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

S O M E B A C K G R O U N D O N P R O PA 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

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 A N 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

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

A F E W L E S S O N S F R O M E X P E R I E N 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.

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