EBRD and the GEF Combining Capacity Building and Investment

EBRD and the GEF

Combining Capacity Building and Investment

The European Bank for Reconstruction and Development:Regional Leader in its Countries of Operations

Founded in 1991 after the disintegration of

the Soviet Union, EBRD’s region of

operations cover most countries in Eastern

Europe, Central Asia and, since 2008, Turkey

Founded in 1991 after the disintegration of

the Soviet Union, EBRD’s region of

operations cover most countries in Eastern

Europe, Central Asia and, since 2008, Turkey

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Since 1991, invested almost

€ 50 billion in 3,000 projects

Private sector > 77% of

portfolio

Debt 80%, Equity 20% of

portfolio

€ 8 billion invested in 2009

Portfolio expansion for 2010

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The European Bank for Reconstruction and Development:Investments in the Times of Crisis

As an Multilateral Development Bank, EBRD brings in additional financial capital and

technical assistance (TA) to economically viable sustainable development projects

As an Multilateral Development Bank, EBRD brings in additional financial capital and

technical assistance (TA) to economically viable sustainable development projects

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Financing Facilities through partner financial institutions – individual clients, small size projects and SMEs; up to $ 5 million loans ($ 20 million project value)

Direct Lending Facilities – limited recourse, mid-sized projects, flexible approval procedure; up to $ 15 million investments ($ 50 million project value)

Direct Investment – loans and equity investment; investments above $ 15 million for overall project value of $50 million+

Technical Assistance (e.g. energy audits, financial advisory services) – applicable to any sector and project size

The European Bank for Reconstruction and Development:Modus Operandi

Technical AssistanceTechnical Assistance

$1,000+ Project value $100,000,000+ $1,000+ Project value $100,000,000+

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Linking Capacity Building and Investment - Rationale

Ensure that capacity building activities support investment in the low-carbon economy and/or climate resilience

Increase the leverage of scarce GEF resources

Mobilise investment resources of EBRD and commercial co-financing sources

Demonstrate the benefits of increased capacity for policy-making and regulation

EBRD GEF Project Activities

Energy Efficiency in the Built Environment

– Public Buildings

– Residential Buildings

Medium-Size Renewables

Industrial Energy Efficiency

Public Buildings Programme

Aim to develop and fund commercial structures for private sector to invest in public sector energy efficiency (eg schools, hospitals etc.)

Built on energy performance contracting the Bank has used TA to develop the commercial models for Russian style public sector regulation

TA provided to participating cities to support preparation and tender of EPC, EBRD finance through dedicated funds to support ESCOs

GEF funding for Russia and Romania ($9m and $5m), other donors funding work in Bulgaria, Ukraine and Kazakhstan

Residential Buildings Programme

Objective

– Address 1960s era apartment blocks (Khrushevki)

– Close co-operation with central government agencies and local governments

Preparation

– Capacity building for regional/municipal governments

– Best practice training for improved regulation

– GEF funding for work in Russia (with IFC). Other donors covering Ukraine

Provide finance

– Combine public finance and EBRD finance through a range of instruments – credit lines, direct lending to municipalities or housing associations

GEF funded programme underway in Russia with IFC ($9 million)

Renewables Support

Combination of regulatory and investment support for smaller renewable energy projects in emerging economies

EBRD Renewables Direct Lending Facility in Ukraine: €50m EBRD financing, €20m CTF and €30m equity

$8.45m GEF grant for TA to support:– Further development of the regulatory framework

– Assistance to developers in preparing commercial arrangements for projects

– Environmental assessments

Industrial Energy Efficiency

Substantial programme to support industrial clients through TA funded energy audits

EBRD UNIDO programme funded by GEF under preparation in Russia ($15m)

– Capacity building for federal and regional government (Energy Agency)

– Training and support to large industrials and SMEs on energy management and energy efficiency technologies

– Investment support through EBRD direct lending and credit lines (RUSEFF)

In June 2008, a Sustainable Energy Action Plan (SEAP) for Kazakhstan was signed between the Bank and the Kazakh Government, the first ever signed by the Bank and one of its countries of operations.

Objective: Assist Government of Kazakhstan in reducing energy intensity of Kazakh economy by:

improving framework of energy legislation and regulation to trigger

investment in power generation, T&D, industrial energy efficiency and renewable energy with a strong focus on financing of national priority investments

Create a platform for continued dialogue

SEAP Priority Activities:

Review and improve draft laws in the energy sector, e.g. Energy Efficiency and Renewables

Strengthening of regulatory agencies and specialized bodies and assisting them in implementing metering of energy use and improving the methodology of setting tariffs

Financing of Technical Assistance:

Bilateral Donors

EBRD Special Shareholders Fund

Outcomes:

Creation an enabling environment for investments to allow them to achieve maximum impact by linking policy objectives of the Government of Kazakhstan to EBRD financing instruments

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Other Examples: Kazakhstan Policy Dialogue:Government/EBRD Sustainable Energy Action Plan

In January 2010, the Turkey Sustainable Energy Finance Facility was approved by the Clean Technology Fund Trust Fund Committee.

Objective: Invest US$200 million in energy efficiency and renewables in Turkish SMEs through local banks.

Support: Combines four sources of finance

Bilateral Donor Grant – EU Pre-Accession Funds (US$8m)

Multilateral Donor Grant – Clean Technology Fund Grant (US$2.4m)

Multilateral Donor Loan – Clean Technology Fund low-interest Finance (US$40m)

IFI loans - EBRD (US$160m)

In April 2010, EBRD submitted the Ukraine Renewables Direct Lending Facility for approval to the Clean Technology Fund Trust Fund Committee.

Objective: Invest US$135 million in renewable projects in Ukraine.

Support: Combines four sources of finance

Multilateral Donor Grant – GEF (US$8.45m)

Multilateral Donor Loan – Clean Technology Fund low-interest Finance (US$27m)

IFI loans - EBRD (US$65m)

Equity – Developers (US$33m est.)

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Combining Climate Funds, Donor

Finance, and IFI Finance in Turkey and Ukraine

EBRD promotes and facilitates the development of the carbon markets in the EBRD

region of operations through technical assistance and direct transactions:

• Assistance to Kazakhstan in preparing for entry into Kyoto

• Carbon Credit Transactions as add-on to mitigation investments (e.g.

Azerbaijan, Ukraine)

• Support of AAU trading (e.g. draft of model agreement for AAU sales)

Technical assistance funds required for Carbon market development.

Direct links to investment are possible and beneficial for countries in the

EBRD region.

Carbon Market Development

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Conclusion

EBRD is in a unique position to combine capacity building and investment for lasting benefit

Demonstrated expertise in policy dialogue and capacity building

Strong links to governments and the investor community

Unique ability to leverage technical assistance and donor grants with commercial financing

Focus on achieving lasting change through investments