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Financing A Cleaner Future in Thailand Bangkok, Thailand July 15, 2009 Defining Characteristics of IFC Owned by 179 member countries Provides loans and equities for private sector projects Does not accept government guarantees Shares same risks as other investors Is commercially oriented Driven by risk-reward considerations Market leader in environmental & social performance standards Equator Principles Rated AAA (S&P) and Aaa (Moody’s) 2 IFC has over 100 country and regional advisory services offices worldwide 3 IFC’s Products and Services Senior Debt Structured Finance Mezzanine Finance • On-lending • Partial credit guarantees • Convertible debt • Liquidity management • Securitization • Subordinated debt • Bond underwriting • Other Tier II instruments • Acquisition financing • Warehousing facilities • Global Trade Finance Program • Syndicated loans Private Equity Advisory Services Sustainable Finance • Common shares • Corporate governance • Carbon finance • Preferred shares • Risk management • Renewable energy • Small and medium business banking • Supply chain financing • Housing finance • Energy efficiency finance • Energy efficiency • Cleaner production 4 IFC has been successfully assessing and assuming risks in emerging markets for the last 50 years… Latin America & the Caribbean, 27% East Asia & the Pacific, 14% Sub-Saharan Africa, 11% Europe & Central Asia, 28% Middle East & North Africa, 10% South Asia, 10% Global, 1% 5 …spread across several sectors Health & Education, 2% Subnational Finance, 1% IT & Communications, 4% Private Equity & Investment Funds, 4% Agribusiness, 7% Financial Markets, 37% Oil, Gas, Mining & Chemicals, 11% Global Manufacturing & Services, 21% Infrastructure, 15% 6 3 Scenarios for Thailand GHG Emissions in 2005 (Million Tons of CO2 Equivalent) GDP Carbon Efficiency (Tons of CO2 /$1000 GDP) Per Capita Carbon Capacity (Tons of CO2 / Person) Thailand 226.67 1.36 3.34 World 27,136 0.50 4.22 2005 Emissions Unconstrained Growth 2030 Frozen Tech Scenario In million tons of CO2 equivalent greenhouse gases emissions 227M 11,741M 11,968M Tons of CO2 Policy Scenario Reduction 2030 Policy Scenario 5,250M 6,500M Abatement Potential 2030 Abatement Scenario Technologies and their penetration frozen at 2005 level 6,200M 300M Assume existing energy, energy efficiency and transportation policy Increase renewable energy in total energy mix, improve energy efficiency in industrial, commercial and residential sectors, mass transportation and fuel efficiency Full technical abatement potential realized, with support of CTF and other mechnisms Sectors and Barriers Energy • Geothermal • Wind • Biomass • Hydro • Solar Technical • Technical feasibility • Projects using such technologies Energy Efficiency • Waste-to-energy • Industrial, commercial and residential • Green lighting • Building energy efficiency Commercial • Laws and regulations • Private sector players’ willingness • Economic viability Transportation • Public transportation • Fuel efficiency • Fuel switching Financial • Equity • Structured finance: mezzanine, bridge loans, construction loans, etc. • Bank loans 8 Improving Access-to-Finance By Mobilizing Local Financing IFC Provide FI partners risk sharing facilities & line of credit to encourage lending to projects of energy efficiency, renewable energy and cleaner production Marketing Partners Utility companies Equipment vendors ESCOs / EMCs Use on–the-ground and global advisory teams to support banks’ internal capacity building Facilitate the establishment of cooperation between banks and marketing partners Provide policy advices to local government to create better legal and regulatory environment NGOs Government Focused private equity & other FIs Promote lessons-learned sharing among FIs globally Carbon funds Commercial Banks Special investment entities Private equity funds with climate change focus Leasing companies Other financial institutions Marketing partnership International supply chains FI Partners Borrowers ESCOs End-users Project developers Project implementation Project 1 Project 2 Project 3 Project 4 Project 5 Project 6 Project N Sample Financing Mobilization Schemes Energy Efficiency Financing Risk Sharing Facility • Term: Up to 5 years • Size of loans: Up to $5 million • Eligible Projects: Industrial, commercial and residential EE improvements; Green lighting; Waste treatment, etc. Small Renewable Energy Project Financing • Term: Up to 10 years • Size of Loans: Up to $10 million • Hydro • Wind • Geothermal • Distributed generation utilizing renewable energy • Biomass ESCO Financing Facility • Term: Up to 5 years • Size of loans: Up to $5 million • Credit-worthy endusers • Revenues: Fixed + variable (fixed portion sufficient to cover debt service) RE/EE/CP Mezzanine Financing Facility • Term: Up to 10 years • Size of loans: Up to $5 million • Borrowers: Developers of small to mediumsized renewable projects Cleantech Private Equity • Participation: IFC as an LP • Up to 20% contribution • Fund has to be have clearlydefined focus in cleantech project Energy Efficiency Leasing • Term: Up to 5 years • Size of loans: Up to $5 million • Eligible Projects: Industrial, commercial and residential EE improvements; Green lighting; Waste treatment, etc. 10 Seeking Partners… Financial institutions (banks, leasing companies, funds, etc.) Line of credits, risk sharing facilities, mezzanine facilities Renewable energy, energy efficiency, cleaner production Developers of renewable energy projects Equity, structured finance, mezzanine finance Renewable energy, energy efficiency, cleaner production ESCOs & companies implementing EE/CP projects Equity, structured finance, mezzanine finance Renewable energy, energy efficiency, cleaner production 11 Calvin Q. XU Jasper B. Virola Senior Industrial Specialist Energy & Climate Change IFC East Asia & Pacific Department Investment Officer Infrastructure IFC East Asia & Pacific 14th Floor, One Pacific Place 88 Queensway, Hong Kong Tel: +852-2508-8196 | Fax: +852-2509-9363 [email protected] 11th Floor, Tower One Ayala Triangle, Ayala Avenue Makati City, 1226 Philippines E-mail: [email protected] 12