74
World Bank Study
in projects with equity contracts at the early stages, and project finance during implementation; and (v) provide derivatives for project developers to manage the market risk of their carbon assets. Below are examples of wholesale products and services provided by private sector FIs and private arms of the MDBs (see Table 14). Unlike project finance—which requires that details be provided for the activities proposed—corporate finance is available on the strength of the clients’ balance sheets. thus, it is possible that many ee investments are not documented, because companies may not specifically request loans for this purpose (e.g. financing of energy improvements
Table 14: Corporate and investment products and services Product
Product design, results, potential
Financial institution(s)
Region
Project Finance
Banks’ special divisions focus on long-term financing of clean energy projects. Often, the focus is on one or more specific RE technologies and/or on certain countries
BNP Paribas (Wind), Rabobank, Barclays, Fortis, Standard Chartered Bank, West LB (Biofuels and Wind)
Global
Led effort to raise US$1.5 billion of equity for the wind-power market in 2006, with its own portfolio of about US$650 million. RE equity portfolio is about US$1 billion (26 wind farms); also pursues investments in biomass, geothermal, and solar power
JPMorgan
U.S.
Portfolio financing technique: Combined financing of wind energy projects with the construction risk attached to developing wind farms
Dexia (Wind)
U.S.
Led energy-from-waste project financing that included a 25-year loan supported by waste contracts with local authorities and corporate backing on non-contracted waste
Bank of Ireland
Europe
Partial Credit Guarantee
Financial institution provides a bond (issued by a municipality) to fund environmental projects
IFC
Global
Securitization
A risk-sharing arrangement for environmental projects. FIs represent a guarantor at the mezzanine level of risk, allowing client to transfer risk to the bank
IFC
Global
Eco-Securitization scheme will test the feasibility of financing “natural infrastructure” by linking sustainable management of resources with the funding capacity and requirements of assetbacked securitization
IFC and UK Department for International Development (DFID)
Global
Proposed green mortgage-backed securities. Designed to package mortgages on buildings that meet energy-use and environmental targets. Products would be rated higher and worth more due to the operating benefits associated with green buildings
Not yet implemented
U.S.
Designed to fund large-scale reforestation in Panama. Reinsurers underwrite a 25-year bond, while investors and frequent Panama Canal users purchase the bond
Various
Latin America
Cat bonds provide ancillary capital for risks from natural catastrophes and can pay higher than average yields, diversify investors’ portfolios and improve industry reserves
BNP Paribas and others
Global
Provides environmentally-friendly technologies at preferential rates
Deutsche Bank, ABN AMRO, and ING Group
Europe
Bonds
Technology Leasing
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