Scaling up Climate Finance (Improving The Impact Of Our Interventions)

Transcription

1 Scaling up Climate Finance (Improving The Impact Of Our Interventions) 27 January, 2017

2 *: FY13-15 Overview & IFC s Strategy

3 Climate Change Is threatening our developmental gains in South Asia Source: WB, ADB 3

4 Most Climate Vulnerable region 3 out of the top 10 vulnerable countries are in South Asia (India, Bangladesh & Nepal) Source: Maplecroft 4

5 South Asian Countries have set significant Climate Change targets by 2030 in COP21 India % reduction in emissions intensity. 175 GW Renewable Energy (RE) by 2022 REQUIREMENTS NEXT 5 YEARS Nepal INDC was submitted later Bangladesh- An unconditional 5% reduction in GHG emissions. $40 billion adaptation needs Sri Lanka- An unconditional 7% emissions cut Bhutan- pledge to remain carbon neutral Maldives- An unconditional 10% reduction in energy sector emissions Nepal : 4,OOOMW hydro power by 2020, also focus on climate resilience Mitigation (95% India) $200 billion RE Financing $30 billion Energy & Water Efficiency Financing Adaptation (Mainly Bangladesh, India & Nepal) $75 billion Adaptation Financing 5

6 What have we done so far in South Asia (FY11-15)? $1.3 billion (Climate Investments-Approx. 2.5% of South Asia s total Clean energy Investments & 25% of IFC South Asia total business ) $0.4 billion Mobilization Volume 1.76 m Tons* Cumulative -GHG Reduction/Year Equivalent to taking 350,000 cars off the Road 24% Of our Advisory Business is Climate Renewables, Green Building, Credit lines have contributed maximum to our Climate Volumes 6 Adaptation related AS program in Bangladesh, Nepal & Sri Lanka benefited more than 100,000 farmers PPP has demonstrated first of it s kind energy efficient Street lighting & Rooftop Solar project benefiting 1.65 m people Off Grid- Lighting India program has enabled access for >8 m people *: FY13-15

7 Climate Volume Performance Climate LTF performance by Volume Sector contribution to Volumes Renewables, Green Building, Credit lines have contributed max. to our Climate Volumes 7

8 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Climate Volumes o/a (in US$ million) IFC South Asia Climate Business Growth Strategy(FY16-20) 2X Climate Investments including mobilization $1.3 Billion o/a $0.4 B mobilization $2.2 Billion o/a $1.2 B mobilization Eco/Smart Cities Green Buildings & RE will continue to be major contributors Adaptation Green Buildings EE Region will focus on EE, eco Cities & adaptation 100 RE 0 3 Pillars- Investment, Advocacy & specialist/advisory support *In the next five years, relative to last five years, i.e. FY

9 Some examples of Innovative Projects *: FY13-15

10 Example: High Impact Intervention (Renewables) Market Transformation of the Renewables Sector 15% target penetration of RE market by IFC clients IFC s RE commitments during last 5 years : $ 1 billion ( o/a & Mob) WHY? 300 million still lack access to power; Government of India (GoI) targeting universal access to electricity by 2019 under its 24x7 Power for All program; GoI plans to scale up RE to 175 GW by 2022; GoI s commitment to RE is a cornerstone of its pledge under COP 21. Renewables is the fastest growing energy sector in the country; Huge capex needs require diversification of funding sources Comprehensive Facilitation-Investment Offer HOW? FACILITATION WBG intervention at various levels Bringing new investors through mobilization PPP Advisory Program Policy advocacy -Stakeholder consultations Connecting developers and investors Use of flexible concessional funds INVESTMENT Direct funding to developers and indirect funding through financing of financial institutions Green Bonds issuances and Credit enhancement products Opportunistic equity investments in RE developers Treasury products IMPACT At 15% penetration of the market in RE, estimated GHG savings could result in: Emissions reductions of 25 million tco2 per year equivalent of taking 5 million cars of the road Energy generation of 26 million MWh per year 10

11 Case study Anchor Investment: Yes Bank Green Bond ABOUT YES BANK FINANCIAL SERVICES India s fourth largest private sector Bank Green Bond program to support Renewable energy infrastructure investments Diversify funding sources and tap into nascent Green Bond capital markets Green bond of INR 3.15bn (approx. US$ 49.2m) issued in Aug 2015 was the second green bond under the bank s EMTN program and the first issued for an international investor under the Green Bond Principles IFC ROLE IFC invested US$ 50 million Send a strong signal of support to potential investors Sharing IFC s experience and expertise on Green Bonds and market Review of Yes bank s pipeline of green investments Helped draft Impact Reporting and Use of Proceeds language Provided impact reporting tool and training to provide future investors environmental impact data. Issuer Status Yes Bank Limited Green Bond, Senior Unsecured Pricing Date 3 August 2015 Settlement Date Size 5 August 2015 INR 3.15b (approx. US$ 49.2m) Maturity 5 August 2020 Tenor Listing Governing Law: 10 years Bombay Stock Exchange Indian Law IFC s Investment Fully Subscribed by IFC Pre-committed private placement IFC s first Green Bond investment, and IFC s first green corporate bond investment in Indian Rupee Achievement Setting the market standard for Green Bonds in India and EM Markets Stimulating the domestic capital markets and opening the door for climate change investments 11

12 CHINA GREEN FINANCE PROGRAM (CHUEE)-RISK SHARING FACILITY As of June, loans disbursed by partner FIs using IFC investment products Total loan amount>us$924million Total investment US$2.3 billion Annual GHG emission reduction: 22.8 million tons CO2 equivalent Annual energy saved >44.2 million MWH

13 Kabeli A Hydroelectric Project (KAHEP) Nepal-Blended finance ABOUT PROJECT A 37.6 MW peaking run-of-river type hydropower project located in Panchthar District, Nepal developed by Butwal Power Company (BPC) and InfraCo Asia for an estimated project cost of US$100mm IFC S INVESTMENT Project part of the joint IFC World Bank Nepal Hydropower Sector Strategy, that is being pursued with a number of strategic engagements IFC provided a loan of up to US$18.2mm with a tenor of 19 years IDA provided a loan of US$40 million for 20 year tenor Canada Climate Change Program (CCCP) provided US$18.2mm with same tenor as IFC IFC ROLE IFC bringing in Blending Concessional finance catalyzed financing that addressed the perceived risks IDA and IFC (including concessional financing ) provided 80% of the project debt 13

14 Notable Advisory Projects Weather Index Insurance, Sri Lanka Partnered with SANASA, to help farmers minimize the impact of crop losses due to floods or droughts through weather based agricultural insurance products Expected Farmers Reach: PPCR, Nepal Working with leading agribusiness firms to promote improved agricultural and water management practices and introduce new technologies among small farmers Expected Farmers Reach: PPCR, Bangladesh Working with leading agribusiness and insurance Company to provide climate smart products and services to firms and supply chain members and to better manage climate risks Expected Farmers Reach: Lighting Asia Addressing the systemic market barriers that are impeding the development of markets for off-grid appliances and mini-grids Enabled energy access to 6.5 million people Rajasthan Street Lighting PPP one of the largest single city energy efficient street lighting project in India, Benefitting 1.65 million people PaCT Bangladesh Working with ten apparel brands on harmonizing procurement guidelines related to water efficiency in the supply chain, 200 textile factories on the identification of resource efficiency measures Expected water savings: 25 million cubic meters in a year 14