Innovative Financing Options for Climate Change-related Transfer

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					           Innovative Financing Options for
                    Climate Change-related
Transfer and Development of Technologies




 Paul van Aalst
 September 27, 2004
 EGTT – Montreal
 paulvanaalst@planet.nl



                          EGTT - Montreal - 23
                            September 2004       1
Guten Morgen !

   NO !                                    YES !!
  E = mc2                      “Neue Kombinationen”




            EGTT - Montreal - 23 September 2004
                                                    2
Program

   Introduction
   Secrets of Innovative Financing
       Key Words
       Linkages
       “Loud – Long – Legal”
   Barriers and how to deal with them
   Examples and what YOU can do
   Cases and how these apply
   Tools to take away

                EGTT - Montreal - 23 September 2004
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        Key Words for “Access”

   Access to financing depends on:
     Added value for stakeholders
     Transparent, Accountable, Credible

     Sustainability: not just the environment



 Nothing New; No Secrets
 No rocket science

             EGTT - Montreal - 23 September 2004
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        CC - Financing Characteristics
                         Adaptation                                   Mitigation
Scale      Very large (as of USD 5 million but often   Medium (USD 1-5 million) – very large
           over USD 50 million)                        (over USD 50 million)
Term                       > 20 yrs                                      5 – 25
Focus &    •  Costs, including R&D and capacity        •   Costs to prepare for start project-
revenue-      building and other expenses that             related investments
basis         may not lead directly to investment      •   Investments with some or good
              projects                                     opportunities for revenues from
           •  Investments with no or little direct         transaction benefits (e.g. Energy
              revenues, but sometime with                  feed-in tariffs, toll, cost reduction)
              opportunity for taxes and levies             or from public sources (levies and
                                                           specific taxes).
Parties    Driven by public sector, private sector     Traditionally publicly financed and
involved   subcontracts or implements.                 increasingly a role and opportunity for
                                                       private sector.
Financing Mostly public ranging from grants from       Varying from income self-financing
          multilateral funds, to national R&D          through revenue streams via public-
          budgets, to levies and specific taxes.       private partnerships to public
                                                       financing.
                              EGTT - Montreal - 23 September 2004
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      Quantify Added Value

                     Return   Climate   Social     Econo-        Other         Total
                 Components   Change    return       mic        returns    (financial)
Project-phases                 return              returns                    return
                                                                              %/$
A: Research                                                                     A

B: Development                                                                 B

C: Pilot Implementation                                                        C

D: Commercial                                                                  D
Implementation
Total                                                                     A+B+C+D



                          EGTT - Montreal - 23 September 2004
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    Accountable + Transparent
    Sustainability
   … accountability and transparency in sustainable development
    performance.

   … stepping up the development of bank products addressing
    environmental, social and ethical issues;

   … validating the bank's sustainable development strategy
    through dialogue with both internal and external stakeholders.

   … actively support initiatives and businesses in clean or
    renewable energy technologies.

Source: ABN AMRO (leader in the Dow Jones Sustainability
   indexes. (Quotes from a one-pager)

                    EGTT - Montreal - 23 September 2004
                                                                7
Barriers

MACROLEVEL BARRIERS : COUNTRY
Country risk
Limited financial infrastructure
Weak, uncertain and unbalanced economic situation
Limited legal infrastructure
MESOLEVEL BARRIERS : SECTOR OR THEME
“First-time” effect
Regulatory framework
Cross subsidies / unfavourable taxation
Limited knowledge infrastructure or business infrastructure
MICROLEVEL BARRIERS : PROJECT
Capacity in local implementing and other stakeholders
Project- and site-related data

                 EGTT - Montreal - 23 September 2004
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General financing instruments

   Project finance

   Public Private Partnership (PPP)

   Build–Operate–Transfer (BOT)

   Export Credit Agencies (ECAs)

   Grants and subsidies
              EGTT - Montreal - 23 September 2004
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Climate change related financing

    Multilateral and Intergovernmental
     organizations
        Global Environment Facility (GEF) – Climate
         Change Programme
          • Special Climate Change Fund (SCCF)
          • Least Developed Countries Fund (LDCF)
          • Adaptation Fund (AF)
        World Bank - Carbon Financing
        United Nations Environment Programme
         (UNEP)

                   EGTT - Montreal - 23 September 2004
                                                         10
Climate change related financing (2)
      Country-based instruments
        Carbon Trust (United Kingdom)
        Green Financing (the Netherlands)

        Energy for Rural Transformation
         (Uganda)
        Polish National Fund for Environmental
         Protection (Poland)


                EGTT - Montreal - 23 September 2004
                                                      11
Climate change related financing (3)

     Other financing models
         E+Co
         REEEP

     Deal brokers and market facilitators

     Financing instruments under construction
         JREC European Union-Patient Capital Initiative
         The Netherlands EBRD Carbon Fund

                   EGTT - Montreal - 23 September 2004
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Cases:
 AT Biopower
 Poland Efficient Lighting Project
  (PELP)
 Canada Biodiesel Project:
     Buses in Toronto
     Garbage trucks in Winnipeg

     Cruise boats in Montreal


             EGTT - Montreal - 23 September 2004
                                                   13
Guidelines for innovative financing

   Tool 1: Added value for stakeholders

   Tool 2: Linkages to other themes

   Tool 3: Loud, Long, Legal – an effective
    policy framework


              EGTT - Montreal - 23 September 2004
                                                    14
                     “Danke sehr
                         und
                         auf
                     Wiedersehen”




EGTT - Montreal - 23 September 2004
                                      15

				
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