Introduction to CHUEE

1. Introduction to CHUEE IFC July 2013

2. Summary • IFC Sustainable Energy Financing Advisory Services • About CHUEE

3. Private Sector Provides Key Solution to Climate Change Innovation Execution capacity Financing Cost Effective 80% Climate Financing that can be Provided by the Private Sector Source: UNFCCC

4. Economic Growth Opportunities behind Climate Change Energy Efficiency Renewable Energy Global Energy Efficiency Market Scale by 2020 $170 Billion USD Developing Countries' Percentage of Total Global Energy-saving Potential by 2020 65% Developing Countries Invested in Renewable Energy in 2011 $89 Billion USD Source: 1. UNEP: “Global trends in renewable energy investments” McKinsey: “Resource Revolution” McKinsey: “Energy Efficiency: A Compelling Global Resource

5. 中国节能减排融资项目China Energy Efficiency Finance Program (CHUEE)

6. IFC Sustainable Energy Financing Advisory Services Emphasis on FIs, focus on value chain • Financial Institutions: • Market awareness, marketing strategy • Capacity building in products, technology and sales • Marketing preparation, training EnablingEnvironment FI level Advisory Market Players FIs - Key partners • Market Players: • Partnerships with Fis • Capacity building • Enhance Awareness Enabling Environment: • Policy and regulatory reform to stimulate sustainable energy financing • Public awareness

7. As of December, 2012 • 178 loans disbursed by 3 partner FIs • Total loan amount: US$783million • Total investment: US$1.77 billion • Annual GHG emission reduction: 19.3 million tons CO2 equivalent • 36.5%of the projects are in the frontier regions of China. Financing mobilization results

8. China’s Small and Medium Enterprises (SMEs) • SMEs consume 41% of the total energy consumption by all Chinese enterprises and about 2.5 times the amount of energy of large industrial enterprises • The SME sector generates over 60% of China’s GDP, and provides around 80% of urban jobs • Given this, SMEs have historically attracted a disproportionally small number of sustainable energy finance loans in comparison to larger enterprises

9. 2003-2010China ESCO Projects’ Production Gross Production (100 Million RMB)

10. IFC: Stimulating South-South Knowledge Exchange and Partnership on Green Credit • IFC, in partnership with CBRC, has been facilitating S-S knowledge exchange to share China’s experiences in implementing Green Credit Policy using international standards, stimulating replication by banking regulators in other markets. Highlights include: • In Sep. 2012, the Sustainable Banking Network for regulators was formally launched with CBRC leadership and IFC technical support, as a platform for knowledge exchange and learning. It is now representing 12 countries across Asia, Africa and Latin America. • Benefiting from China’s experiences on policy development, Bangladesh Bank launched the Environmental Risk Management Guidelines in 2012; Nigeria central banks endorsed the Nigerian Sustainable Banking Principles in 2012; Vietnam’s central bank SBV is now developing E&S risk management guidelines and plan to launch in 2014; Indonesia central bank BI has developed the draft Green Banking Regulation; • Philippines and Mongolia Central banks consider developing “Green Credit Policy” type of regulatory framework based on China experience and EPs

11. Sample cases • China ASEAN Cooperation Fund，ensures sustainable cooperation in ASEAN region • Vodafone Ghana，promoting China export with Chinese banks • China WindPower，helping Chinese clients into Africa and secured donor funding to develop wind farm • Huajian Group，introducing Chinese manufacturers to Africa by Justin Lin

12. Green Building Important Information: • China’s new construction areas are 2 billion square meters each year, accounting for half of the global new-constructed volume. • Construction industry has a emission reduction potential of 1.1 billion tons by 2030. • Architecture is one of China’s priorities to improve the environment, including energy-saving, emission reduction, water-saving and many other factors. Regulatory focus has shifted from new-constructed buildings to existing buildings, from energy-saving to low carbon.

13. Road Map of China’s Carbon Market Development Regional Total Volume Control and Trade Pilot Policy Financial Business Permission Policy Policy Premises Kyoto Protocol & CDM Projects Operation Administrative Measures National Carbon Market Regional Pilot Formal Phase Regional Pilot Preparatory Phase Market Types and Features SporadicVERTransactions CDM Projects Carbon Finance Phases Carbon Financial Market Starts Carbon Financial Market Well Developed

14. Thank You! China Energy Efficiency Finance Program (CHUEE) IFC Advisory Services in East Asia and Pacific 1501, China World Office 2, No.1, JianWai Ave., Beijing 100004, P.R. China Tel: +86-10-5860 3000 Fax: +86-10-5860 3105

15. Case Study Beijing DQY Agricultural Technology- Biogas Power Generation Project • Provides sufficient power to meet the breeding farm’s internal needs • Saves 83,000 tons of CO2 emissions per year through hazard free treatment of chicken manure • Provides low-cost organic fertilizers for surrounding orchards and crops • Annual revenue of RMB 7.98 million through sales of extra electricity to the State Grid • Annual reduction of RMB 2.73 million by converting heat from power generator’s flue gas to heat greenhouses and office buildings

16. Energy EfficiencyInvestment Demand in Architecture, Industry, Transport Areas during “Twelfth Five-Year Plan”