Table ronde n°4 Mécanismes de financement innovants au service de la transition écologique :...
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Transcript of Table ronde n°4 Mécanismes de financement innovants au service de la transition écologique :...
Table ronde n°4Mécanismes de financement innovants au service de la
transition écologique : exemples étrangers
> Rudolf Hennesvice-président, kfW Privatkundenbank-Programme Development Housing
> Sylvie Lemmetdirectrice de la division Technologie, industrie et économie, PNUE
> Virginie Marchalanalyste politique, direction de l’environnement de l’OCDE
> James Ranaivosonconseiller de direction actions opération climat, Banque européenne d’investissement
TABLE RONDE N°4Mécanismes de financement innovants au service de la transition écologique : exemples étrangers
Rudolf Hennesvice-président, kfW Privatkundenbank-Programme
Development Housing
Promoting Energy Efficiency in Germany
● Dr.-Ing. Rudolf Hennes
Vice President
KfW Bankengruppe
Paris
12.07.2012
62
A bank with a wide array of functions
Promotion of developing and
transition countries
International business
Promotion construction
of new housing and modernisation
as well as education
Promotion SMEs, business founders,
start-ups
Financing municipal infrastructure projects and global loans
Germany/Europe agency business for Federal Government
We promote Germany
International project and
export finance
We ensure internationalisation
We promote development
Promotion of environmental and climate protection
Business Area Mittelstandsbank
Business Area Privatkundenbank
Business Area Kommunalbank
Business AreaExport and Project
Finance
Business Area Promotion of
Developing and Transition Countries
Domestic promotion
7
Stick(Laws, By-laws, Technical Standards, DIN-Standards, Building Codes,…)
Tambourine(Communication, Consulting, Technical Capacities)
Carrot(Low Interest Loans, Grants, Partial Debt Relief)
How to Promote Energy Efficiency?
8
Refinancing loan
Loan to customer
Interest rate
retail bank
Customer
Interest rate
Margin for credit risk and handling
German Government
or KfW
Capital market
Interestsubsidy
FundingAAA Rating
Funding by KfW and on-lending through retail banks
State liabilityInstitution owned
by Federal Republic and federal states
Promotional mandate
defined by KfW Law
Advantages:• no distortion of competition• Concentration on core competences• Diversification of risks
KfW‘s Business Model
for commercial and private customers
9
Energiewende – Programmes of KfW
EERE Innovation for Energiewende
KfW-ProgrammeOffshore Wind Energy
KfW-EE ProgrammeIncrease of max. loan amount to. 25 Mio. EUR
ERP-Innovationsprogramm
Increase of max. loan amount to 25. Mio EUR
EE Construction and Retrofit (Residential B.)Increased Grant Element
New: Effizienzhaus Denkmal
IKK-/IKU KfW-Investment LoanMunicipal enterprises; social welfare org.
Increase of loan amount tof 50 Mio. EUR
Energetic Urban RehabilitationGrants and loans to municipalities
KFW-ACTIONPLAN ENERGIEWENDE
Financing Initiative EnergiewendeDirect loans for larger enterprises
KfW-Programme RE
Increase of max. loan amount to 25 Mio. EUR
EE Construction and Retrofit (Non-Residential B.)New: Effizienzhaus 55, 70 und Denkmal
Inclusion of municipal enterprises
Programmes of SME Bank Progr. of Private Customers Bank Programmes of Municipal Bank
Public LightingLoans to municipalities
10
Promotional effects
Sylvie Lemmetdirectrice de la division Technologie, industrie et économie,
PNUE
Virginie Marchalanalyste politique, direction de l’environnement de l’OCDE
Towards a green investment policy frameworkThe case of Low Carbon, Climate Resilient Infrastructure
Presented by Virginie MARCHALLe financement de la transition écologique
Jeudi, 12 juillet 2012Ministère de l’économie et des finances
Why infrastructure matters?
14
Long infrastructure lifetimes means it has a strong lock-in effect for climate – locking in both vulnerability and emissions for decades to centuries
Need to act now!
3-6°C by 2100
2°C by 2100
Source: OECD Environment Outlook to 2050
The infrastructure financing gap
15
Infrastructure needs (annual, in USDtn illustration, need to be adapted to country context)
Source: OECD illustration, based on estimates from WB, WEF, OECD and Kennedy and Corfee 2012,”Mobilizing private sector investment in low carbon infrastructure”
CHALLENGES• Scale-up sources of capital, public and private
• Shift sources from brown to green
?
Private sector participation
The barriers to private sector engagement
16
• Barriers linked to infrastructure• High capital upfront
• Relatively low-return
• Very long investment timelines
• Barriers linked to climate market failure• Less profitable than LCR alternatives
• Lack of familiarity
• Higher policy risk
• Contextual barriers• New financial regulations restrain the
availability for long term capital
• Project finance is drying up
Balancing the risk-return profile to attract private sector investment
Role of the public sector:1. Reform policies to improve the risk-return value proposition of green
infrastructure2. Leverage public sources of finance to mobilise the private sector
TOWARDS A GREEN INVESTMENT POLICY FRAMEWORK
The need to combine investment and climate policies
1. CLEAR GOALSStrategic goal setting and
alignment
2. ENABLING GREEN INVESTMENT
Enabling policies for competitive, open markets;
incentives for green investment
3. MOBILISING GREEN FINANCE Financial policies, tools and
instruments
4. RESOURCESHarnessing public and private resources and
capacity
5. ENGAGEMENTPromoting green
business and consumers behaviours
Two objectives: 1. Social and economic provision of infrastructure at the lowest cost
2. Improve the risk-return value proposition of green infrastructure assets
The challenge of sustainable transport
Specific challenges
• Scale: Passenger transport volumes x2.5 in 2050, freight x4, urbanisation: +2.8 billion people in cities by 2050
• Shift: natural bias towards road infrastructure
• Public sector: low returns, predominant role of the public sector
Priorities
18
Integrate transport and land use planning
CBA based on co-benefits
Market structurePrice externalities beyond carbon
Remove fossil fuels subsidiesMainstream LCR in public
procurement
Integrate financing and planning (scale up and earmark public
revenues, subsidies)Land value capture tools for private
investorsBonds
Harmonising GHG emission accounting
Why pensions funds are not investing more?
Problems with clean energy investments
2
Problems with Infrastructure Investments
1
Lack of suitable investment Vehicles(climate bonds)
3
▪ Carbon pricing and fossil fuel subsidies▪ Unpredictable and fragmented policy support▪ Special species of risks
▪ Lack of project pipeline▪ Lack of investor understanding▪ Regulatory barriers
Barriers to institutional investment in clean energy
▪ Nascent and illiquid climate bond markets▪ Challenges with securitisation▪ Credit issues
Problems with clean energy investments
2
Problems with Infrastructure Investments
1
Lack of suitable investment Vehicles(climate bonds)
3
▪ Carbon pricing and fossil fuel subsidies▪ Unpredictable and fragmented policy support▪ Special species of risks
▪ Lack of project pipeline▪ Lack of investor understanding▪ Regulatory barriers
Barriers to institutional investment in clean energy
▪ Nascent and illiquid climate bond markets▪ Challenges with securitisation▪ Credit issues
Problems with clean energy investments
2
Problems with Infrastructure Investments
1
Lack of suitable investment Vehicles(climate bonds)
3
▪ Carbon pricing and fossil fuel subsidies▪ Unpredictable and fragmented policy support▪ Special species of risks
▪ Lack of project pipeline▪ Lack of investor understanding▪ Regulatory barriers
Barriers to institutional investment in clean energy
▪ Nascent and illiquid climate bond markets▪ Challenges with securitisation▪ Credit issues
Source: OECD (2012 Forthcoming) The Role of Institutional Investors in Financing Clean Energy
Thank you!
Contacts:
Jan Corfee-Morlot ([email protected]), Senior Policy Analyst
Virginie Marchal ([email protected]), Policy Analyst
Geraldine Ang ([email protected]), Junior Analyst Policy Analyst
Christopher Kennedy , visiting scolar
www.oecd.org/env/cc/financing
20
21
Level of Financial Sector DevelopmentLow Medium High
Low Income Countries Middle Income Countries Upper Middle Income and High Income Countries
Banking Services Basic Banks Full Range Banks Universal BanksNon-Bank Financial Services
None Government Bonds Equity
Government and Corporate Bonds
Equity Alternatives (Private
equity, venture capital)
Interest Rate Administrative Setting Largely Market Based Fully Market BasedAccess to Finance for SMEs Limited Partial Readily Available
Availability of Long-Term Funding
Limited(up to 1 year)
Partial(up to 7 years)
Full(up to 15 years)
Risk Management Weak Adequate RobustClean Energy Financing Instruments
Lines of Credit (liquidity support)
Concessional Financing Dedicated Debt Funds
Lines of Credit (demonstration)
Partial Risk Guarantee
Lines of Credit (demonstration)
Partial Risk Guarantee Equity Funds Consumer Financing
3. MOBILISING GREEN FINANCE Financial policies, tools and instruments
Source World Bank
22
POWERGENERATION BUILDINGS &
VEHICLES
OIL & NAT. GAS INFRASTRUCTURE
Low carbon electricity enables
greening of buildings & vehicles
Lower investment in oil & nat. gas infra. frees up capital for
green energy generation
Decreased demand for oil & natural gas, and
their infrastructure
Policies to promote energy efficiency and low carbon technologies for buildings
& vehicles
4. APPLICATIONS AND NEXT STEPSInfrastructure relationships in virtuous circles of low carbon growth
Sources: Kennedy C. and J. Corfee Morlot, 2012 forthcoming, Mobilising private investment in low-carbon, climate resilient infrastructure, OECD.
23
POWERGENERATION BUILDINGS &
VEHICLES
OIL & NAT. GAS INFRASTRUCTURE ROAD
RAIL
PORTS
AIRPORTS
Low carbon electricity enables
greening of buildings & vehicles
Lower investment in oil & nat. gas infra. frees up capital for
green energy generation
Decreased demand for oil & natural gas, and
their infrastructure
Decreased demand for
coal & oil frees up rail and port
capacity
Policies to promote energy efficiency and low carbon technologies for buildings
& vehicles
4. APPLICATIONS AND NEXT STEPSInfrastructure relationships in virtuous circles of low carbon growth
Sources: Kennedy C. and J. Corfee Morlot, 2012 forthcoming, Mobilising private investment in low-carbon, climate resilient infrastructure, OECD.
24
POWERGENERATION BUILDINGS &
VEHICLES
OIL & NAT. GAS INFRASTRUCTURE ROAD
RAIL
PORTS
AIRPORTS
Low carbon electricity enables
greening of buildings & vehicles
Switching of freight from road to rail to replace
transport of coal
Lower investment in oil & nat. gas infra. frees up capital for
green energy generation
Decreased demand for oil & natural gas, and
their infrastructure
Decreased demand for
coal & oil frees up rail and port
capacity
Growing use of port capacity for global
trade in components of green buildings,
vehicles and energy supply systems
Policies to restrict growth in air freight, and maintain freight transport by rail and
marine transport
Demand management & switching of freight to rail decreases demand
for road infra. freeing up capital for low carbon
vehicles
Policies to promote energy efficiency and low carbon technologies for buildings
& vehicles
4. APPLICATIONS AND NEXT STEPSInfrastructure relationships in virtuous circles of low carbon growth
Sources: Kennedy C. and J. Corfee Morlot, 2012 forthcoming, Mobilising private investment in low-carbon, climate resilient infrastructure, OECD.
James Ranaivosonconseiller de direction actions opération climat,
Banque européenne d’investissement
European Investment Bank
Financing the Ecological Transition
James RANAIVOSON12 July 2012
Financing the Ecological Transition
Climate Action in EIB Corporate Operational Plan………….3
EIB Group (EIB/EIF) Financial Tools….………………………..4
Challenges : EIB Contribution………………………………..5-6
Infrastructure Layered Debt Funds.....………………………...7
Project Bonds……….……………………………………………..8
Generic Structured Bonds………………………………………9
European Investment Bank Page 27
Climate Action in EIB’s Corporate Operational Plan
EIB COP Target Context : 25% of total lending contributing to Climate Action Projects qualify from following sectors/project types: Energy Efficiency, Renewable Energy,
Sustainable Transport, Forestry and Land Use, RDI, Adaptation, GHG capture or avoidance
European Investment Bank Page 28
0
5000
10000
15000
20000
25000
Millions
2009 2010 2011
Sustainable transport RE EE RD& I Other0.0
5.0
10.0
15.0
20.0
25.0
2008 2009 2010 2011
EIB
sig
natu
res
(bn
EUR
)
Sum of AMOUNT
Year of date of signature
17%
21%
28%
30%
EIB / EIF Financing Tools
Page 29European Investment Bank
Risk Capital Growth Capital Mid-Market and Risk Sharing Finance Investment Loans
Purpose: IP and Technology Transfer, Pre-seed & Seed & Early Stage financing
Intermediaries / Partners: (i) Research Centres, Incubators, Business Angels, Microfinance Financers, Development & Promotional Banks; (ii) Early Stage VC Funds
Products: EIF as Fund-of-VC Funds manager on behalf of EIB, EC and other public or private mandators
Purpose: Access to additional capital to finance growth
Intermediaries / Partners: (i) Development & Promotional banks, Commercial Banks, Private Institutional investors, Public Regional Managing Authorities & local banks; (ii) Growth Equity or Hybrid Mezzanine VC Funds
Products: (i) EIF as Fund-of VC Funds manager on behalf of EIB, EC and other public or private mandators; (ii) EIF as Holding Fund managers of EU structural funds dedicated to finance growth capital
Purpose: Access to capital for stage of commercialisation ; stimulate loans to sub-investment grade companies
Intermediaries / Partners: Same as (i) for Growth Capital ; (ii) Private Mid-Market Equity Funds
Products: Same as (i) for Growth Capital; (ii) EIB-EC joint RSFF; (iii) EIB and/or EIF guarantees or credit enhancement of SME loan securitisation
Purpose: Direct Loans to large companies and projects; Intermediated (Global or Framework) Loans through eligible banks to small companies and projects
Intermediaries/Partners:
(i) EU investment grade companies, projects and banks; (ii) EU 27 & accessing sovereigns; (iii) non-EU eligible countries, companies/projects/banks
Products: (i) EIB Loans or Guarantees from own funds; (ii) Loans or Guarantees from EC and MS Mandates
Seed / Start-Up Phase Emerging Growth Phase Development Phase Later Stage Counterparts
Challenges: EIB contribution (1)
European Investment Bank Page 30
Emphasis:
INNOVATION• Support to various stages of RDI in clean and green technology
SUSTAINABLE ENERGY• Continue expansion of renewable energy (RE) production infrastructure• Expand energy networks (grids) especially to integrate generation from RE• Play Catalytic role in energy efficiency initiatives inc. “smart” technology
RESOURCE EFFICIENCY• Scale up support to natural resource management (particularly water, forestry,
ecosystem services, sustainable agriculture & fisheries…) and waste management
TRANSPORT• Pursue strong support to sustainable and resource efficient transport
Challenges: EIB contribution (2)
European Investment Bank Page 31
Lending, Blending, Advising:
In complement to higher lending volumes where applicable:
• Enlarge the scope - in terms of final beneficiary development stage - of some existing financing tools, reinforce or wake up others: mezzanine, RSFF, structural funds, bonds as loan substitutes, securitization, green bonds...and strengthen/expand target sectors: trade finance, biomass, rural development…
• Optimize the use of Infrastructure (PPP, RE, Environment, Forestry, Land Use, Carbon reduction etc) Private (or Debt) Equity Funds
• Built upon existing experience of blending EC budget + EIB own funds and leverage of structural funds to better use financial intermediaries and catalyze private/institutional investors investments
• Prepare for scaling up pilot projects particularly Project Bonds and Structured Debt Funds
• Expand provision of Technical and Financial Advice funded by EC budget, structural funds and Member States
Infrastructure Layered Debt Funds
European Investment Bank Page 32
• Principle:– Utilize EC and 3rd party (sovereign) capital– 1st loss piece is issued by the EC and Sovereign Donors; – EIB leverages off this by going into the 2nd loss piece beside other IFIs/DFIs
• Examples in Energy Efficiency: Green for Growth (8 target partners countries in Southeast Europe ) , EEEF (pan-European)
• Capital Structure:
Private investors
Private investors, EIB, other IFIs
EIB, other IFIs
EC, Sovereign Donors Junior - C SharesJunior - C Shares
Mezzanine - B SharesMezzanine - B Shares
Senior – A Shares Senior – A Shares
NotesNotes
Project Bonds
• Case of EIB funded subordinated debt
Project Bonds
Target rating
minimum A-
Bond issue and underwriting
SPV
ProjectCosts
Project Bond Investor
EIB Sub-debt
Equity & Quasi-equity
EIB sub-debt participation can be combined with different types of funding sources (bonds and other senior loans)
max 20% of the bond issue
European Investment Bank Page 33
FLP = First Loss Piece.
European Commission
European Investment
Bank
SPV
EC FLP EIB, IFIs, DFIs Loans
SeniorDebt
Equity
Port.
of Loan
Assets
Loan 1
Loan 2
Loan 3
…
Loan n
Equity or Quasi-equity contribution
Project / Portfolio Sponsor
Sub-Debt
Infra PE or Debt Fund
Generic Structured Bonds
PrivateInstitutionalInvestors
Lending
Receivables
Performance Guarantees
Possible participations
Other IFIs, DFIs
Security
European Investment Bank Page 34
EIB could be investor in bond as loan substitute for a single project, senior or junior lender to an SPV of loansecuritization, credit enhancer or guarantor of such SPV (that could be covered bonds) etc.
Investment Grade Bond
Structural Funds
Possible participations
Governments?
Contacts
European Investment Bank100, bd. Konrad Adenauer
L-2950 Luxembourgwww.eib.org
James RANAIVOSONManagerial Adviser
Structured Finance Climate & EnvironmentEmail: [email protected]
Phone: +352 4379 87315
Page 35European Investment Bank