NEWSLETTER. Establishing the Centre as a knowledge platform by planning and implementing advisory projects. November 2012, Volume1

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1 NEWSLETTER November 2012, Volume1 What is the FRANKFURT SCHOOL - UNEP Collaborating Centre for Climate & Sustainable Energy Finance? The Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy Finance (the Centre) is committed to facilitating essential structural changes in energy supply and use around the globe by helping to catalyse privatesector capital flow towards investments in sustainable energy and climate change (CC) mitigation. By treating all activities from research through to project implementation as a continuum, the Centre is building a knowledge base that is directly benefiting its partners and the wider community. The Centre s combination of advisory work with applied research and capacity building is a perfect platform for identifying and propagating good practices in sustainable energy and climate finance. Through partnerships with various financial institutions, the Centre is developing and field-testing new financial instruments, products and services that serve the growing demand for energy efficiency (EE) and clean energy production. The Centre s primary objective is to implement UNEP s concept of a green economy by channelling capital towards sustainable energy and climate finance and bridging the public-private gap. Thanks to a strong focus on raising awareness, the Centre is becoming a leading think-tank on sustainable energy and CC adaptation and mitigation. Website For further information on Centre activities please refer to: Establishing the Centre as a knowledge platform by planning and implementing advisory projects The Frankfurt School UNEP Collaborating Centre for Climate and Sustainable Energy Finance is a joint venture between Frankfurt School of Finance & Management (FS) and the United Nations Environment Programme (UNEP). The Centre draws on the 20-year track record in development finance built up by Frankfurt School s International Advisory Service (IAS), which advises banks and microfinance institutions on access to finance. Since its inception, the Centre has built up a reputation and international visibility as one of the leading knowledge and advisory platforms on climate and clean-energy finance. Past outreach activities include: meeting with the UNEP Risøe team in Roskilde, Denmark; holding workshops in Durban during the global climate negotiations (COP 17) in 2011, and fostering our partnership with Bloomberg New Energy Finance (BNEF) during the 2012 BNEF Summit in New York. The Global Trends in Renewable Energy Investments report, jointly produced with BNEF and released in June 2012, is one of the most widely read reports on the renewable energy industry. The Centre is building on IAS s highly specialised track record and network in development finance. Fatma Dirkes, Head of IAS The Centre s education and training programmes have also brought it widespread recognition. They include Sustainable Energy Finance Summer Academies, the Renewable Energy Finance Conference, and an Executive Event in Mumbai, India, which attracts world-renowned academics and financial experts. Sabrina Heckler Phone: s.heckler@fs.de Launched in April this year, the Microfinance for Ecosystem-based Adaptation to Climate Change project (MEbA) is a good example of our strength in advisory projects. During the next phase the Centre will continue its efforts to facilitate the refocusing of the financial sector on sustainable energy by identifying and optimising synergies between public- and private-sector players.

2 Did you know? For the past three years, the FS-UNEP Sustainable Energy Finance (SEF) Summer Academy has been organised in Frankfurt am Main, Germany s main financial hub. More than 70 participants from a total of 30 nations have successfully completed the summer programme. In strong recognition of the financial sector s crucial role in integrating climate considerations and environmental sustainability into their operations, the SEF Summer Academy was launched in The programme benefits from Frankfurt School s more than ten years experience hosting Development Finance Summer Academies in Frankfurt am Main, Germany. This, combined with UNEP s unique know-how in facilitating interaction between public and private sector financiers, facilitates building capabilities and raising awareness regarding clean technologies. Targeted towards a broad audience of bankers, engineers, project developers and other decision makers, the SEF Summer Academy provides a comprehensive overview about various aspects of EE/ RE investments. Alicia Rondon-Krummheuer a.rondon-krummheur@fs.de Third Summer Academy provides real-world exposure to Sustainable Energy Finance As climate change continues apace, many German institutions are anxious to raise public awareness of renewable energy (RE) and EE. On July 15-20, 2012, the Frankfurt School-UN- EP Collaborating Centre for Climate & Sustainable Energy Finance welcomed 26 managers from 15 countries representing commercial, microfinance and development banks, consultancies, project developers, investors and researchers to our annual executive course. During the week they built up their knowledge and technical understanding of RE and EE financing projects, to help them identify, support and guide demy field trip to Hainhaus Park. lecture. Sustainable Energy Finance Summer Aca- Summer Academy participants listen to a successful investments in clean-energy technologies. This year, for the first time, the Centre granted scholarships to organisations without sufficient resources for tuition fees, so their representatives could attend the Summer Academy. The team of lecturers included 13 internationally renowned trainers who passed on their knowledge and experience in interactive classroom sessions supported by case studies and in-depth discussions. One of The course gave real-world exposure to SEF. Visits to PV and windfarms in Germany offered excellent networking opportunities! Hassan Harajli, Summer Academy Participant the reasons for our Summer Academies success is the quality of the participants, explained Alicia Rondón-Krummheuer, the Project Manager responsible for organising the SEF Summer Academy. They contribute regional expertise, complementary experience and specialised knowledge, so learning from each other becomes a core aspect of the training experience. Did you know? This year, in response to the growing demand for clean energy and climate-friendly solutions on the African continent, we are for the first time organising a Sustainable Energy Finance Summer Academy at UNEP s headquarters in Nairobi, Kenya. Sustainable Energy Finance Summer Academy goes regional Frankfurt School s well-established Summer Academy concept has grown wings! On October 21-26, 2012, a brand new edition of the Centre s Sustainable Energy Finance Summer Academy took place in Nairobi, Kenya, focusing on specific regional issues in the climate finance community. At the Summer Academy decision-makers, project developers, bankers and investors from Africa explored the finance industry s crucial role in shaping the global response to climate change and supporting the rapidly rising global demand for new energy solutions, with a strong Group picture of this year s Nairobi Summer Academy

3 Laura Susanne Shuford emphasis on best-practice approaches in Africa. The 5-day training offered give participants broad theoretical and practical insights into the economics and dynamics of the main RE sources. Experienced senior trainers and practitioners from UNEP, the Development Bank of South Africa and Carbon Africa Project Developers imparted their academic, technical and financial knowledge of RE/EE issues. This year we re hosting the Sustainable Energy Finance Summer Academy at UNEP s HQ in Nairobi for the very first time, explains Project Coordinator Tobias Panofen, in charge of implementing Participants working in groups the Nairobi programme. Not only are we replicating the success we ve had in Frankfurt, we re also bringing together key African stakeholders and experts as both trainers and participants. The Summer Academy in Nairobi offers high-class training specifically designed for the African continent, with a high level of region-specific participation and topics. Did you know? Previously, the annual GTR launched in 2007 was published under UNEP s Sustainable Energy Finance Initiative (SEFI). The report aimed to provide a comprehensive overview of international investments in RE, broken down by type of economy, technology and level of investment. The GTR is mainly based on the Desktop database of BNEF an online portal to the world s most comprehensive database of investors, projects and transactions in clean energy. The database covers organisations (including start-ups, corporate entities, venture capital and private equity providers, financial institutions and other investors), projects and transactions. The release of next year s GTR is envisaged for June Latest report on Global Trends in Renewable Energy Investment: global investment in renewable energy powers to a new $257 billion record! Despite the escalating sovereign-debt crisis in Europe and rapidly falling prices of RE equipment, global investment in RE and fuels over the past year rose by 17% to a new high of $257 billion, with China and the USA at the top of the table. The new record is highlighted in the latest Global Trends in Renewable Energy Investment 2012 report (GTR), published by the Frankfurt School UNEP Collaborating Centre for Climate & Sustainable Energy on June 11, In regional terms, Europe boasted the highest level of investment at $101 billion. Among developing countries, India managed to boost green-energy investment by an impressive 62% to $12 billion. The rising tide of investment in renewable energy has been the most visible manifestation to date of the hoped-for transition to a green economy. One of the dominant features of the renewable energy landscape in 2011 was falling technology costs. Photovoltaic module prices fell by nearly 50%, onshore wind turbine prices by 5-10%. The trend means that these two leading renewable energy technologies are now more competitive with fossil-fuel alternatives such as coal and gas. WEBSITE All GTR reports can be downloaded from: Dr. Christine Grüning c.gruening@fs.de The transition to green, resource-efficient, low-emission economies is creating new jobs and business opportunities Prof. Dr. Udo Steffens, President and CEO, Frankfurt School of Finance & Management This year s GTR is the second such report to be published by the Centre. Together with its sister publication, REN21 s Renewables 2012 Global Status Report, it has become one of the most widely consulted reports on renewable energy.

4 Did you know? The People s Republic of China is making ambitious efforts to reduce energy consumption by 20% by As part of this programme the country is teaming up with international donor agencies to access best practices for green lending. The ex-post evaluation process will run to the end of Centre carries out ex-post evaluation of China project The Sustainable Energy and Energy Efficiency Intermediary Loan Programme is a joint initiative by China, the Agence Française de Développement (AFD) and the French Global Environmental Fund (FGEF). Implemented between 2007 and 2010, the programme aimed to catalyse funding for EE and RE projects by making subsidised loans and providing technical assistance, training and capacity building. Three beneficiary banks in China Huaxia Bank, Shanghai Pudong Development Bank and China Merchants Bank acted as lending intermediaries. FS-UNEP evaluation team with Huaxia Bank green finance team at the bank s head office in Beijing Industrial facility incorporating energy efficiency measures financed by the AFD Loan Programme Laura Susanne Shuford l.shuford@fs.de Once AFD-funded projects and programmes have been completed, they are systematically assessed using the ex-post evaluation mechanism. The Centre has been appointed by AFD to carry out the ex-post evaluation of the Loan Programme in order to assess its performance, identify good practices and lessons learnt, and advise on the future sustainability of similar AFD programmes in China. As instructed by AFD, the FS team is examining the programme s performance using a series of six indicators, five of which were recommended by the OECD s Development Assistance Committee (DAC). The sixth indicator is AFD s additionality criterion, which measures the value added by AFD to China s long-term sustainable development. Did you know? Raising awareness of the importance of EE in construction and transport, as well as CC, will help build wider support for both the project and the SEAP process among local residents. This should help ensure that the Plan is implemented effectively and brings about definite changes in energy-using behaviour. Centre project organises awareness-raising workshops Representatives from UNEP, local governments and Frankfurt School attend awareness-raising workshops in the Ukraine A project organised by the Centre entitled Sustainable Energy Planning in Eastern Europe and the Southern Caucasus: towards the Covenant of Mayors Ukraine, Moldova and Azerbaijan is due to hold second- and thirdround awareness-raising workshops in Beltsy, Moldova on October and Baku, Azerbaijan on November 13-14, The workshops are targeting municipalities, including local government representatives, executives and senior strategic managers working in housing, transport and energy management. Areas of focus will include EE, RE and CC. The Covenant of Mayors is the mainstream movement initiated by the European Commission for Europe s local and regional authorities for increasing EE and use of RE sources.

5 Signatories of the covenant, which now total of 4,070 cities, have committed themselves to go beyond the objectives of EU energy policy of at least 20% reduction of greenhouse emissions. The path to achieving this reduction is laid out in each signatories Sustainable Energy Action Plan (SEAP). Laura Susanne Shuford The workshops and accompanying training sessions provide members of local authorities and other stakeholders with guidelines for more sustainable energy planning, covering all the topics in the SEAP Guidebook ( How to develop a Sustainable Energy Action Plan ). As requested by the three countries, they will focus on the construction and transport sectors in particular, as well as potential sources of funding in support of CC and EE initiatives in construction and sustainable transport. The workshops are tailored for each of the target regions and use key regional figures and facts to analyse each topic. The first awareness-raising workshop was held on May 22-23, 2012 in Vinnitsa, Ukraine. Did you know? MidSEFF and TurSEFF aim at reducing Turkey s dependence on fossil fuels by supporting investments in EE/RE projects to increase energy savings and reduce carbon emissions. FS is part of a consortium supporting the programmes by providing general facilities management and capacity-building activities, for example by assisting sub-borrowers and banks to identify and evaluate the most viable EE/ RE projects. The two SEFFs are part of the EBRD Sustainable Energy Initiative. Since the first SEFF in Bulgaria, EBRD has committed over EUR 1,9 bn in commercial finance to EE/RE projects in more than 15 countries. Frankfurt School TurSEFF and MidSEFF projects win EBRD Sustainable Energy Finance Award 2012 Frankfurt School was among the many delegates in attendance at the annual Sustainable Energy Finance Facility (SEFF) Conference organised by the European Bank of Reconstruction and Development (EBRD) in Bratislava, Slovakia on October 3-4, Topics included the SEFF s footprint in various countries, insights into financial institutions perspectives, the role of donors in opening up markets and creating opportunities, and at last lessons learned from SEFFs; specifically MidSEFF and TurSEFF in Turkey. Afterwards, at the official dinner, EBRD honoured two projects in particular TurSEFF and MidSEFF with the SEFF 2012 Award for scaling-up finance distribution channels. From left to right: Remon Zakaria (EBRD), Michele Mancini (MWH), Oksana Pak (EBRD), Adonai Herrera-Martinez (EBRD), Funda Dere (FS), Isil Ercan (Isbank), Ezel Sevim (Denizbank), Adem Yol (D Appolonia) Project websites For further information on MidSEFF and TurSEFF please refer to: The Mid-size Sustainable Energy Finance Facility (MidSEFF) provides a EUR 975m credit line to seven Turkish banks for on-lending to sub-borrowers involved in mid-size RE projects, EE improvements in industry, and private-sector investments in municipal and/or industrial waste-to-energy projects. The Turkish Sustainable Energy Finance Facility (TurSEFF) provides a USD 220m credit line to five Turkish banks for funding commercial EE initiatives, standalone small-scale RE projects, and EE/RE investments in commercial and residential construction projects. Funda Dere f.dere@fs.de The opinions, findings, interpretations and conclusions expressed in this newsletter are those of the Frankfurt School and do not necessarily reflect the views of UNEP, the German Ministry for the Environment, Nature Conservation and Nuclear Safety or other donors. Neither of the above mentioned institutions and bodies nor any person acting on their behalf may be held responsible for the use which may be made of the information contained in this newsletter.

6 What is the Climate Finance Innovation Facility? The Climate Finance Innovation Facility (CFIF) supports finance-industry engagement in the RE and EE sectors. The Facility provides financial institutions in developing countries with tailored technical assistance and funding for the development of climate-focused financial products and services. A broad range of activities are eligible for support, ranging from feasibility studies to market assessments and legal reviews. Support comes in the form of grants for cost-sharing incremental aspects of financial product development. The overall aim of CFIF is to help mobilise and scale up financial flows into climate-change solutions. More broadly, by encouraging early action within the finance community, the Facility helps cultivate on-the-ground leadership among financial actors with the aim of generating replication effects across markets and geographies. CFIF is currently working in nine projects with different partner financial institutions: ICICI Bank, India Credit Financing of Green Homes and Solar Off-grid Equipment CARD MFI, Philippines Empowering the Poor through Increasing Access to RE/EE XacBank, Mongolia Development of Carbon Finance Mechanism Taizhou Commercial Bank, China EE Lending Programme for small business Ace Development Bank Limited, Nepal Credit Financing of SHS in rural Nepal Tameer Microfinance Bank, Pakistan Promotion of RE Technologies Vision Fund, Cambodia Feasibility Study on Access to Finance for RE Appliances for Rural Poor Impact Investment Exchange Asia, Singapore Mitigating and Adapting to CC Bank of Kathmandu, Nepal Introducing Biogas for Business Project website For further information on CFIF activities please refer to: Hirak Al-Hammad h.al-hammad@fs.de Eric Usher eric.usher@unep.org Development bank and local cooperatives work hand-in-hand to facilitate microfinancing of solar home systems in rural Nepal Access to clean energy is vital for improving the livelihoods of rural populations in Nepal and yet the lack of affordable products, services and funding in remote areas is proving a major challenge. Between May 29 and June 3, 2012, CFIF representatives Marjan Stojiljkovic and Hirak Al-Hammad met with project partners in Nepal to evaluate the field-level impact of the current CFIF project. In 2011, with technical assistance (TA) funding from CFIF, ACE Development Bank and its CFIF Project Manager Marjan Stojiljkovic (left) and CFIF Project Coordinator Hirak technical adviser Al-Hammad (right) with SHS customers in Nepal Winrock (Nepal) launched the Solar Home System (SHS) lending programme. In a top-down approach, development-bank funding for SHS is channelled directly to the rural communities which need it by a local network of local cooperatives, regional training organisations and specialist suppliers, all working in partnership with the bank. The team observed the role played by the network, as well as the impact of the bank s funding and TA support on the delivery of microfinance needed for SHS installations. During the visit, the team met with local SHS users and witnessed the income-generating effects of the programme. By 2013, the bank aims to provide 5,000 rural households and enterprises with access to SHS, based on an initial investment target of $1.5 million. CFIF Small Enterprises Energy Efficiency project with Bank of Taizhou shows big promise The idea of encouraging micro and small enterprises (MSEs) to adopt EE measures is relatively new in China. Existing national EE policies are primarily geared to large-scale industries. Yet China s 2.4 million MSEs account for more than 50% of the country s emissions. Through CFIF, the Centre has provided funding and TA to the Bank of Taizhou, which offers EE loans to MSEs in the Taizhou region so they can invest in EE equipment and processes. Between August 2010 and March 2012 the Centre further supported the programme by carrying out an in-depth market study and providing on-site training to bank staff to familiarise them with customised tools and techniques for EE loan appraisal. Another key element in the programme is political and fiscal support by local governments, enabling the bank to offer an EE loan product that is attractive to MSEs. The programme has made MSEs more aware of how EE measures can cut energy costs, increase productivity and reduce emissions. As a result the bank has already granted 27 EE loans totalling $2.5 million, and is planning to disburse a total of RMB 100 million ($15 million) over the financial period. A local micro entrepreneur is granted an EE loan by the bank (TZB)

7 What is the Microfinance for Ecosystem-based Adaptation for Climate Change programme? Successful completion of MEbA project s inception phase The Microfinance for Ecosystem-based Adaptation to Climate Change (MEbA) project aims to provide vulnerable local populations (smallholders, farmers and other stakeholders) in the Northern Tropical Andes of Peru and Colombia with access to finance. The project supports Ecosystem-based Adaptation (EbA) approaches by piloting and fostering the use of innovative microfinance instruments, mainly by partnering with microfinance institutions (MFIs) and encouraging them to include EbA-focused financial products in their portfolios. Such products include loans for e.g.: Sustaining or improving ecosystems in order to secure and maintain income streams for rural populations confronted by climate change; Sustainable land and water management (local knowledge); Disaster risk reduction (micro insurances); Implementation of diversified hence more resilient agroforestry and agricultural systems; Promotion of ecotourism to protect and restore ecosystems; Re-forestation activities; And other innovative products. The project attempts to link two traditionally unrelated areas of thought and action: finance, and ecosystem-based strategies. It also seeks to identify opportunities and strategies to reduce investment risks for MFIs, enhance their capacity to finance and replicate EbA initiatives, and by influencing political agendas, to leverage additional funding. Norah Becerra n.becerra@fs.de Jason Spensley jason.spensley@unep-rolac.org The inception phase of the MEbA project, officially launched on April 1, 2012, was successfully concluded on August 31, Working closely together, the Frankfurt and Panama MEbA team submitted their Inception Report to UNEP s Regional Office for Latin America and the Caribbean (RO- LAC). The report included a detailed plan for working with partner institutions (UNEP ROLAC, Frankfurt School and MFIs in Peru and Colombia); baseline indicators for case-study regions; indicators and milestones for monitoring project progress; a framework concept for the monitoring system, and budget projections through to From left to right: Mery Solares (MEbA Project Coordinator, FS), Norah Becerra (Senior Project Manager, FS), After reviewing the report, UNEP ROLAC submitted the deliverables for the approval Jason Spensley (UNEP ROLAC), Alicia Rondon-Krummheuer (Project Manager, FS) of the donor organisation: the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU). During the inception phase, the MEbA team identified and approached several potential partner MFIs. Meetings were also held with government institutions and other prospective stakeholders such as private finance companies, insurance companies, microfinance associations and external consultants, as well as representatives of other adaptation projects such as IDB, KfW and GIZ, with the aim of identifying possible synergies. In Peru, MEbA will be working with a number of MFIs, including Fondesurco, EDYFICAR and Mi Banco. In Colombia, MFI partners include Bancamia, Contactar, and Crezcamos. The MEbA project is regarded as the leading innovatory microfinance project focused on adaptation to climate change. Centre team members benefit from Panama work experience In early April 2012, UNEP ROLAC welcomed Frankfurt School s Mery Solares and Yvonne Rusche to Panama City, where they spent five months working on the implementation phase of the MEbA project. During their first week the FS team was invited to participate in the UNEP Climate Change team retreat, where they and other newcomers were introduced to the daily working routine at UNEP in Panama. Over the next few months the FS team all with in-depth financial sector experience with a strong focus on microfinance were able to broaden their expertise in climate change adaptation strategies. By studying online while working on the MEbA project, junior staff member Yvonne Rusche successfully gained her certificate in Community-based Adaptation to Climate Change. She and Mery Solares were From left to right: Ericka Espino (Project both active members of Adaptation to Climate Change Communities of Practice, an online Assistant, UNEP ROLAC), Mara Murillo (Deputy Regional Director, UNEP ROLAC), Mery Solares platform coordinated by IDB. (MEbA Project Coordinator, FS), Yvonne The FS team also took part in many other networking activities, including meetings and pre- Rusche (MEbA Project Assistant, FS), Jason Spensley (Project Manager, UNEP ROLAC) sentations to promote the MEbA project and

8 Did you know? The MEbA Project is regarded as the leading innovative microfinance project focused on adaptation to climate change Definition: Ecosystem-based Adaptation (EbA) integrates the use of biodiversity and ecosystem services into an overall strategy to help people adapt to the adverse impacts of CC. It includes the sustainable management, conservation and restoration of ecosystems to provide services that help people adapt to both current climate variability, and CC. Examples of EbA activities: - Sustainable water management, where river basins, aquifers, flood plains, and their associated vegetation are managed to provide water storage and flood regulation services; - Disaster risk reduction, where restoration of coastal habitats such as mangroves can be a particularly effective measure against storm-surges, saline intrusion and coastal erosion; - Sustainable management of grasslands and rangelands, to enhance pastoral livelihoods and increase resilience to drought and flooding; - Establishment of diverse agricultural sytems, where using indigenous knowledge of specific crop and livestock varieties and conserving diverse agricultural landscapes; - Strategic management of shrub lands and forests to limit the frequency and size of uncontrolled forest fires; and - Establishing and effectively managing protected area systems (e.g. through Ecotourism) to ensure the continued delivery of ecosystem services. link up with adaptation specialists and practitioners throughout the Latin American region. This rewarding experience is serving as a basis for building up the Centre s own in-house adaptation skills, opening up further opportunities for constructive work in this field. MEbA team takes part in FOROMIC workshop in Barbados FOROMIC is the Latin American and Caribbean region s leading annual forum for providers of support and finance to microenterprises, SMEs and smallholders. During the pre-event activities, Mery Solares a MEbA Project Coordinator highlighted key aspects of the MEbA project in a workshop on How Microfinance Institutions can promote climate change adaptation, held on September 30, Organised by IDB and FOMIN, the workshop took place in Bridgetown, Barbados, prior to FOROMIC The event aimed to spur regional MFIs into formulating a more committed response to CC adaptation by describing the outcomes of climate-change impacts and discussing the resources and tools available to tackle risks associated with climate change. The workshop s descriptions of the MEbA project excited considerable interest from MFIs and other stakeholders in the LAC region. Team presents MEbA project at Tropentag 2012 At Tropentag 2012, held this year at the University of Göttingen in Germany, MEbA Project Managers Alicia Rondón-Krummheuer and Laura Susanne Shuford presented a poster introducing the Frankfurt School UNEP Centre s MEbA project to delegates. The team designed the poster as a visual depiction of MEbA s work. Their aim was to facilitate a debate on the key role played in climate change adaptation by investment and funding, both in rural communities and MFI research. The results of the discussions will help fine-tune project activities by incorporating relevant research experience contributed by conference participants. The annual conference was jointly organised by the universities of Bonn, Göttingen, Hohenheim, Kassel-Witzenhausen, Hamburg and Zurich, as well as the Council for Tropical and Subtropical Research (ATSAF e.v) in cooperation with the GIZ Advisory Service on Agricultural Research for Development (BEAF). The event focused on resource management, environment, agriculture, forestry, fisheries, food, nutrition and related sciences in the context of climate change and rural development, as well as sustainable resource use and poverty alleviation worldwide. More than 750 scientists and practitioners from over 80 countries attended the event, and many of them presented their research at conference sessions and during guided poster tours. Events Workshop in Lima, Peru: November 14, 2012 Workshop in Bogota, Columbia: November 20, 2012 Project website For further information on MEbA please refer to: Alicia Rondón-Krummheuer a.rondon-krummheuer@fs.de Centre Project Manager Alicia Rondón-Krummheuer explaining the MEbA concept at Tropentag Centre Project Managers Alicia Rondón-Krummheuer and Laura Susanne Shuford show off their MEbA poster

9 What is the National Climate Finance Institutions Support Programme? The Centre s National Climate Finance Institutions Support Programme Fit for Funds helps public-sector institutions in Asia, Latin America and Africa develop financial mechanisms for climate-change projects. By networking and organising regular workshops, the programme enables these institutions to exchange experiences, enhance their knowhow and identify good practices in the funding of mitigation and adaptation initiatives. The programme also provides national climate finance institutions in the very early stages of development with capacity-building support in the form of technical assistance and training. NCFISP team meets up with Climate Finance Institutions in four countries In 2012, NCFISP offered technical assistance to six new and existing National Climate Finance Institutions (NCFIs). NCFISP team members visited the Secretariat of the Pacific Regional Senior Project Manager Carola Menzel (right) and Project Manager Laura Susanne Shuford at the Ministry of Finance in Ghana. Events Latin America Regional Workshop in Colombia, November 13-14, 2012 African Regional Workshop in Nairobi (Kenya), November 14-15, 2012 PAST Events Workshop in Bangkok, Thailand, October 8.-10, 2012 The second regional Asian workshop offered a study tour to the Thailand Energy Efficiency Revolving Fund to learn about the institutional arrangement and operational processes to establish, manage and deliver funds, and to explore a public-private partnership approach. The group met with Thailand s Ministry of Energy, which launched the Fund in 2003, the CIMB Thai Bank, and a recipient of an energy efficiency and renewable energy loan. During the workshop the participants worked on the modalities for accessing international climate funds with a focus on monitoring and reporting guidelines, and proposed recommendations for the GCF Board, including transparency, equality, attracting the private sector and a balance between mitigation and adaptation. Environment Program in May 2012, the Fonds National pour l Environnement au Bénin in June 2012, Vietnam s Ministry of Planning & Investment in July 2012, and the Ministry of Finance in Ghana in September Working with representatives of the institutions, they identified a number of key areas to be addressed. In some cases further capacity needs to be developed, either to comply with the accreditation and implementation requirements of existing climate funds (e.g. the Adaptation Fund, GEF) or to prepare applications for other climate funds such as the Green Climate Fund (GCF). The team is currently coordinating implementation of the planned measures with the respective institutions. The team is also due to carry out two status quo assessments in Latin America in October 2012, and will develop appropriate capacity-building plans immediately after these visits. National climate finance instruments (NCFIs) used to coordinate and align climate capital flows have certain similarities across borders, but are mainly characterised by their diversity. The programme has recently launched a series of case studies that provide examples of institutional arrangements, funding sources and typical projects. First in the series are the Indonesian Climate Change Trust Fund and the Thai Energy Efficiency Revolving Fund. The Indonesian Climate Change Trust Fund is a National Climate Fund that aims to attract, manage and mobilise financial investments in climate-change mitigation and adaptation projects. The Thai Energy Efficiency Revolving Fund works to overcome barriers within the Thai financial sector, stimulate funding for energy efficiency initiatives, and reduce the country s greenhouse gas emissions. The case studies can be obtained via the Centre network or downloaded from the project website. Project website For further information on NCFISP s activities please refer to: Carola Menzel c.menzel@fs.de Virginia Sonntag-O Brien Virginia.SonntagOB@unep.org Cover of first NCFISP case study: The Indonesia Climate Change Trust Fund Cover of second NCFISP case study: The Thai Energy Efficiency Revolving Fund

10 What is the Finance for Access to Clean Energy Technologies project? The German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) has appointed UNEP to head up the End-user Finance for Access to Clean Energy Technologies (FACET) project in South and Southeast Asia. The project s primary objective is to stimulate and scale up domestic bank lending to end-users of small-scale clean energy technologies, thereby creating access to energy and reducing GHG emissions. UNEP and Frankfurt School are joint-managing the project through the Centre. The project will implement at least two national programmes intended to mobilise funding for end-users of small-scale technologies such as biogas and solar systems. Although they are commercially available, uptake of these technologies has been constrained by high capital costs and a lack of financing options. Each country scheme will combine technical assistance with a temporary financial support mechanism (e.g. interest-rate reduction) aimed at facilitating financial access to these technologies for private households and micro enterprises. FACET advances to second phase After having successfully designed individual country programmes for Indonesia and Vietnam, the project is about to enter the next phase. In both countries, FACET will support lending for fixed dome biogas digesters (up to 12m 3 ). Additionally, in Vietnam, the project will promote financing of household-sized solar water heaters. There are already existing programmes for providing partial subsidies and training of local technicians. However, local financial institutions have only been insufficiently involved to close the remaining financing gap. Many potential users of clean technologies do not have access to credit. Biogas cooking stove in Indonesia In Indonesia, FACET will create synergies with the Indonesia Domestic Biogas Programme (IDBP, or BIRU), managed by the Dutch development organisations Hivos and SNV. IDBP provides subsidies and technical assistance required to build and maintain the digesters. FACET will supplement IDBP by establishing the missing link to financial institutions and providing funds for temporary interest rate reduction. In addition, FACET will train loan officers and raise awareness for the new financing products among potential borrowers. The aim is to familiarise bankers and endusers with the new loan product, in order to prepare for a commercial lending market. FACET is about to sign a first cooperation agreement with Bank Syariah Mandiri (BSM). Supporting biogas finance in Vietnam will follow a similar structure as in Indonesia (cooperation with SNV and existing biogas programmes, respectively). In addition, FA- CET will make use of the Vietnamese government s subsidy scheme for domestic solar water heaters. The project aims at establishing the cooperation between six accredited suppliers (offering high-quality systems at sub- Solar Water Heater in Vietnam sidised prices) and selected financial institutions. First partner bank will be the Central People s Credit Fund (CCF). Capacity building, promotion campaigns and temporary interest softening will help CCF with introducing a new lending segment to the market. Project website For further information please refer to: Torsten Becker t.becker@fs.de Dean Cooper Dean.Cooper@unep.org

11 What is the Seed Capital Assistance Facility? The Seed Capital Assistance Facility (SCAF) is an initiative that helps clean-energy investors provide enterprise development support and seed capital finance to early-stage investment targets in the RE and EE sectors in selected countries in Africa and Asia. The Facility addresses the two biggest challenges confronting investors who wish to provide seed capital finance to smaller, less mature or riskier ventures: the high cost of transactions, and the low returns characterising clean-energy investments in the early stages. SCAF aims to overcome these hurdles by offering two types of cost-sharing support to investment fund managers willing to include seed investment windows in their overall investment strategies. SCAF is implemented by the United Nations Environment Programme, Asian Development Bank (ADB) and African Development Bank (AfDB). The FS UNEP Collaborating Centre manages SCAF for Africa. The Global Environmental Facility (GEF) and the UN Foundation provide funding for the programme. Centre supports development of Kouga wind farm in South Africa In 2010, SCAF and Inspired Evolution Investment Management (IEIM) signed a Cooperating Fund Agreement with the aim of helping development company Red Cap build one of Africa s largest wind farms. The project has a potential output of 300 MW, and in Round One of the Independent Power Procurement Programme (IPPP) tender process by South Africa s Department of Energy, Red Cap was selected as preferred bidder to develop the first 80 MW facility at the Kouga site under the South African Renewable Energy Feed-In Tariff (REFIT) programme. IEIM provided Red Cap with $1.2 million of early-stage finance through the Evolution One Fund, with $ of additional support from SCAF to cover the costs of grid connection and engineering studies, environmental assessment, financial modelling and other preparatory activities. By sharing the costs of such preparatory activities, all of which are relatively expensive in South Africa simply because they are the first of their kind, SCAF is helping to enhance the project s prospects of success. On November 5th, 2012, this $143 million project achieved financial close, with construction now due to begin in early From seed finance to hydro In 2011, IEIM s Evolution One Fund committed $350,000 of seed finance to the development by Tanzania s Njombe Resource Development Company of a small-scale (10 MW) hydro project in Mapembasi. SCAF is match-funding 20% pro rata of the IEIM commitment, sharing the costs of preparing the power purchase agreement, environmental impact assessment, grid connection study and EPC contract. If all goes well, IEIM is expecting to invest another $3.5 million in project equity, matched by $19 million in debt finance. The project is expected to connect 5,000 households to the grid, selling any surplus power to Tanesco using a standardised feed-in tariff. Project website For further information on SCAF please refer to: Martin Cremer m.cremer@fs.de Eric Usher eric.usher@unep.org The opinions, findings, interpretations and conclusions expressed in this newsletter are those of the Frankfurt School and do not necessarily reflect the views of UNEP, the German Ministry for the Environment, Nature Conservation and Nuclear Safety or other donors. Neither of the above mentioned institutions and bodies nor any person acting on their behalf may be held responsible for the use which may be made of the information contained in this newsletter.