“TheClimate Investment Funds (CIF):
International financing for mitigation
projects”
Meeting of the Regional Network
of Ozone Officers
4th to 7th October 2011
Port-of-Spain, Trinidad and Tobago.
Content
• International financing of climate change
mitigation
• The Climate Investment Funds (CIF)
• The Clean Technology Fund (CTF)
• Mexico‘s Investment Plan under the CTF
• Financing structured by the Inter-American
Development Bank (IADB) under the CTF
• Key Points in Project Financing
International Financing for Climate
Change
• Through the World Bank and Multilateral Development Banks
(MDBs) and mainly taking Sovereign Risk
Donor Countries
(International Funds)
MDB’s
Climate Investment
Funds CIF
(CTF, FIP)
Policy Based
Loans (PBL)
Capacity Building
Developing
Countries
Projects
based
Capacity
Building
MDB’s
Structure of the Climate Investment
Funds (CIF)
The CTF finances the increase of
the demonstration, use and transfer
of clean technologies.
Support specific programs towards new
facilities with high possibility to be
replicated in a greater scale
Funding: USD 4,500 million in
concessional financing
Funding: USD 2,000 millon in grants and
concessional financing
Climate Investment Funds (CIF)
• At the end of 2008, developed countries created a climate
fund of about USD 6,500 million to offer developing
countries the possibility to access financing for Climate
Change Mitigation (low carbon).
• The World Bank acts as fiduciary; the World Bank and
the Multilateral Development Banks (MDBs), such as the
IADB, act as implementing agencies.
• Purpose:
− To cover inmediately the financing gap for urgent
actions until “Post-2012” is defined.
− Large-scale investments convert projects into
programs and accelerate public and private
investments.
• Implementing Period: 3 to 5 years.
Donor Countries for the the CIF
Country
Australia
Canada
Denmark
France
Germany
Japan
Republic of Corea
Netherlands
Norway
Spain
Sweden
Switzerland
United Kingdom
United States
Total
USD Million*
135
97
38
300
813
1,200
3
76
194
152
92
20
1,414
2,000
$6,500
*based on exchange rate on September 25 2008, initial CIF pledging date
Climate Investment Funds – Governance
Partnership Forum
A broad based meeting of stakeholders including: donor and eligible recipient countries,
MDBs, UN and UN agencies, GEF, UNFCCC, the Adaptation Fund, bilateral
development agencies, NGOs, private sector entities, scientific and technical experts
Clean Technology
Fund
Strategic Climate Fund
PPCR
Trust Fund Committee
Trust Fund Committee
SubCommittee
Australia, Brazil, China,
Egypt, France, Germany,
India, Japan, Mexico,
Morocco, South Africa,
Spain, Sweden, Turkey, UK,
United States
Algeria, Australia, Bangladesh,
Canada, Costa Rica, Germany,
Indonesia, Japan, Kenya,
Netherlands, Norway, Switzerland,
Thailand, UK, Yemen
Active Observers
UNDP, GEF, UNEP, UNFCCC
4 civil society; 2 private sector
Active Observers
UNDP, GEF, UNEP, UNFCCC
4 civil society; 2 Indigenous Peoples; 2
private sector
Australia,
Bangladesh,
Bolivia, Canada,
Denmark,
Germany,
Japan, Kenya,
Samoa, Senegal,
UK, Yemen
Plus the chair
of the
Adaptation
Fund
Clean Technology Fund (CTF) - Objectives
1. Provide scaled-up financing in countries’ investment plans for
demonstration and transfer of low carbon technologies with
significant potential for GHG emissions reductions:
•
•
•
Power sector: renewable energies, efficiency in generation,
transsmition and distribution.
Transport: Efficiency, modal shifts to public transportation
Energy Efficiency: Buildings, Industry, Agriculture
2. Support activities to stimulate transformational change:
•
Institutional strengthening and capacity – lead to long-term
investment
•
Engage private sector on new investments – build experience and
confidence of low carbon investment options
•
Complement and additional to existing Government or MDB
activities
CTF: Products and T&C
Develop and pilot financing products – all include concessional elements
1. CTF Public Sector financial products tailored to projects/
programs:
• Grants
• Concessional loans
• Guarantees on concessional terms
• Combination of the above instruments
2. CTF Private Sector as above, plus:
•
•
•
Equity investments
Debt – Senior or Subordinated and;
Other risk sharing mechanisms (e.g. partial guarantee of off-take
payment)
3. Project proposals to justify use of concessional CTF finance
within a blended package on the basis of identified incremental
costs or specific activities for removing barriers
Countries with CTF financing
Country and regional programs (in USD Million)
Colombia
150
Middle East and North Africa Regional
Program
US$750 Million
Egypt
300
Algeria
India (pending)
Egypt
Indonesia
400
Jordan
Kazakhstan
200
Marroco
Mexico
500
Tunisia
Marroco
150
Nigeria
Philippines
250
South Africa
500
Thailand
300
Turkey
250
Ucraine
350
Viet Nam
250
Approved Investment Plans
by January 2011:
Financing of the CTF: US$4,500
million and
US$3,700 million in cofinancing.
CIF: Definition of Investment Plans
Clean Technology Fund (CTF)
FINANCE MINISTRY
INVESTMENT PLAN
SOVEREIGN RISK
Lines of Credit granted
to Local Development
Banks
WORLD
BANK &
MDBs
PRIVATE SECTOR
Structuring
“Project Finance ”
The Clean Technology Fund (CTF) in
Mexico:
• Mexico was the first country in obtaining CTF’s authorization
for its Investment Plan (2009) for a total amount of USD 500
millon.
• Mexicos’s Investment Plan has the objective to support public
and private sectors in developing projects in Energy
Efficiency, Renewable Energy, and Transport.
• The World Bank (WB) and the Inter-American
Development Bank (IADB) are implementig agencies. WB
and IADB are channeling CTF resources throughout their
lines of credit, together with their own resources.
• Because CTF resources are blended with public and private
investments, local and multilateral financings, Carbón Finance
and grants on technical assistance; they generate substantial
investments in low carbon sectors.
• Mexico’s Investment Plan supports Climate Change Mitigation.
El Clean Technology Fund (CTF) in Mexico:
By Implementing Agency and Programs
Institution
Program
WORLD BANK:
USD 250 M
USD 200 M transport, approved
USD 50 M energy efficiency, approved
IFC:
USD 50 M
USD 15.6 M wind farm project, approved
USD 14.4 M other wind farm project, pending for approval
USD 20 M energy efficiency projects, pending for approval
INTER-AMERICAN
DEVELOPMENT BANK:
IADB
USD 200 M
USD 53.38 M renewable energy for private sector developers,
approved
USD 50.6 M sustaineble housing program (Green Mortgage) with
public bank SHF, in sructuring process
USD 71.62 M renewable energy program with public bank
NAFIN, in structuring process
USD 24.4 M energy efficiency program with commercial banks,
pending for approval
CTF financing with Private Sector: The case
of Wind Farm Projects in Oaxaca, Mexico
La Mata- Ventosa Wind
Farm Project
Eurus Wind Farm
Project
Wind farm project developed by
Electricite de France- Energies
Nouvelles (EDF-EN), installed
capacity 67.5 MW, cost US$200
millon
Wind farm project developed
by Acciona (Spain), installed
capacity 200MW, costo
US$525 millon.
Private Producer with Off-taker
Walt-Mart México.
Financed by IADB, IFC, USEximbank y CTF (through
IADB).
Private producer with Off-taker
Cemex.
Financed by IADB, IFC, CTF
(through IFC) and other
Mexican banks (public and
commercial).
CTF-IADB financing with Public Banks:
The case of RE and EE Programs in
Mexico
Renewable Energy
Program with Nacional
Financiera (NAFIN)
USD 210 millon
Through IADB line of credit
named CCLIP
established with NAFIN.
USD 70 M – CTF
USD 70 M – IADB line of credit
USD 70 M – NAFIN’s funding
Sustainable Housing
Program with Sociedad
Hipotecaria Federal
(SHF)
USD 100 millon
Through IADB line of
credit named CCLIP
with SHF.
USD 50 M – CTF
USD 50 M – IADB line
of credit
Project Financing: Barriers/Oportunities
• Key Points on RE and EE Structuring
Projects
Developer
• Technical
Capacity
• Financial
Capacity
“Equity”
(30/70)
Financial
capacity to give
a Partial
Guarantee on
the project
financing (Ej.
~20%)
Approx.50% of
the total cost
Project
“Off-Taker”
• Technology Risk
• Quality of the
Renewable Energies
• Plant Generation
Capacity
• Sufficient Income by
Energy Selling
• Additional Income by
ERPAs
• Political Risk
Land Ownership
 Change in the
Regulatory Framework
• Credit Rating
by S&P or
Moody’s
(AAA, AA, A,
BBB, etc)
Guarantee as a tool to Risks’ Mitigation
WB/MDB
and/or
Public
Banks
Commercial
Banks and/ or
International
Banking
Guarantee Fund to cover
the following Risks:
i) Technology (Suppliers)
ii) Plant Capacity
(Performance)
iii) Political Risk
iv) CERs Delivery
LOW CARBON
Project
Financing
Revolving and Contingent Line of Credit
• To secure sufficient project’s income to support its Senior Debt
Scenarios:
MDB’s and
CTF
Project’s
Income
($)
Line of
Credit
Public
Banks
Revolving
and
Contingent
Facility
Lenders
(Commercial
and
International
Banks)
• Payment
Default by offtaker
•Reduced
Energy Tariffs
• Lower Energy
generation than
expected
Resources from the Revolving and
Contingent Line are used
Project’s
Income
“Senior” Debt
Subordinated Debt
Revolving and Contingent Line:
i) Up-front fee and Commitment fee,
ii) Re-payment, is permitted
iii) Used resources will be subordinated debt payable after
Senior Debt is paid
15
Tenor (yrs)
25
Clean Tech Clusters Development
1st. Stage: development of a “cluster” with diverse actors’ participation
Resul:ts
•Tech Cost
Federal
Govnt
Local
Govnt
MDB´s
•Local
Capacity
Building
•Employees
•R&D
•Industry
•RE lower
Cost of
production
GEF
Tech
Supplier
Private
Sector
R&D
Centers
Univers
ities
2nd. Stage: Support National Developers
• Promote ER-EE competitive
Local Developers
• Better and more financing
MDB´s
Public
Banks
•Capacity Building
•Guarantess
Commerc
ial Banks
Thank You!
Dolores Barrientos
UNEP Mexico
Representative Officer
Tel.: (52 55) 4000-9877
dolores.barrientos@unep.org