November 19 th wbi pcf training session world bank impact of carbon finance on project financing
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November 19 th WBI-PCF Training Session. World Bank Impact of Carbon Finance on Project Financing. November 19th, 2001 www.prototypecarbon.org. Features of the PCF. Closed-end Mutual Fund structure with diverse portfolio to: Minimize Project Risks Reduce Transactions Costs

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November 19 th wbi pcf training session world bank impact of carbon finance on project financing

November 19th WBI-PCF Training Session. World BankImpact of Carbon Finance on Project Financing

November 19th, 2001

www.prototypecarbon.org


Features of the pcf

Features of the PCF

  • Closed-end Mutual Fund structure with diverse portfolio to:

    • Minimize Project Risks

    • Reduce Transactions Costs

    • Enhance the Learning Experience

  • Shareholding: Governments, $10 m; Companies, $5 m

  • Total Capital: US$145 million to be used in ~ 30 projects

  • PCF Products:

    • Competitively priced, high quality emissions reductions

      • target portfolio wide outcome price: ~$5/tCO2 ($20/tC)

      • target deal price: $2.5-3.5/tCO2 (~$9-12tC)

    • High value knowledge asset: create competitive advantage for corporate investors and efficient market regulation and leverage for sustainable development for Parties


  • November 19th 2001 www prototypecarbon org

    PCF Subscribers

    ($145 million)

    Public Sector(6)

    Governments of Netherlands, Finland, Sweden, Norway, Canada, and Japan Bank for International Cooperation

    Private Sector: (17)

    RWE - Germany, Gaz de France, Tokyo Electric Power, Deutsche Bank, Chubu Electric, Chugoku Electric, Kyushu Electric, Shikoku Electric, Tohoku Electric, Mitsui, Mitsubishi, Electrabel, NorskHydro- Norway, Statoil -Norway, BP-Amoco, Fortum, RaboBank, NL


    Impact of carbon finance on project financing at 3 t co2e

    Impact of Carbon Finance on Project Financing at $3/t CO2e

    Project, Not Equity, FIRR.

    Note: data are preliminary


    Impact of carbon finance on project financing at 3 t co2e1

    Impact of Carbon Finance on Project Financing at $3/t CO2e

    Waste-to-Energy project : Chennai, India, MSW

    • Gasification of solid waste

    • 15 MW plant, 95 GWh/ann, $38m cost

    • ERs from:

      • Power generation displacing fossil fuel (40%)

      • Methane capture & conversion (60%)

        Project IRREquity IRR

    • Without carbon finance14% 16%

    • With carbon finance>19% > 25%


    Impact of carbon finance on project financing at 3 t co2e2

    Annual

    Uganda

    1-7MW

    Costa Rica

    Chile

    25MW

    Mini-Hydro

    off-grid

    grid

    grid

    ERs (000 t)

    49

    61

    79-138*

    Net Gen.(GWh)

    30

    75

    160

    CO2 ERs/GWh

    1664

    807

    494-860

    ER (USc/kWh)

    0.50

    0.24

    * Gas vs.

    0.15-0.26

    coal BL

    Impact of Carbon Finance on Project Financing at $3/t CO2e

    Hydro: Off-grid vs. Grid


    Impact of carbon finance quality and quantity at 3 t co2e

    Impact of Carbon Finance: Quality and Quantity (at $3/t CO2e)

    • Methane-capture projects: carbon finance can turn “dogs” into “cash cows”

    • “Traditional” renewables: boost return by 0.5-2.5%

      • Makes some marginal deals bankable;

      • Creates a useful additional risk hedge for already profitable deals

      • Can displace ODA and Government subsidy in some projects

    • Quantity of carbon finance is only half the story: The leverage of carbon finance on financial closure is disproportional to volume of carbon finance


    Annexes

    Annexes


    Typology of funds plays

    Typology of Funds/Plays

    • Pure Carbon Funds (PCF, National Funds)

    • Private Equity Funds

      • Aimed at JI/CDM Projects

      • New Energy, RE, EE Funds with Carbon Credits

      • Forestry Funds with Carbon Credits

      • Energy or Forestry Funds that Could Add Carbon Credits

    • Mutual Funds with % in Private Equity

    • NGO Funds

    • Sustainability, Social, Ethical Mutual funds

    • Corporate “Funds” Earmarked for Carbon Credit Investment


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