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EBRD and the GEF Combining Capacity Building and Investment. The European Bank for Reconstruction and Development: Regional Leader in its Countries of Operations. 2.

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EBRD and the GEF

Combining Capacity Building and Investment

the european bank for reconstruction and development regional leader in its countries of operations
The European Bank for Reconstruction and Development:Regional Leader in its Countries of Operations

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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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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

  • 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

Cumulative Business Volume (billion €)

Annual Business Volume (ABV, billion €)

the european bank for reconstruction and development modus operandi
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

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

Technical Assistance

linking capacity building and investment rationale
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
EBRD GEF Project Activities
  • Energy Efficiency in the Built Environment
    • Public Buildings
    • Residential Buildings
  • Medium-Size Renewables
  • Industrial Energy Efficiency
public buildings programme
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
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
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
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)
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Other Examples: Kazakhstan Policy Dialogue:Government/EBRD Sustainable Energy Action Plan

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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Combining Climate Funds, Donor

Finance, and IFI Finance in Turkey and Ukraine

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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Carbon Market Development

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.

conclusion
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