I.
GIFF Concept Summary An initial capitalization of $100-‐$160 million is sought to implement the pilot phase of the Green Infrastructure Finance Facility (GIFF). The Facility would utilize this funding to bring private renewable energy (RE) projects with a financial viability gap to financial close. In exchange for this financial support the project proponents of each project would relinquish to the Facility their rights to the stream of future carbon and related environmental benefits that would be generated throughout their projects’ useful lives and in addition, agree to repay all financial obligations such as, subordinated concessional loans provided to it as part of the overall support. One novel feature of the approach is the deliberate blending of both concessional and carbon finance instruments within individual project structures, thus creating maximum effectiveness for achieving four financial objectives: (i) making RE investments financially viable and more attractive to donor governments; (ii) creating bankable financial structures by de-‐risking the positions of senior lenders; (iii) maintaining a high leveraging factor of private financing within each financing structure; and (iv) creating the opportunity for a financially sustainable business model for the Facility. The interventions of the Facility will bring RE projects to financial closure with majority participation from the private sector and with a majority portion of the financial support recoverable through repayment of concessional loans (up to 30%). The carbon payment would provide revenue enhancement if it is needed beyond the concessional loan. The opportunity to replenish the funding comes with the redemption or sale of the carbon benefits in either formal and emerging Emission Trading Scheme (ETS) markets, or through private placements of willing participating governments or voluntary carbon buyers. The Facility will endeavor to receive pledges from donor governments for a floor carbon price that will allow the Facility to breakeven on its operations. For the pilot phase, the breakeven per ton price is estimated at $1.75/ton. In addition, the Facility will also endeavor to sell forward its carbon contracts at callable prices. A $5/ton redemption price would allow the Facility to earn roughly a 7% Financial Internal Rate of Return (FIRR) on its total operations. The financial assessment for the Facility has been premised on conservative assumptions using reference investments for five RE technologies with viability gaps ranging between 36% and 67% of total CAPEX costs. Under the principle of co-‐benefit sharing, host governments would need to shoulder about half of the viability gap through their current or future package of financial incentives. The Facility would fund the remaining gap with the GHG value of the benefits as a reference. The Facility would be expected to achieve 10 financings, leveraging over $500 million in total investment and which would generate up to 20 million tons of avoided CO2. Price discovery would be carried out through competitive bidding and the service obligations of the proponent would be regulated through the Public-‐Private Partnership 4