The KfW Carbon Fund 37th REGULAR MEETING OF THE ALIDE GENERAL ASSEMBLY 2007 May 2007.
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Transcript of The KfW Carbon Fund 37th REGULAR MEETING OF THE ALIDE GENERAL ASSEMBLY 2007 May 2007.
The KfW Carbon Fund37th REGULAR MEETING OF THE ALIDE GENERAL ASSEMBLY 2007 May 2007
2
KfW Bankengruppe in brief
Promotional bank of the Federal Republic of Germany.
Founded in 1948.
Shareholders: Federal Republic of Germany (80%), German federal states (20%).
Headquarters: Frankfurt am Main; branch offices: Berlin and Bonn.
Foreign representations: Brussels and around 50 offices and representations worldwide
Balance-sheet total at the end of 2006: EUR 360 billion
3,580 employees at the end of 2006
Rating: AAA/Aaa/AAA.
3
Brand Structure
KfW Carbon Fund
4
KfW Environmental and Climate Commitments
KfW Facts and Figures
Total loan commitments for
environment- and climate protection measures in 2005: € 9.3
billion
- Thereof two thirds for climate protection
- Share of total commitments
20
%
Carbon mitigation effect of KfW climate protection programmes
Total annual reduction 1990 to 2004 in Germany
across all sectors 10.5 mill. t CO2
Annual CO2 mitigation effect of KfW programmes
(energy efficiency in the building sector and wind power)
(average 2003 to 2004) 3.9 mill. t CO2
5
Carbon Market
0,799
1,6
2,4
0
0,5
1
1,5
2
2,5
3
2005 2006 2007F
Mission: to define a price/cost on carbon emissions, a value on emission reductions, and to enable trade of resulting allowances or credits
Size of International Carbon Market
Volume - Billions Tons of CO2 e
9,4
22,5 23,6
0
5
10
15
20
25
2005 2006 2007F
Transactions – EUR Billions
+100%
+50% +139%
+5%
Source: Point Carbon
6
CDM Market
401
563 552
0
100
200
300
400
500
600
2005 2006 2007F
“The CDM/JI market is a success: the project market is seen as more mature, and is resulting in cost effective emission reductions.” (source: Point Carbon)
Size of CDM Market
Volume - Millions Tons of CO2 e
2,1
3,94,3
00,5
11,5
22,5
33,5
44,5
5
2005 2006 2007F
Transactions – EUR Billions
+40%
-2%
+93% +10%
Source: Point Carbon
7
CDM Market - profile
China; 70%
Egypt; 2%Malaysia; 1%
Brazil; 3%
India; 12%
China completely dominated the CDM sell side, bringing the bulk of the HFC-23 and adipic acid N2O
Profile of CDM Market
Country Sellers - 2006 Project Types - 2006
Source: Point Carbon
N2O; 21%
HFC-23; 33%
Renewable Energy; 13%
Other; 10%
Fugitive Emissions;
7%LULUCF; 1%
Energy efficiency;
7%
Waste; 9%
8
Purchase programme for Carbon Credits (JI/CDM) Purchase of compliance tools for the ETS (CERs, ERUs) KfW acting as a trustee for programme participants
KfW buys as a trustee for programme participants
Target group: German and European enterprises, who
- want to make use ofJI and CDM for compliance purposes and
- do not have own access to projects abroad
Forward purchase contracts with sellers of carbon credits
„Emissions Reductions Purchase Agreement (ERPA)“
The KfW Carbon Fund
9
The KfW Carbon Fund
First tranche EUR 84 millionLaunched in June 2004More than 6 million tons contracted; to be closed mid 2007KfW contribution with own funds: EUR10MMGerman Government contribution: EUR4MM
Second tranche EUR 100 million Second Tranche launched in May/2007: targeting smaller Compliance Buyers and non trading companies emphasis on Renewable Energy and Energy EfficiencyPartnership with European Investment Bank
10
Present Status
Programme Volume (First Tranche): EUR 83.9 Mio.
24 participating Enterprises from
Germany, Austria, France and Luxemburg
Supported by German Federal Government and KfW
6.4 million tons CO2e contracted (per 31.03.07)
Sectors: focus on renewable energy (wind, hydro, biomass), methane avoidance (landfill gas,
CMM, biogas) Countries: focus on India, China, Brazil, Egypt
All ERPAs to be concluded until mid 2007
11
Fund Concept
Purchase programme (“Buyers’ Pool”) for project-based certificates Purchase of compliance tools for the ETS
(CERs, ERUs, project-based EU-Allowances) commercial orientation
KfW purchases as a trustee for participants in its own name, for the account of participants on the basis of individual Agency Contracts between KfW
and each participant
off-take contracts with suppliers of certificates (“ERPA”) payment on delivery up to 2012 with option to extend fixed or variable pricing
12
Objectives of the Fund Background
Kyoto-Protocol (Clean Development Mechanism) European Emissions Trading System (ETS), Linking Directive
Provide a service instrument for German and European enterprises which want to to use project-based certificates for compliance
purposes
alternative to own measures and emissions trading no internal capacities required risk mitigation by diversification
Project development function
Promotion of projects and measures contributing to reduction of global Greenhouse Gas Emissions sustainable development in the host country
13
Programme Structure - Tranche 1
Participant 1
KfW
Project Portfolio
(“KfWCarbon
Fund“)
Project n
Project 3
Project 2
Project 1
Participant 2
Participant 3
Participant x
ERPA
Ag
ency co
ntracts
14
Programme Structure - Tranche 2
Buyer 1EIB-KfWCarbon Programme
KfWProgramme Manager
and Contracting Party
EIB/KfWUnderwriters
Project n
Project 3
Project 2
Project 1
Buyer 2
Buyer 3
Buyer x
Em
ission
Red
uctio
n P
urch
ase Ag
reemen
t
Pu
rchase an
d A
gen
cy Ag
reemen
t
Financing Facility
EIB Facility Manager
EIB/KfWUnderwriters
15
Investment Policy
Eligible Projects
Emphasis on renewable energy and energy efficiency
Exclusions in line with Kyoto and ETS:
Nuclear, large hydro, forestry
Risk balanced portfolio
By countries, technologies, counterparties
Primary market activities
No emissions trading
Emphasis on forward contracts
Up to 2012;
Options for Post-Kyoto credits
16
Portfolio Distribution
Africa21%Asia
53%
Europe1%
Latin America25%
Renewable Energy: Hydro
32%
Renewable Energy: Wind
30%
Coal Mine Gas7%
Energy Efficiency: Supply side
1%
Fossil Fuel Switch4%
Landfill Gas25%
Industrial Gases1%
Regional distribution of ER volumes Technological distribution of ER volumes
Fondsportfolio (ERPA or LoI) as per 31.03.2007
17
Financing support for CDM /JI project preparation
Financing of preparatory measures:
Design of PDDs, Business Plans, Environmental Impact Assessment Reports or support of validation costs
Maximum amount of KfW financing: € 50,000.00; contribution of funds by project owner expected
Repayment by deduction from the first payment of KfW for CERs delivered due upon the first delivery of Certificates
18
Financing options at KfW for project financing
Advance payments on ERPA:
up to 50% of ERPA value upon provision of investment grade securities; separate loan agreement with KfW Carbon Fund
Project financing by KfW-IPEX and DEG:
min. loan amount of 20 Mio €; term up to 10 years; min. 30% equity contribution; interest fixed or variable; security package depending on project structure
min. loan amount of 1 Mio €; term 4 to 10 years; interest fixed or variable; collateral security (e.g. fixed assets); DEG financing share up to 35% of total project costs
Concessional Financing by KfW Development Bank
19
Future Plans
Continuous purchase programme for compliance certificates
Purchase target of 9 million tons CO2e per year (including Post-Kyoto
purchase)
Own underwriting capacity (“warehousing”)
EIB-KfW Carbon Programme
EUR 100 Million purchase facility for carbon credits
(second tranche of the KfW Carbon Fund)
Value Added Features
Tailormade product for SMEs (delivery guarantee)
Financing facility for projects as advance payments
Risk-sharing between EIB and KfW
The KfW Carbon Fund
For more information: www.kfw.de/carbonfund
Rose Cuten
KfW Carbon Fund
São Paulo Office
Brasil
Phone: 55 11 5187-5150