Climate finance van de ven (ebrd)scaling up cf ccxg gf march2014

EBRD SUSTAINABLE ENERGY INITIATIVE

EXPERIENCES

INPUTS FOR THE CCXG GLOBAL FORUM DISCUSSION

ON SCALING-UP AND REPLICATION

March 2014

Jan-Willem van de Ven

Senior Carbon Manager

ENERGY EFFICIENCY AND CLIMATE CHANGE

THE QUESTIONS

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1. How has EBRD worked with actors at

international, national and local levels to

identify and tackle barriers to replication and

scaling-up?

2. How can useful lessons and information on

barriers be shared and used for scaling up

and replicating climate finance interventions?

SCOPE

1. Introduction to the European Bank and

Reconstruction and Development, and the

Sustainable Energy Initiative

2. Scaling-up and replication, an embedded

consideration in the Bank’s operations

(transition impact, SEI):

• Ingredients to success

• Systematic development approach

• Market demand driven

3. Robust MRV, enabling demonstration effects

and sharing of information.

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The EBRD

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• International financial institution established in 1991 to

promote transition to market economies in 34 countries from

Central Europe to Central Asia

• Owned by 63 countries and two inter-governmental

institutions (EU and EIB).

Sound

Banking

Principles

Transition

Impact

Environmental

Sustainability

• AAA rated. Capital base of €30 billion

• 2013: €8.5 billion finance committed

THE EBRD

EBRD REGION – CHARACTERISTICS

AND BARRIERS

EBRD Region characteristics:

• High share of heavy industry

• Ageing infrastructure

• High energy and carbon intensity

• Substantial potential for renewable energy resources

• Energy efficiency potential

Substantial barriers,

externalities and market failures: • Difficult access to

finance (particularly for SME)

• Lack of information and (management) skills

• Regulatory constraints, incl. a lack of market-based pricing energy (subsidized) and no/low carbon prices.

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BARRIERS TO SEI (FURTHER)

Credit-related risks

• high perceived credit risks

• long pay-back period for investments in energy supply and utilities

• commercial loans not readily available

Behavioural and technology-related

• information barriers: consumers have a high discount rate for decisions on EE

investments (based on first costs rather than lifecycle savings)

• limited market availability of energy efficient technologies

Pricing and policy

• limited policy support, capacity and expertise

• energy tariffs not reflective of the costs of generation externalities

• low collection rates (ETCs)

• reforms to support renewable developers inadequate in some CoOs

• unclear carbon pricing signals

• inadequate pace of industrial restructuring

6 © EBRD 2014, all rights reserved

THE SUSTAINABLE ENERGY

INITIATIVE

• The EBRD has been

engaged in sustainable

energy finance since its

establishment.

• In 2006, the EBRD

launched the Sustainable

Energy Initiative to deal with

energy efficiency and

climate change (responding

to G8 call).

• The EBRD was the first

MDB with a dedicated pool

of technical experts in-

house.

• In 2013, the EBRD

launched Sustainable

Resource Initiative which

includes SEI, materials

efficiency and water

efficiency.


SEI FINANCE BY BUSINESS AREAS

• From 2006 to 2013, SEI

finance amounts to €13.4

billion.

• SEI business volume has

shown an increasing trend

since 2006, with a peak in

2011 (€2.6 billion).

• Cleaner energy production

and corporate EE account

for the bulk of SEI

investments since 2006.

• Since 2006, the share of

SEFFs and renewable

energy projects has

increased significantly.

0

500

1000

1500

2000

2500

3000

2006 2007 2008 2009 2010 2011 2012 2013

SE

I finance v

olu

me (

€ in m

ln)

MunicipalInfrastructure EE

Renewable Energy

Cleaner Energyproduction

SEFFs

Corporate EE

SEI business volume split by business areas


SEI INGREDIENTS TO SUCCESS

POLICY

DIALOGUE

PROJECTS AND

INVESTMENTS

TECHNICAL

ASSISTANCE /

INCENTIVES

Mainstreaming: SEI Projects

across Bank’s Investment

Portfolio (set investment targets)

Enabling Regulations:

Working with

governments to support

development of a strong

institutional and regulatory

framework that

incentivises sustainable

energy (carbon pricing,

energy efficiency

regulations, feed-in tariffs) Technical Assistance:

to overcome barriers:

market analysis, LEME

development, energy

audits, training and

awareness raising

Incentives: (grant co-

financing) to reward

performance, attract early

adopters / demonstration

projects and address

affordability constraints


STRUCTURED APPROACH TO SEI

PROJECT DEVELOPMENT

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The EBRD’s Sustainable energy Initiative (SEI)

Country Strategies

Sustainable Energy Action Plans (SEAP)

Market Studies

Demand for finance by project sponsors

Definition of Financing Programmes (examples):

Sustainable Energy Financing Facilities (SEFFs)

Finance and Technology Transfer Centre for Climate Change

(FINTECC)

Resource Efficiency Transformation Programme (RESET)

Instruments and tools (mitigation and adaptation):

Leveraging private sector intermediaries (banks, ESCOs)

Policy dialogue and Technical Assistance

Energy / resource efficiency audits

Incentive grants and training (energy/carbon management)

List of Eligible Measures and Equipment (LEME)

Monitoring, Reporting and Verification (MRV)

Assessment

of Market

Demand,

Barriers and

Delivery

Potential (incl.

co-finance)

© EBRD 2014, all rights reserved

SEFF - A SUCCESSFUL MODEL

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Slovak Republic Slovak Republic Turkey Turkey Ukraine Western Balkans

Moldova Poland Romania Romania Russia Russia

Armenia

Bulgaria Bulgaria Bulgaria Bulgaria Belarus

Georgia Hungary Kazakhstan

Kosovo Kyrgyzstan Moldova

SUSTAINABLE ENERGY FINANCING FACILITIES

CATALYSING AND RESPONDING TO DEMAND

• Local financial institutions on-lend funds to small and medium-sized businesses, corporate and residential borrowers.

• The potential demand is demonstrated with a market study and origination of a project pipeline.

• Finance is provided for energy efficiency and small-scale renewable energy projects.

• SEFFs establish project implementation teams who support (and train) local financial institutions and their clients.

• SEFFs have a robust MRV regime, whereby incentives are typically paid upon verified project completion.

SEFFs are effective in reaching a wide range of small and

medium-sized business and residential clients


• Climate finance reaching a bigger market of small and medium sized

transactions, and herein involving and leveraging private finance

sector.

• Bring together the critical technical and financial components required

to facilitate and to add value to sustainable energy investment

opportunities.

• Increase awareness of the benefits of sustainable energy investments

and promotes ‘best practice’ technical solutions, builds skills.

For climate finance to become a viable banking product, the EBRD

SEFF model uses a “Pilot > Prove > Propagate” approach to kick-

start and scale-up, in parallel with related “Policy” approaches

SEFFS AND SCALING UP CLIMATE FINANCE

© EBRD 2014, all rights reserved 13

FACILITY

Turkish Sustainable Energy Financing Facility

(TurSEFF) provides local banks with credit lines for

sustainable energy investments in the residential,

industrial and commercial sectors (sub-loans of up

to €5 million).

TECHNICAL ASSISTANCE

• €2.4 million provided by the Climate

Investment Funds and €7.5 million from the EU

were used for project implementation support.

• This included supporting partner banks with

pipeline development, loan appraisals, energy

audits, promoting the facility and training.

INNOVATIVE FINANCIAL MIX

EBRD loans $222 million

of which SEI $222 million

CTF concessional loan $47 million

JBIC loans $ 20 million

Total facility value $ 289 million

5 PARTICIPATING BANKS

ESTIMATED IMPACT

Over 370 sub-projects financed through five partner

banks by the end of 2012 are estimated to result in:

• Energy savings: 3,300 GWh/year

• Emission reductions: 645,210 tCO2/year

SEFF EXAMPLE TURKEY

http://www.turseff.org/en/home.html

SHARING

• Keep the eye on delivery; focus on “what works, when it starts working”.

• Demonstration projects are key in support of the bigger picture policy dialogue,

and resulting regulatory reform to an enabling environment.

• Most SEI programmes have dedicated websites in local and English languages.

• Standardise where possible, e.g. the EBRD is carrying out a number of

standardised carbon emission factor studies and publishes these.

• Climate Finance MRV essential to learn and share results (e.g. J-MDB Report).

• Co-ordination between stakeholders, e.g. recent donor co-ordination meeting on

the Kazakh emissions trading scheme in Astana.

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Thank you

Jan-Willem van de Ven

Senior Carbon Manager, Energy Efficiency and Climate Change, EBRD

[email protected]


Climate finance van de ven (ebrd)scaling up cf ccxg gf march2014

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