Session II: Key Elements of
Structured Finance for Renewable
Programs and Energy Efficiency
“Financial Instruments to Promote
Sustainability and Climate Change Mitigation
Morelia, Mexico, Nov 29, 2012
Development and Energy are Intrinsically Linked
Source:
http://holtz.org/Library/Social%20Sc
ience/Geography%20and%20Econ
omic%20Development%20by%20G
allup,%20Sachs/GDP%20Density%
20Map.gif downloaded 12Nov2012
Source:
http://www.cojoweb.com/earthlights_
msp_big.jpg , downloaded 12Nov201
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Yet, Energy and the Biggest Threat to Development, Climate Change,
are also Intrinsically Linked…
Source:
China’s Energy and Carbon Emissions Outlook to 2050, Nan Zhou, David Fridley, Michael McNeil, Nina Zheng, Jing Ke, and
Mark Levine, Lawrence Berkeley National Laboratory, Report LBNL-4472E, April 2012
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For a Good (?) Reason (So Far!)…
Source:
Levelized Cost of New Generation Resources in the Annual Energy Outlook 2011,
http://www.eia.gov/oiaf/aeo/electricity_generation.html , downloaded 23Nov2012
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Itaú Unibanco: Global Presence
Itaú Unibanco has a strong presence in South America …
Itaú BBA U.K. Securities Ltd.
Banco Itaú BBA Intl S.A. (London)
Banco Itaú BBA Intl Frankfurt Rep. Office
Itaú BBA USA Securities Inc.
Itaú BBA NY Rep. Office
Itaú Unibanco NY Branch
Banco Itaú BBA Intl Paris Rep. Office
Banco Itaú Europa Luxembourg S.A.
Itaú Asia Securities
Ltd. Tokyo Branch
Itaú Unibanco Tokyo
Branch
Banco Itaú Suisse S.A. Switzerland
Banco Itaú Europa Intl (Miami)
Itaú BBA Securities Inc Miami
Banco Itaú BBA Intl S.A. (Lisbon)
Banco Itaú BBA Intl Madrid Rep. Office
Itaú Middle East
Itaú Unibanco S.A. Nassau Branch
Ltd. (Dubai)
Itaú Unibanco S.A. Cayman Branch
Itaú BBA Nassau Branch
Itaú Unibanco Holding S.A. Cayman Branch
Itaú Bank & Trust Bahamas Ltd.
BIE Cayman Ltd.
Banco Itaú BBA Colombia
Itaú BBA Shanghai Rep. Office
Itaú Ásia Securities Ltd. (Hong
Kong)
Banco Itaú BBA S.A. Peru Rep.
Office
Itaú Unibanco S.A. . (Brazil)
Banco Itaú Paraguay S.A.
Banco Itaú BBA S.A. (Brazil)
Banco Itaú Uruguay S.A.
Banco Itaú Chile
Banco Itaú Argentina S.A.
... and global distribution capabilities.
Our overriding purpose is to contribute decisively to the success of our clients, developing their
business in order to achieve sustainable leadership, playing a significant role in the growth of the
countries where we operate, and in the advancement of the people who are directly or indirectly
served by the projects we support. (…) A great deal of certainty is dangerous. (…) We understand
that even when we believe deeply in something we should still question it. The strength of our
reputation springs from our capacity to do things better and differently (…)”
Keys to Successful Climate Change Strategies:
• Developed through a transparent partnership process
involving stakeholders of different sectors
• Reflects national conditions and preferences, natural
resources base, and institutional framework (“national
policy goals and national circumstances”)
• Focus on long-term goals but recognizes short-term
tradeoffs
• Allows for intermediate adjustments, if necessary
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Green Standards Are Fundamental – But Not Enough
•
•
Large Events Like the 2014 World Cup Are a Great Opportunity to Upgrade
Building standards
Engagement Between Develpment and Commercial Banks: Focus on
Supply Chain
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Social Issues: Low Income Households and the “Poverty Trap”
– the Case of Power Distribuition in Brazil
Improvement in Social
Conditions Lead to
Improvement in
Economic and
Financial Results!
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Ethanol – from Proálcool to flex-fuel
• Designed in the 70’s as a response for the Oil Crisis
• Sugar cane production dates back to early XVI century
• Incentives to increase sugar cane and ethanol
production, develop technology, gain consumer support
• Huge initial success
• Major difficulties during 80’s, when oil prices fell
• Solution: technological development (flex fuel),
continued support for production
• Issues: trade-off food x fuel?
• Financial incentives for agriculture vs. fossil fuel
subsidies
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Birth, crisis and success: Technology is the Key
Factor!
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Biofuels: Energy X Food? Not if You Do It Properly...
481% growth 1979-2011!!!
292% growth 1979-2011!!!
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Renewables – Wind Power
•
•
•
•
•
•
•
Booming industry worldwide
Very low environmental footprint
Brazil has estimated 143GW potential
Issue: high costs, and lack of local expertise
First Govt. Sponsored support program did not deliver
Solution: change incentives; support local production
Solution: technological development and increased scale
of production => lower costs
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A Global Success Story for Renewable Energy
Global Windpower (installed)
Forecast (2006)
Perspectives on Windpower for the world and for Brazil –
technical, economical and political questions, Jens Peter
Molly, Deutsches Windenergie-Institut GmbH, April 2006
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Actual Growth
Source: Windpower.net
In Spite of Many Local Difficulties...
Key to Success: Adjust to Local Conditions
60,000
Brazil (installed capacity)
Production Capacity [MW]
50,000
40,000
Production Capacity
(over the past 13 years)
Brazil (considering recent
auctions)
China
USA
Germany
30,000
Spain
India
20,000
10,000
0
1999
2001
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2003
2005
2007
2009
2011
Hydropower Environmental Footprint:
Challenges
0.0%
3.8%
Amazonas
Tocantins
13.4%
Atl.N/NO
3.7%
3.0%
1.8%
6.7%
S.Francisco
Atl. Leste
67.4%
Paraná
Uruguai
Atl. SE
Unutilized Hydropower Potential
(per Basin)
Source: Aneel. Image from http://www.bicusa.org/es/Article.11709.aspx
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16
Energy Sector – Large Hydro
Challenges and Opportunities
UHE Balbina
Flooded Area: 3150 km2
Capacity: 250 MW
(9,44 km2/MW)
UHE Tucurui
UHE Samuel
Flooded Area : 560 km2
Capacity: 217 MW
Flooded Area : 2430 km2
Capacity: 4240 MW
(0,57 km2/MW)
(2,58 km2/MW)
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17
Energy Sector – Large Hydro
Challenges and Opportunities
Area Comparison
3500
3500
3150
3000
3000
2430
2500
2500
UHE Balbina
2000
2000
km2
Flooded Area: 3150 km2
1500
Capacity: 1500
250 MW
1000
(9,441000
km2/MW)
500
500 0
560
UHE Tucurui
104
UHE
Samuel
Santo Domingo
0 Flooded Area : 560
Mexico City
km2
Capacity: 217 MW
UHE Samuel
UHE Samuel
Flooded
: 2430 km2UHE Balbina
UHEArea
Tucurui
Capacity:
4240 MW
UHE Tucurui
UHE Balbina
(0,57 km2/MW)
(2,58 km2/MW)
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18
Hydropower Environmental Footprint:
Solutions and Opportunities
Source: Legal Issues Guidebook to the Clean Development Mechanism, June 2004
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19
Challenges and Opportunities
Summing up…
The benefits of strong, early action on climate change outweigh the costs. The effects of our actions now on
future changes in the climate have long lead times (...)what we do in the next 10 or 20 years can have a
profound effect on the climate in the second half of this century and in the next. No-one can predict the
consequences of climate change with complete certainty; but we now know enough to understand the risks.
Mitigation - taking strong action to reduce emissions - must be viewed as an investment, a cost incurred now
and in the coming few decades to avoid the risks of very severe consequences in the future. If these
investments are made wisely, the costs will be manageable, and there will be a wide range of opportunities
for growth and development along the way. For this to work well, policy must promote sound market signals,
overcome market failures and have equity and risk mitigation at its core.
Stern Review, The Economics of Climate Change, 2006
Source: http://www.ethicalmarkets.com/2010/02/09/hoax-precautionary-principle-anyone-2/
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2
Obrigado!