1. November 19 th WBI-PCF Training Session. World Bank November 19 th WBI-PCF Training Session. World Bank Impact of Carbon Finance on Project Financing November 19th, 2001 www.prototypecarbon.org

2. Features of the PCF Closed-end Mutual Fund structure with diverse portfolio to: Minimize Project Risks Reduce Transactions Costs Enhance the Learning Experience Shareholding: Governments, $10 m; Companies, $5 m Total Capital: US$145 million to be used in ~ 30 projects PCF Products: –Competitively priced, high quality emissions reductions target portfolio wide outcome price: ~$5/tCO2 ($20/tC) target deal price: $2.5-3.5/tCO2 (~$9-12tC) –High value knowledge asset: create competitive advantage for corporate investors and efficient market regulation and leverage for sustainable development for Parties

3. Public Sector (6) Governments of Netherlands, Finland, Sweden, Norway, Canada, and Japan Bank for International Cooperation Private Sector: (17) RWE - Germany, Gaz de France, Tokyo Electric Power, Deutsche Bank, Chubu Electric, Chugoku Electric, Kyushu Electric, Shikoku Electric, Tohoku Electric, Mitsui, Mitsubishi, Electrabel, NorskHydro- Norway, Statoil -Norway, BP-Amoco, Fortum, RaboBank, NL PCF Subscribers ($145 million)

4. Impact of Carbon Finance on Project Financing at $3/t CO2e Technology  IRR Energy Eff.-District Heating 2.0 Wind 0.9-1.3 Hydro 1.2-2.6 Bagasse 0.5-3.5 Biomass with methane kick Up to 5.0 Municipal Solid Waste with methane kick >5.0 Note: data are preliminary Project, Not Equity, FIRR.

6. Waste-to-Energy project : Chennai, India, MSW Gasification of solid waste 15 MW plant, 95 GWh/ann, $38m cost ERs from: –Power generation displacing fossil fuel (40%) –Methane capture & conversion (60%) Project IRR Equity IRR Without carbon finance14% 16% With carbon finance>19% > 25% Impact of Carbon Finance on Project Financing at $3/t CO2e

7. AnnualUganda 1-7MW Costa Rica Chile 25MW Mini-Hydro off-grid grid ERs (000 t) 49 61 79-138* Net Gen.(GWh) 30 75 160 CO2 ERs/GWh1664 807 494-860 ER (USc/kWh) 0.50 0.24 * Gas vs. 0.15-0.26 coal BL Hydro: Off-grid vs. Grid

8. Methane-capture projects: carbon finance can turn “dogs” into “cash cows” “Traditional” renewables: boost return by 0.5-2.5% –Makes some marginal deals bankable; –Creates a useful additional risk hedge for already profitable deals –Can displace ODA and Government subsidy in some projects Quantity of carbon finance is only half the story: The leverage of carbon finance on financial closure is disproportional to volume of carbon finance Impact of Carbon Finance: Quality and Quantity (at $3/t CO2e)

9. Annexes

10. Typology of Funds/Plays Pure Carbon Funds (PCF, National Funds) Private Equity Funds  Aimed at JI/CDM Projects  New Energy, RE, EE Funds with Carbon Credits  Forestry Funds with Carbon Credits  Energy or Forestry Funds that Could Add Carbon Credits Mutual Funds with % in Private Equity NGO Funds Sustainability, Social, Ethical Mutual funds Corporate “Funds” Earmarked for Carbon Credit Investment