EBRD sustainable energy initiative experiencesinputs for the CCXG Global Forum discussion on scaling-up and replication

1. EBRD SUSTAINABLE ENERGY INITIATIVE
EXPERIENCES
INPUTS FOR THE CCXG GLOBAL FORUM DISCUSSION
ON SCALING-UP AND REPLICATION
March 2014
Jan-Willem van de Ven
Senior Carbon Manager
ENERGY EFFICIENCY AND CLIMATE CHANGE

2. THE QUESTIONS
2
1. How has EBRD worked with actors at
international, national and local levels to
identify and tackle barriers to replication and
scaling-up?
2. How can useful lessons and information on
barriers be shared and used for scaling up
and replicating climate finance interventions?

3. SCOPE
1. Introduction to the European Bank and
Reconstruction and Development, and the
Sustainable Energy Initiative
2. Scaling-up and replication, an embedded
consideration in the Bank’s operations
(transition impact, SEI):
• Ingredients to success
• Systematic development approach
• Market demand driven
3. Robust MRV, enabling demonstration effects
and sharing of information.
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4. The EBRD
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• International financial institution established in 1991 to
promote transition to market economies in 34 countries from
Central Europe to Central Asia
• Owned by 63 countries and two inter-governmental
institutions (EU and EIB).
Sound
Banking
Principles
Transition
Impact
Environmental
Sustainability
• AAA rated. Capital base of €30 billion
• 2013: €8.5 billion finance committed
THE EBRD

5. EBRD REGION – CHARACTERISTICS
AND BARRIERS
EBRD Region
characteristics:
• High share of heavy
industry
• Ageing infrastructure
• High energy and
carbon intensity
• Substantial potential
for renewable energy
resources
• Energy efficiency
potential
externalities and
market failures:
• Difficult access to
finance (particularly for
SME)
• Lack of information
and (management)
skills
• Regulatory
constraints, incl. a lack
of market-based
pricing energy
(subsidized) and
no/low carbon prices.
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6. BARRIERS TO SEI (FURTHER)
Credit-related risks
• high perceived credit risks
• long pay-back period for investments in energy supply and utilities
• commercial loans not readily available
Behavioural and technology-related
• information barriers: consumers have a high discount rate for decisions on EE
investments (based on first costs rather than lifecycle savings)
• limited market availability of energy efficient technologies
Pricing and policy
• limited policy support, capacity and expertise
• energy tariffs not reflective of the costs of generation externalities
• low collection rates (ETCs)
• reforms to support renewable developers inadequate in some CoOs
• unclear carbon pricing signals
• inadequate pace of industrial restructuring
6© EBRD 2014, all rights reserved

7. THE SUSTAINABLE ENERGY
INITIATIVE
• The EBRD has been
engaged in sustainable
energy finance since its
establishment.
• In 2006, the EBRD
launched the Sustainable
Energy Initiative to deal with
energy efficiency and
climate change (responding
to G8 call).
• The EBRD was the first
MDB with a dedicated pool
of technical experts in-
house.
• In 2013, the EBRD
launched Sustainable
Resource Initiative which
includes SEI, materials
efficiency and water
efficiency.
7© EBRD 2014, all rights reserved

8. SEI FINANCE BY BUSINESS AREAS
• From 2006 to 2013, SEI
finance amounts to €13.4
billion.
• SEI business volume has
shown an increasing trend
since 2006, with a peak in
2011 (€2.6 billion).
• Cleaner energy production
and corporate EE account
for the bulk of SEI
investments since 2006.
• Since 2006, the share of
SEFFs and renewable
energy projects has
increased significantly. 0
500
1000
1500
2000
2500
3000
2006 2007 2008 2009 2010 2011 2012 2013
SEIfinancevolume(€inmln)
Municipal
Infrastructure EE
Renewable Energy
Cleaner Energy
production
SEFFs
Corporate EE
SEI business volume split by business areas
8© EBRD 2014, all rights reserved

9. SEI INGREDIENTS TO SUCCESS
POLICY
DIALOGUE
PROJECTS AND
INVESTMENTS
TECHNICAL
ASSISTANCE /
INCENTIVES
Mainstreaming: SEI Projects
across Bank’s Investment
Portfolio (set investment targets)
Enabling Regulations:
Working with
governments to support
development of a strong
institutional and regulatory
framework that
incentivises sustainable
energy (carbon pricing,
energy efficiency
regulations, feed-in tariffs)
Technical Assistance:
to overcome barriers:
market analysis, LEME
development, energy
audits, training and
awareness raising
Incentives: (grant co-
financing) to reward
performance, attract early
adopters / demonstration
projects and address
affordability constraints
9© EBRD 2014, all rights reserved

10. STRUCTURED APPROACH TO SEI
PROJECT DEVELOPMENT
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The EBRD’s Sustainable energy Initiative (SEI)
Country Strategies
Sustainable Energy Action Plans (SEAP)
Market Studies
Demand for finance by project sponsors
Definition of Financing Programmes (examples):
Sustainable Energy Financing Facilities (SEFFs)
Finance and Technology Transfer Centre for Climate Change
(FINTECC)
Resource Efficiency Transformation Programme (RESET)
Instruments and tools (mitigation and adaptation):
Leveraging private sector intermediaries (banks, ESCOs)
Policy dialogue and Technical Assistance
Energy / resource efficiency audits
Incentive grants and training (energy/carbon management)
List of Eligible Measures and Equipment (LEME)
Monitoring, Reporting and Verification (MRV)
Assessment
of Market
Demand,
Barriers and
Delivery
Potential (incl.
co-finance)
© EBRD 2014, all rights reserved

11. SEFF - A SUCCESSFUL MODEL
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Slovak Republic Slovak Republic Turkey Turkey Ukraine Western Balkans
Moldova Poland Romania Romania Russia Russia
Armenia Bulgaria Bulgaria Bulgaria Bulgaria Belarus
Georgia Hungary Kazakhstan Kosovo Kyrgyzstan Moldova

12. SUSTAINABLE ENERGY FINANCING FACILITIES
CATALYSING AND RESPONDING TO DEMAND
• Local financial institutions on-lend funds to small and
medium-sized businesses, corporate and residential
borrowers.
• The potential demand is demonstrated with a market study
and origination of a project pipeline.
• Finance is provided for energy efficiency and small-scale
renewable energy projects.
• SEFFs establish project implementation teams who support
(and train) local financial institutions and their clients.
• SEFFs have a robust MRV regime, whereby incentives are
typically paid upon verified project completion.
SEFFs are effective in reaching a wide range of small and
medium-sized business and residential clients
12© EBRD 2014, all rights reserved

13. • Climate finance reaching a bigger market of small and medium sized
transactions, and herein involving and leveraging private finance
sector.
• Bring together the critical technical and financial components required
to facilitate and to add value to sustainable energy investment
opportunities.
• Increase awareness of the benefits of sustainable energy investments
and promotes ‘best practice’ technical solutions, builds skills.
For climate finance to become a viable banking product, the EBRD
SEFF model uses a “Pilot > Prove > Propagate” approach to kick-
start and scale-up, in parallel with related “Policy” approaches
SEFFS AND SCALING UP CLIMATE FINANCE
© EBRD 2014, all rights reserved 13

14. FACILITY
Turkish Sustainable Energy Financing Facility
(TurSEFF) provides local banks with credit lines for
sustainable energy investments in the residential,
industrial and commercial sectors (sub-loans of up
to €5 million).
TECHNICAL ASSISTANCE
• €2.4 million provided by the Climate
Investment Funds and €7.5 million from the EU
were used for project implementation support.
• This included supporting partner banks with
pipeline development, loan appraisals, energy
audits, promoting the facility and training.
INNOVATIVE FINANCIAL MIX
EBRD loans $222 million
of which SEI $222 million
CTF concessional loan $47 million
JBIC loans $ 20 million
Total facility value $ 289 million
5 PARTICIPATING BANKS
ESTIMATED IMPACT
Over 370 sub-projects financed through five partner
banks by the end of 2012 are estimated to result in:
• Energy savings: 3,300 GWh/year
• Emission reductions: 645,210 tCO2/year
SEFF EXAMPLE TURKEY

15. SHARING
• Keep the eye on delivery; focus on “what works, when it starts working”.
• Demonstration projects are key in support of the bigger picture policy dialogue,
and resulting regulatory reform to an enabling environment.
• Most SEI programmes have dedicated websites in local and English languages.
• Standardise where possible, e.g. the EBRD is carrying out a number of
standardised carbon emission factor studies and publishes these.
• Climate Finance MRV essential to learn and share results (e.g. J-MDB Report).
• Co-ordination between stakeholders, e.g. recent donor co-ordination meeting on
the Kazakh emissions trading scheme in Astana.
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16. Thank you
Jan-Willem van de Ven
Senior Carbon Manager, Energy Efficiency and Climate Change, EBRD
VandeveJ@ebrd.com
16© EBRD 2014, all rights reserved