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JCF September, 2005 General Outlines of Japan Carbon Finance, Ltd. JCF Your Partner for Development & Success in CDM/JI Projects & for Contribution to.

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Presentation on theme: "JCF September, 2005 General Outlines of Japan Carbon Finance, Ltd. JCF Your Partner for Development & Success in CDM/JI Projects & for Contribution to."— Presentation transcript:

1 JCF September, 2005 General Outlines of Japan Carbon Finance, Ltd. JCF Your Partner for Development & Success in CDM/JI Projects & for Contribution to Sustainable Development

2 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 2 Company Profile (1) Main Business Objective: To purchase CERs and ERUs （ ERs ） issued until 2012 from CDM/JI Projects (2) Fund Pool: Called “Japan GHG Reduction Fund (JGRF)”, all amount of which JCF can utilize to purchase ERs (3) Committed Fund Amount: Approx. US$ 140 million (4) Establishment: December 1, 2004 (5) Location: Tokyo, Japan

3 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 3 (6) Fund Providers: 2 Policy-lending Institutions (Governmental Banks) & 31 Major Japanese Private Enterprises Utility Tokyo Electric Power Co., Inc. Kansai Electric Power Co., Ltd. Chubu Electric Power Co., Inc. Tohoku Electric Power Co., Inc. Hokkaido Electric Power Co., Inc. Hokuriku Electric Company The Chugoku Electric Power Co., Inc. Shikoku Electric Power Co., Inc. Kyushu Electric Co., Inc. The Okinawa Electric Power Co., Inc. Electric Power Development Co., Ltd. (J-Power) Tokyo Gas Co., Ltd. Policy-lending Institution Japan Bank for International Cooperation (JBIC) Development Bank of Japan (DBJ) SectorFund Providers 10 Major Powers & the Largest Gas Firms

4 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 4 SectorFund Providers Oil & Manufacturing Nippon Oil Corp. Idemitsu Kosan Co. Ltd. Japan Energy Corp. Kyushu Oil Corp. Sony Corp. Toshiba Corp. Sharp Corp. Fuji Xerox Co., Ltd. The Japan Iron and Steel Federation Taiheiyo Cement Corp. Toyota Motor Corp. Terumo Corp. Trading Mitsubishi Corp. Mitsui & Co., Ltd. Sumitomo Corp. Itochu Corp. Marubeni Corp. Sojitz Corp. Engineering JGC Corp. (6) Fund Providers: Major Companies in Oil, IT, Steel, Cement, Automobile & Medical Equipment fields 6 Major Investing & Trading Companies

5 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 5 (1) Assistance for Project Development: JCF are ready to bear following costs for development of CDM/JI projects in principle with a certain ceiling amount:  PDD Preparation  Validation (No Need to Refund in principle)  Initial Verification Services (2) Purchase of Carbon Credits (CERs, ERUs): JCF commits purchase of carbon credits under ERPA (Emission Reduction Purchase Agreement) (at a fixed price). * Payment on Delivery in principle * Purchase Price: to be decided on project-by-project basis (3) Upfront Payment: Upfront Payment for carbon credits can be considered on case-by-case basis. (depending on necessity and risks etc.) (Thorough Due Diligence has to be taken.)

6 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 6 Other Buyers ’ Case In case that purchase volume is 70% of original assumption in PDD Purchase Method (Ref.) 200620072008 2009201020112012 CERs Volume Project Developer has to find other buyers (in each year). Actually Generated CERs Original Assumption in PDD Purchased by Buyer (Delivered to Buyer) (may suffer from opportunity loss.)

7 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 7 JCF: Sweep Method In case that purchase volume is 70% of original assumption in PDD Purchase Method (JCF) 200620072008 2009201020112012 Actually Generated CERs Project Developer has to find other buyer only after total volume for JCF is delivered CERs Volume Original Assumption in PDD All volume generated in each year will be purchased by JCF until reaching total volume of contract Could be Purchased by JCF as Option Front-loaded revenue!

8 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 8 Risks in development & implementation of CDM projects 1. Registration Risks 2. Risks in Fluctuation of CERs Volume 3. Risks in Monitoring, Verification and Issuance of Credits 4. Risks in Additional Policy by CDM Executive Board 5. Political Risks in Host Country 6. Risks in Administrative Process for Credit Transfer 7. Risks in Renewal of Crediting Period * Risks specifically involved in CDM projects

9 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 9 Even in case of shortage of Carbon Credits in spite of best endeavors by Project Participants: Project Participants are not required: to make up for the shortage (with Credits from other projects or sellers); and to pay any penalty to JCF. unless the delivery failure is caused by their willful misconduct. (e.g. Sale of Carbon Credits to some third party) No Need to Compensate Great Merit for Project Participants not to suffer from unpredictable financial risks in future.

10 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 10 Project Development Costs borne by JCF Ceiling Amount: Total Credit Volume purchased by JCF (ton-CO2e) Cost Item = < 300,000 300,000 < ~ =< 600,000 600,000 < PDD Preparation & Validation Max. US$ 50,000 Max. US$ 75,000 Max. US$ 100,000 Initial Verification Max. US$ 15,000 No Need to Refund to JCF in principle (JCF will not deduct these amounts from payment of credits in future.)

11 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 11 Merits for Projects (1) Additional Cash Flow:  Improvement of Project Viability with additional Cash Inflow by selling CERs in US$  Securing of Stable Profitability by getting commitment for purchase of CERs  Front-loaded Revenue in Sweep Method (2) Assistance in Development:  Saving of Development Costs (PDD, Validation, Initial Verification etc.)  Getting of Assistance and Orientation for development of CDM projects (3) Possibility of Parallel-purchase / Equity participation:  A part or all of the remaining Carbon Credits may be purchased by our Fund Providers in collaboration with JCF.  Participation as investors by some our Fund Providers may be possible.

12 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 12 (4) Collaboration with and Support from JBIC & DBJ:  Strong ties with Japanese Government issuing Written Approvals for CDM/JI Projects  Cooperation and strong ties with Host Governments and Development Financial Institutions  Underlying Financing from JBIC, such as; A) Export Loan B) Overseas Investment Loan C) Untied Loan D) ODA Loan, etc. Merits for Projects

13 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 13 CDM/JI Projects Example Model for Underlying Finance provided for CDM /JI Projects by JBIC Underlying Finance （ On-Lending Scheme ） Fund Provision Purchase of CER (Carbon Finance) Direct Loan Underlying Sponsorship Finance (Equity, etc.) (Japanese) Companies in Power /Energy Sector, etc. Intermediary Financial Institution Cash Inflow during Construction Period Cash Inflow during Crediting Period JBIC JCF

14 Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 14 Operational Flowchart JCF Project Planning Feasibility Study Other Participants of Project Project Entity Stake Holders Host Country DNA Exclusive Negotiation Period Conclusion of MoU defining basic terms & conditions Project Preparation DOE Consultant Host Country DNA Assistance for Project Development Bearing of PDD Preparation Cost PDD Preparation Validation Bearing of Validation Cost Due Diligence Clarification & Screening of PIN Evaluation & Selection of Project Submission of PIN Conclusion of ERPA

15 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 15 Operational Flowchart JCF Host Country DNA Project Entity Stake Holders Registration CDM -EB Japan DNA DOE CERs Payment on Delivery DOE CDM-EB Verification Certification & CERs Issuance Project Implementation Effecting of Sale/Purchase Obligation Upfront Payment Assistance for Project Development Validation Conclusion of ERPA Bearing of Initial Verification Cost Monitoring

16 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 16  Project Description and Project Participants  Fulfillment of Kyoto Rules:  Methodology (Baseline Study & Monitoring Plan)  Validation (Methodology Applicability, Data, Quality Control, etc.)  Possibility of Authorization & Approval by Host Country  Stakeholders ’ Comments  Additionality  Investment Analysis/Barrier Analysis and Common Practice Analysis, etc.  Environmental & Social Safeguard Requirements:  Compliance with Laws & Regulations, etc. Key Criteria at Screening of PINs/PDDs * Red: High Priority

17 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 17  Project Feasibility:  Construction Plan, Business Plan and Fund-raising Plan  Project-related Contracts  Concession/License & Permits  Creditworthiness and Competence of Project Sponsors  Experiences of Management and/or Project Operator  Commercially Viable Proven Technology  Financial Viability (Cash Flow Projection, Sensitivity Analysis, etc.)  Contribution to Sustainable Development of Host Country  Environmental, Social & Economic Impacts, Technology Transfer Effects, etc. * Red: High Priority

18 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 18 *Sector: “ Sectoral Scopes ” listed in UNFCCC web site which include A) Renewable Energy, B) Waste Handling and Disposal, C) Manufacturing Industries (Energy Efficiency, Fuel Switching, etc.), D) Fugitive Emissions, E) Chemical Industries, F) Agriculture, etc. ERs to be purchased from: approx. in USD, million a Single ProjectUp to 25 a Single Host CountryUp to 37 a Single Sector *Up to 41  Portfolio Guideline  Purchase Conditions  Price  Volume More than 50,000t-CO2e/year is preferable.  Delivery Schedule etc. Early commissioning project is preferable. * Red: High Priority

19 JCF Your Partner for Development & Success in CDM/JI Projects (C) Copyright 2005 Japan Carbon Finance, Ltd. All Rights Reserved. 19 Japan Bank for International Cooperation (JBIC) Representative Office in Jakarta Ichiro Hayashidani, Representative i-hayashidani@jbic.go.jp Tel: +62-21-5220693 Fax: +62-21-520975 Summitas II, 7 th Floor, Jl. Jenderal Suderman Kav. 61-62 Jakarta 12190, INDONESIA Japan Carbon Finance, Ltd. (JCF) Carbon Finance Department Hitoshi Kurihara, Director General h-kurihara@jcarbon.co.jp Joichi Kimura, Deputy Director General j-kimura@jcarbon.co.jp Yoichiro Matsushita, Deal Manager y-matsushita@jcarbon.co.jp Tel: +81-3-5212-8879 Fax: +81-3-5212-8886 1-3, Kudankita 4-chome, Chiyoda-ku, Tokyo 102-0073, JAPAN For More Information, Contact You are welcome to visit our web site ! www.jcarbon.co.jp

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