Replicating, scaling up climate finance: some lessons from PROPARCO and ICCF experience

1. Replicating, scaling up climate finance :
some lessons from PROPARCO and ICCF
experience
March 2014

2. SOME B A C K GR OU N D ON PR OPA R C O
Key Figures
2012
€3.1bn
in
PROPARCO’s
portfolio
340
clients€740m
of
commitments
60
countries
172 staff
members
Created in 1977, PROPARCO is a development finance institution dedicated to financing the
private sector.
• A subsidiary of the Agence Française de Développement
with a unique governance characterised by North/South
and public/private participation
• A development mission combined with private sector
profitability, with two priorities in line with the AFD
group strategy : Africa and Climate change.
• A full and customized range of financial tools –equity
and quasi-equity, loans and guarantees, to supplement
the activity of commercial banks
• An international presence on 4 continents and more
than 60 countries
• A high level of environmental and social requirements
• A deep partnership with other european DFI, including
Germany’s DEG and the Netherland’s FMO

3. Climate change is a core focus for PROPARCO as attested by its efforts to promote low-carbon business
models, with a threefold objective : combating climate change, optimizing the use of resources and
encouraging development.
Direct support for renewable
energies, energy efficiency and
biomass recovery projects
Dissemination and promotion of
high environmental standards to its
clients and investors.
Credit lines to finance renewable
energies and energy efficiency
projects
Selectivity of projects, according to
their impact on climate : ex ante
calculation of greenhouse gas
emissions
337 MW
of renewable
energy
produced
€240m of
« climate »
commitments
32% climate
impact
projects
1.5 million teq CO2 a year.
PROPARCO’s financing in 2012 will contribute to reducing greenhouse
gas emissions by 1.5 million teq C02 a year.
*Thanks to projects approved in 2012.
C L I M AT E C H AN G E M I T I G AT I O N : A S T R AT E G I C
P R I O R I T Y

4. I C C F : A E U R O P E AN P L AT F O R M F O R F I N AN C I N G
C L I M AT E R E L AT E D P R O J E C T S
ICCF is a cofinancing vehicle for EDFIs (European Development Finance Institutions), the EIB and
the AFD, set up in 2010. Its purpose is to finance projects that contribute to mitigate climate
change.
IVORY COAST, Azito (2012)
› Arrangement of a USD 170m senior loan (PROPARCO USD55m including USD22m
throughout the mobilization of the facility ICCF, FMO USD37m, EAIF USD30m, DEG
USD25m and BIO USD23m), for a total cost of USD 430m (co-financiers : IFC and
BOAD).
› Financing of the 139 MW capacity extension: addition of a gas turbine , increasing
by 50% Azito’s capacity.
› Additional electricity generation of 1,000 GWh p.a., without extra utilization of gas
nor greenhouse gas emissions (combined-cycle) : 400,000 tons of CO2eq avoided
every year.
ENERGY – Energy efficiency
HONDURAS, Vesa (2013)
› 21 MUSD senior loan for a 170 MUSD project. Co-financiers : FMO (arranger), DEG,
OFID and ICCF.
› Financing of the construction, operation and maintenance of a 50 MW wind farm as
well as of a 37km transmission lien and a substation.
› Power price below that of thermal plants. Diversification of Honduras energetic mix .
Reduction of CO2 emissions : 78 000 t per annum
W IND POW ER• A 305 M€ facility, replenished in 2013 with 100
M€
• Participants : AFD, BIO, CDC, COFIDES, DEG, EIB,
Finnfund, FMO, Norfund, OeEB, PROPARCO,
SIFEM, Swedfund.
• Only works in cofinancing with a leading EDFI
(mostly PROPARCO and FMO) : the client only
meets the promoting partner, work load on
participating institutions is minimal
• 13 projects financed to date : wind power,
energy efficiency (combined cycle), sola power,
line of credit – in 9 countries
• Coming next : guarantee facility with the EU to
fund “additional” projects

5. A FEW LESSON S FR OM EXPER IEN C E
• Renewable energy projects are of interest to
private sponsors and can usually be financed
• Energy efficiency projects are scarcer : new
developments tend to take the precedence on
optimisation
• Financing projects is not the thorniest issue,
even in difficult countries, the thorniest
issue is getting private sponsors to develop
them …
• Private sector tend to regard adaptation as
a risk related issue.

6. PROPARCO HEADQUARTERS
151 rue Saint-Honoré
75001 Paris, France
Tél. (33) 1 53 44 31 08
Fax. (33) 1 53 44 38 38
www.proparco.fr