1. Financing Options for Chlor-Alkali Facility Conversion or Decommissioning
Alex Mourant
USEPA
International Environmental Program Specialist
Trade and Economics Program
Office of International & Tribal Affairs

2. Barriers to Financing Large upfront costs (10s of millions US$)
Potential risks
Market
Currency
Political
Firm-specific
Cost of sound management of mercury

3. Conversion versus Decommissioning
Future cash flows to pay off debt
Should consider reduced production during the time of conversion (forgone revenue)
Who pays for mercury management and remediation?
Not tied to a revenue stream
Could be better decision if facility is near the end of its useful lifecycle
Who pays? Sovereign or firm?

4. Choices for Financing Loans Equity Mezzanine financing
Products
Sources
Loans
Equity
Mezzanine financing
Credit guarantees
Grants
Private Capital Markets
Multilateral Development Banks
Bilateral Aid Organizations
Export Credit Agencies
Blend of financing

5. Financing entities- Private versus Public
Private Capital Markets
Multilateral or Bilateral Institutions
Market rates
Shorter tenor
Risk averse
More favorable interest rates
Longer tenor
Willingness to take on some risk

6. Financing entities- MDBs
Some are public-sector oriented, some are private, and others are blended
Can mobilize the private sector money through loan syndication
World Bank (IBRD, IDA)
International Finance Corporation (IFC)
Multilateral Investment Guarantee Agency (MIGA)
Asian Development Bank (ADB)
African Development Bank (AfDB)
Inter-American Development Bank (IADB)
European Bank for Reconstruction and Development (EBRD)

7. Example of ADB’s typical information requirements
Project description
Feasibility study
Background on sponsor(s)
Project ownership structure
Project's implementation arrangements
Project operations
The market
Environmental and social aspects
Cost estimates
Financing plan and model
Risk analysis
Permits and licenses

8. Financing entities- Bilateral Aid and Export Credit Agencies
Can be tied to business relationships or procurement from the donor
KfW (Germany)
OPIC, Export-Import Bank (US)
Japan
Nippon Export and Investment Insurance (NEXI),
Japan Bank for International Cooperation (JBIC)
OECD List of Official Export Credit Agencies

9. Financing entities- Global Facilities/Funds
Mission-oriented, project would need to match desired goals
Unlikely to support entire conversion process, but potential for targeted support (like in improving global knowledge management or the sound management of mercury)
Grants and concessional loans
Global Environment Facility (GEF)- serves as financial mechanism for the Minamata Convention on Mercury
Green Climate Fund (GCF)- Oriented towards climate change adaptation and mitigation. Could potentially seek financing for the energy efficiency gains that will reduce CO2 emissions