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Table ronde n4 Mécanismes de financement
innovants au service de la transition écologique
exemples étrangers
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TABLE RONDE N4 Mécanismes de financement
innovants au service de la transition écologique
exemples étrangers
gt Rudolf Hennesvice-président, kfW
Privatkundenbank-Programme Development Housing gt
Sylvie Lemmetdirectrice de la division
Technologie, industrie et économie, PNUE gt
Virginie Marchalanalyste politique, direction de
lenvironnement de lOCDE gt James
Ranaivosonconseiller de direction actions
opération climat, Banque européenne
dinvestissement
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Rudolf Hennesvice-président, kfW
Privatkundenbank-ProgrammeDevelopment Housing
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Promoting Energy Efficiency in Germany

• Dr.-Ing. Rudolf Hennes
• Vice President
• KfW Bankengruppe
• Paris
• 12.07.2012

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A bank with a wide array of functions
International business
Domestic promotion
We ensure internationalisation
We promote development
We promote Germany



Promotion of developing and transition
countries
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
International project and export finance
Business Area Promotion of Developing and
Transition Countries
Business Area Mittelstandsbank
Business Area Privatkundenbank
Business Area Kommunalbank
Business AreaExport and Project Finance
Promotion of environmental and climate protection
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How to Promote Energy Efficiency?
Tambourine (Communication, Consulting, Technical
Capacities)
Carrot (Low Interest Loans, Grants, Partial Debt
Relief)
Stick (Laws, By-laws, Technical Standards,
DIN-Standards, Building Codes,)
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KfWs Business Modelfor commercial and private
customers
Funding by KfW and on-lending through retail banks
Capital market
State liability Institution owned by Federal
Republic and federal states
Funding AAA Rating
Loan to customer
Refinancing loan
retail bank
Customer
Interest rate
Interest rate
Margin for credit risk and handling
Interest subsidy

• Advantages
• no distortion of competition
• Concentration on core competences
• Diversification of risks

German Government or KfW
Promotional mandate defined by KfW Law
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Energiewende Programmes of KfW
KFW-ACTIONPLAN ENERGIEWENDE
EE
RE
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 ElementNew Effizienzhaus
Denkmal
EE Construction and Retrofit (Non-Residential
B.) New Effizienzhaus 55, 70 und
Denkmal Inclusion of municipal enterprises
IKK-/IKU KfW-Investment LoanMunicipal
enterprises social welfare org.Increase of loan
amount tof 50 Mio. EUR
KfW-Programme RE Increase of max. loan amount to
25 Mio. EUR
Energetic Urban Rehabilitation Grants and loans
to municipalities
Public Lighting Loans to municipalities
Financing Initiative EnergiewendeDirect loans
for larger enterprises
Programmes of SME Bank
Progr. of Private Customers Bank
Programmes of Municipal Bank
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Promotional effects
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Sylvie Lemmetdirectrice de la division
Technologie, industrie et économie, PNUE
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Virginie Marchalanalyste politique, direction de
lenvironnement de lOCDE
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Towards a green investment policy frameworkThe
case of Low Carbon, Climate Resilient
Infrastructure
Presented by Virginie MARCHAL Le financement de
la transition écologique Jeudi, 12 juillet
2012 Ministère de léconomie et des finances
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Why infrastructure matters?
3-6C by 2100
2C by 2100
Source OECD Environment Outlook to 2050
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!
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The infrastructure financing gap
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

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The barriers to private sector engagement

• 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
• Reform policies to improve the risk-return value
  proposition of green infrastructure
• Leverage public sources of finance to mobilise
  the private sector

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TOWARDS A GREEN INVESTMENT POLICY FRAMEWORKThe
need to combine investment and climate policies

• CLEAR GOALS
• Strategic goal setting and alignment

2. ENABLING GREEN INVESTMENT Enabling policies
for competitive, open markets incentives for
green investment
4. RESOURCES Harnessing public and private
resources and capacity
5. ENGAGEMENT Promoting green business and
consumers behaviours
3. MOBILISING GREEN FINANCE Financial policies,
tools and instruments
Two objectives 1. Social and economic provision
of infrastructure at the lowest cost 2. Improve
the risk-return value proposition of green
infrastructure assets
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The challenge of sustainable transport

• Specific challenges

• Priorities

• 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

Integrate transport and land use planning CBA
based on co-benefits
Market structure Price externalities beyond
carbon Remove fossil fuels subsidies Mainstream
LCR in public procurement
Integrate financing and planning (scale up and
earmark public revenues, subsidies) Land value
capture tools for private investors Bonds
Harmonising GHG emission accounting
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Why pensions funds are not investing more?
Source OECD (2012 Forthcoming) The Role of
Institutional Investors in Financing Clean
Energy
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• Thank you!
• Contacts
• Jan Corfee-Morlot (Jan.CORFEE-MORLOT_at_oecd.org),
  Senior Policy Analyst
• Virginie Marchal (Virginie.MARCHAL_at_oecd.org),
  Policy Analyst
• Geraldine Ang (Geraldine.ANG_at_oecd.org), Junior
  Analyst Policy Analyst
• Christopher Kennedy , visiting scolar
• www.oecd.org/env/cc/financing

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3. MOBILISING GREEN FINANCE Financial policies,
tools and instruments
Level of Financial Sector Development Level of Financial Sector Development Level of Financial Sector Development
Low Medium High
Low Income Countries Middle Income Countries Upper Middle Income and High Income Countries
Banking Services Basic Banks Full Range Banks Universal Banks
Non-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 Based
Access 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 Robust
Clean 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
Source World Bank
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4. APPLICATIONS AND NEXT STEPS Infrastructure
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.
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4. APPLICATIONS AND NEXT STEPS Infrastructure
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.
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4. APPLICATIONS AND NEXT STEPS Infrastructure
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.
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James Ranaivosonconseiller de direction actions
opération climat,Banque européenne
dinvestissement
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European Investment Bank Financing the
Ecological Transition James RANAIVOSON 12 July
2012
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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 Bonds9

European Investment Bank Page 27
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Climate Action in EIBs 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

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European Investment Bank
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EIB / EIF Financing Tools
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
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European Investment Bank
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Challenges EIB contribution (1)

• 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

European Investment Bank
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Challenges EIB contribution (2)

• 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

European Investment Bank
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Infrastructure Layered Debt Funds

• 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

Notes
Senior A Shares
Private investors
Private investors, EIB, other IFIs
Mezzanine - B Shares
EIB, other IFIs
Junior - C Shares
EC, Sovereign Donors
European Investment Bank
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Project Bonds

• Case of EIB funded subordinated debt

Project Bonds Target rating minimum A-
SPV Project Costs
Project Bond Investor
Bond issue and underwriting
EIB Sub-debt
max 20 of the bond issue
Equity Quasi-equity
? EIB sub-debt participation can be combined with
different types of funding sources (bonds and
other senior loans)
European Investment Bank
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Generic Structured Bonds
Private Institutional Investors
Investment Grade Bond
Security
Governments?
Other IFIs, DFIs
Performance Guarantees
Receivables
Lending
Structural Funds
Possible participations
Possible participations
EIB could be investor in bond as loan substitute
for a single project, senior or junior lender to
an SPV of loan securitization, credit enhancer or
guarantor of such SPV (that could be covered
bonds) etc.
European Investment Bank
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Contacts
European Investment Bank 100, bd. Konrad
Adenauer L-2950 Luxembourg www.eib.org James
RANAIVOSON Managerial Adviser Structured Finance
Climate Environment Email j.ranaivoson_at_eib.org
Phone [phone]

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European Investment Bank
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