5 Mainstreaming green financing: The EBRD business model Directly from EBRD: loans, equity investments or guarantees. Mobilising additional commercial sources. Indirectly via local partner financial institutions: lending, leasing. EBRD (+OTHER) COMMERCIAL FINANCING ON A SELECT BASIS Lending facilities with concessional pricing Partial investment grants or incentives payments for eligible technologies which face affordability barriers First-loss cover or (carbon pricing) guarantees. POLICY DIALOGUE DONOR CO-FINANCING Working with governments on legislation that creates optimum conditions for green investments Supporting the development of legal instruments and best practice guidelines (e.g. contract templates, tenders). TECHNICAL ASSISTANCE Resource efficiency audits Capacity building for local financial institutions (staff training, marketing, green retail lending products) Climate vulnerability assessment Project structuring support (e.g. tendering, investment guidelines) Support to adopt operational or CSR-type standards (energy management, buildings certification, reporting). 5

6 GET IMPLEMENTATION OVERVIEW 2016 POLICY DIALOGUE AND CLIMATE FINANCE 2016 Policy Outcomes Egypt Cement Sector Policy Roadmap Ukraine ESCO Legislation EE regulations throughout Western Balkans Morocco RE connection rules to MV grid Green Climate Fund $1.6 billion pipeline under development EBRD has largest GCF project approved ($378 million for SEFFs) Close co-ordination with recipient countries 2016 Policy Innovation Full integration of policy work with investment in e.g. Green City Action Plans Implementation of Regional Frameworks for accelerated procurement ESCO/EnPC work in Western Balkans Other Donors Substantial support from: Continued EU support Austria supports GEFFs Sweden for EE in Ukraine Japan for industrial EE and RE in Ukraine 17 March 2017 GET IMPLEMENTATION BIS 6

7 Innovative finance instruments Energy efficiency audits (several donors) CAPEX investment appraisal is the essential to identify opportunities for energy efficiency improvements. Scale-up Green Econonomy Financing Facilities (several donors) Lowering transaction costs by automatization of technology selection through Lists of Eligible Equipment and Materials. FINTECC programme (Donors GEF, EU, EBRD) The programme aims to improve deployment rates of the best available climate technologies in markets which lag behind. Innovation vouchers scheme (donor: DRIVE fund/nif) R&D financing support mechanism for SMEs to develop innovative resource efficient technologies. Serbia and Ukraine Value chain competitiveness assistance and financing Addressing energy and resource efficiency along product value chains is of critical importance and VCC programme assists SMEs in these chains. Embedding climate resilience (Donors UKAID, CIF) E.g. dealing with scarcer resources as a result of climate change 7

8 INNOVATION: GEFF FROM SEFF TO GEFF The established EBRD SEFF model is being developed to a new EBRD GEFF model with TC supported by the Austrian Federal Ministry of Finance. New facilities will be presented under the GEFF brand. This comes from several developments: Recognising the challenges of green economy transition Implementation of a new consistent approach 17 March 2017 GET IMPLEMENTATION BIS 8

9 INNOVATION: GEFF EBRD GREEN FINANCE EXPERIENCE The GEFFs build upon strong operational SEFF experience. 10 more than years of experience 24 implemented in countries 120 more than financial institutions have participated 4 supported by almost billion of EBRD finance 112,000 over clients (businesses and individuals) equivalent of over 6 million tonnes CO 2 emissions avoided per year 17 March 2017 GET IMPLEMENTATION BIS 9

10 INNOVATION: GEFF PRODUCT EVOLUTION GEFFs continue to focus on the systematic implementation of energy efficiency and small-scale renewable energy technologies. In addition, GEFFs support GET implementation by originating investment opportunities in technologies and services that: lessen the degradation of the environment; and reduce the linear consumption of materials with related environmental impact. 17 March 2017 GET IMPLEMENTATION BIS 10

11 Potential cost reduction Operating Costs INNOVATION: GEFF ENABLING ENVIRONMENT Market barriers (e.g. early-mover costs, entrenched behaviour and information asymmetries), may increase transaction costs affecting the rate of adoption of high performance technologies. Access to broad knowledge base is often the greatest transaction cost to making an informed investment decision. INCUMBENT TECHNOLOGY Reduce height of barrier Awareness of alternative Awareness of benefits Access to finance Administrative burden Technical risk Implementation risk ALTERNATIVE TECHNOLOGY Time 17 March 2017 GET IMPLEMENTATION BIS 11

12 INNOVATION: GEFF EBRD GEFF PERFORMANCE CRITERIA The technical eligibility criteria of EBRD GEFFs are ambitious (visibly performing beyond current market practice) to positively influence the uptake of high performance technologies. The level of ambition needs to be market appropriate to avoid promoting a market niche that is prohibitively expensive. Distribution Technologies below reference baseline Time Market transformation Prohibitively expensive technologies Support programme for high performance technologies Performance 17 March 2017 GET IMPLEMENTATION BIS 12

13 Increasing resilience to climate change via the financial sector in Tajikistan PROGRAMME Launched in 2016, ClimAdapt provides financing to enterprises and household in Tajikistan via local banks and microfinance institutions for improved water and energy use and sustainable land management measures. EBRD financing is blended with concessional longer-term finance from the Pilot Programme for Climate Resilience, to overcome affordability barriers to action on climate resilience. ClimAdapt has two windows: one targeting businesses, especially in the agricultural sector, and another for households. FINANCING STRUCTURE EBRD credit lines Concessional credit lines from the Pilot Programme for Climate Resilience Technical assistance support from UK DFID and the EBRD ETC Fund US$ 2.5 million US$ 2.5 million 2.25 million CLIMATE VULNERABILITY Tajikistan is highly vulnerable to future changes in river runoff and glacier melt, via impacts on its agricultural sector, its hydro-based electricity system and soil erosion. The facility impact metrics will therefore account for reduced water consumption, energy efficiency gains and reduction in soil erosion loss. PROJECT EXAMPLE Climadapt loan of 500,000 -equivalent in local currency for the construction of a new greenhouse complex with advanced insulation and hydroponic and drip-irrigation to grow tomatoes. IRR of 37%, water consumption per kg yield of tomatoes is 46% below the level of the company s existing greenhouses. 13

14 Increasing water efficiency in fruit plantations CLIENT Tunisian branch of an international agribusiness specialised in producing fruits and vegetables for European and North African markets. EBRD SUPPORT Supporting the establishment and operation of an 80ha agricultural plantation in Bizerte Governorate, focused on cultures of raspberries and other fruits. Agricultural producers in North Africa face increasing water shortages and deteriorating water quality. Thus the investment includes advanced water harvesting and water recycling systems. ADVANCED SOLUTIONS Some of the advanced water efficiency solutions supported with EBRD finance were: Rainwater drainage for collection UV & chlorine treatment for disinfection Nutrient control and computerised drip irrigation. INVESTMENT PLAN EBRD loan of which climate resilience finance 4 million 1 million PROJECT IMPACT Rainwater harvesting reduces the company s water consumption by over 30% Reduced loss of soil fertilisers (P, Fe, K) through water recycling and introduction of hydroponic cultivation Wastewater treatment reduces the environmental impact caused by discharge of effluents. 14