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

27 January, 2017

Overview & IFC’s Strategy

*: FY13-15

Climate Change Is threatening our developmental gains in South Asia

3 Source: WB, ADB

Most Climate Vulnerable region

4

3 out of the top 10 vulnerable countries are in South Asia (India,

Bangladesh & Nepal)

Source: Maplecroft

South Asian Countries have set significant Climate Change targets by 2030 in COP21

5 Nepal INDC was submitted later

India- 33-35% reduction in emissions intensity. 175 GW Renewable Energy (RE) by 2022

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

$200 billion RE Financing

$30 billion Energy & Water Efficiency

Financing

REQUIREMENTS NEXT 5 YEARS

$75 billion Adaptation Financing

Mitigation (95% India)

Adaptation (Mainly Bangladesh,

India & Nepal)

What have we done so far in South Asia (FY11- 15) ?

6

1.76 m Tons* Cumulative -GHG Reduction/Year

Equivalent to taking 350,000 cars off the Road

$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

Renewables, Green Building, Credit lines have contributed maximum to

our Climate Volumes

Adaptation related AS

program in Bangladesh, Nepal & Sri Lanka benefited more

than 100,000 farmers

24% Of our Advisory Business is Climate

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

Climate Volume Performance

7

Sector contribution to Volumes Climate LTF performance by Volume

Renewables, Green Building, Credit lines have contributed max. to our Climate Volumes

IFC South Asia Climate Business Growth Strategy(FY16-20)

8

3 Pillars- Investment, Advocacy & specialist/Advisory support

0

100

200

300

400

500

600

700

FY1

1

FY1

2

FY1

3

FY1

4

FY1

5

FY1

6

FY1

7

FY1

8

FY1

9

FY2

0

Clim

ate

Vo

lum

es o

/a (

in U

S$

mill

ion

)

Eco/Smart Cities

Adaptation

Green Buildings

EE

RE

*In the next five years, relative to last five years, i.e. FY11-15

Green Buildings & RE will continue to be major

contributors

Region will focus on EE, eco Cities & adaptation

$1.3 Billion o/a

$0.4 B mobilization

$2.2 Billion o/a

$1.2 B mobilization

2X Climate Investments including mobilization

Some examples of Innovative Projects

*: FY13-15

Example: High Impact Intervention (Renewables)

10

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)

• 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

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

WHY?

HOW?

IMPACT

• 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

FACILITATION • 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

INVESTMENT

Case study Anchor Investment: Yes Bank Green Bond

11

Issuer Yes Bank Limited

Status Green Bond, Senior

Unsecured

Pricing Date 3 August 2015

Settlement

Date

5 August 2015

Size INR 3.15b (approx. US$

49.2m)

Maturity 5 August 2020

Tenor 10 years

Listing Bombay Stock Exchange

Governing

Law:

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

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.

CHINA GREEN FINANCE PROGRAM (CHUEE)-RISK SHARING FACILITY

As of June, 2016

231 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

Kabeli A Hydroelectric Project (KAHEP) Nepal-Blended finance

13

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

Notable Advisory Projects

14

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: 15000

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: 15000

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: 75000

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

https://www.youtube.com/watch?v=sDuH18tYL9A&feature=youtu.be