World Bank GREEN BONDS. Judith Moore The World Bank Treasury 1818 H Street NW Washington DC USA treasury.worldbank.

Transcription

1 World Bank GREEN BONDS Judith Moore The World Bank Treasury 1818 H Street NW Washington DC USA treasury.worldbank.org/greenbonds

2 The World Bank The World Bank is a development cooperative owned by 188 member countries The World Bank works with members to achieve economic growth and social and environmental sustainability World Bank is called IBRD ( International Bank for Reconstruction and Development ) and rated AAA/Aaa Investments in World Bank bonds support member efforts to achieve economic growth, a cleaner environment, and poverty reduction For the World Bank, working towards the Millennium Development Goals and environmental sustainability are key pillars of our international development efforts 2

3 Why do investors buy World Bank bonds? Track record: Issuing debt since 1947; triple-a rating for over 50 years. Safety: Strong balance sheet as result of prudent financial policies and preferred creditor status. 188 sovereign shareholders. Only extends funds to sovereigns and sovereign-guaranteed projects. Has never made a capital call or written off a loan. Products: Meets investor requirements by offering a wide range of debt instruments that meet the various needs of diverse investor groups. Development mandate: Provides financial solutions for sustainable and socially equitable economic development to reduce poverty and improve standards of living. 3

4 World Bank Green Bonds Benefits Investors have high quality fixed income product that meets their financial needs (risk/return) and supports climate actions Diversify investor base for World Bank funding Create awareness about: o the World Bank o climate efforts in member countries o about climate change and the need for private sector financing and opportunities Mobilize funds from the private sector for climate change projects in member countries Catalyst for bigger green bond market for global efforts 4 4

5 World Bank Green Bonds Almost USD 3.5 billion has been raised with 55 World Bank green bonds issued in 17 different currencies. List of Select Investors AP2 - Second Swedish National Pension Fund AP3 - Third Swedish National Pension Fund Adlerbert Research Foundation BofA Merrill Lynch Wealth Mgt Network California State Treasurer s Office Church of Sweden CalSTRS Calvert Investments FMO (Netherlands Development Finance Co.) LF Liv MISTRA Everence Financial New York Common Retirement Fund Nikko Asset Management Rathbone Greenbank SEB Ethos Rantefund SEB Fonden SEB Trygg Liv Sarasin Skandia Liv Trillium Asset Management, LLC UN Joint Staff Pension Fund WWF-Sweden (Världsnaturfonden) ZKB (Zürcher Kantonalbank) 5

6 Examples of the types of projects Green Bonds support MITIGATION project examples: Solar and wind installations Funding for technologies that result in significant reductions in GHG emissions Rehabilitation of power plants and transmission facilities to reduce GHG emissions Greater efficiency in transportation, including fuel switching and mass transport Waste management (methane emission) Energy efficient building construction Reforestation and avoided deforestation ADAPTATION project examples: Protection against extreme events, such as floods and droughts (including reforestation and watershed management) Food security improvement and stressresilient crops (to slow down deforestation) Sustainable forest management and avoided deforestation 6

7 Green Project Portfolio* *As of June 2012 As of June 2012, almost US$3 billion has been allocated to green projects across the world. These graphs illustrate the geographic and sector breakdown.

8 Locations of Eligible Projects Europe & Central Asia Belarus Latin America & Caribbean Brazil Colombia Montenegro Serbia Turkey Ukraine South Asia India East Asia & Pacific China Indonesia Dominican Republic Jamaica Mexico Peru Uruguay Middle East & North Africa Egypt Jordan Morocco Tunisia 8

9 Project Example in China Project Summary: Purpose: To reduce greenhouse gas emissions and deliver economic benefits through biogas systems in rural communities. Project Term: IBRD Financing: US$120 million Project ID: P Mitigation: Renewable energy (biogas), and reduced methane emissions and carbon dioxide from burning of coal and firewood Eco-Farming Project In China, millions of households rely on the agriculture sector for their livelihood and their future depends on improved management of their natural resources. The agricultural sector, however, has had widespread negative impacts on the environment because of inadequate farming techniques involving intensive and mechanized farming, misuse of land leading to desertification, over-use of synthetic pesticides and fertilizers, and the rapid growth in livestock production without adequate environmental controls. In addition, agriculture is responsible for 50% of China s methane emissions methane is a potent greenhouse gas. This project will improve the rural environment and living conditions in the project areas by promoting environmentally friendly and economically efficient farm production. In addition to cleaner, healthier farmyard environments, a key goal of the project is the reduction of greenhouse gas emissions through methane capture and combustion to generate energy and reduced burning of coal and firewood in the project areas. By the end of the project, CO 2 eq emissions in the project area are expected to be reduced by 800,000-1,000,000 tons per year. Steve Harris/ World Bank Video: More Information: 9

10 Project Example in China Project Summary: Purpose: To improve sustainable utilization of land and water resources Project Term: IBRD Financing: US$100 million Project ID: P Adaptation: Improved infrastructure for protection against flooding, watershed management Xining Flood and Watershed Management The Xining Flood and Watershed Management Project for China will improve the safety of people and protection of property from flood events and enhance sustainable utilization of land and water resources within Xining Municipality. The project addresses flood control management by supporting both structural and non-structural activities such as dikes, access roads, cross dike structures, water level control, an integrated flood warning system, and riverbank landscaping. The project also supports wastewater collection and treatment and participatory watershed management. Project goals include reducing the vulnerability to flood events of about 400,000 people, an avoided 2 million tons of untreated wastewater flowing into rivers annually, and an avoided 900,000 tons of annual soil loss. This project illustrates the types of infrastructure investments needed to increase resilience to the impacts of climate change, particularly extreme flood events. Curt Carnemark/ World Bank More Information: 10

11 Project Example in India Project Summary: Purpose: Scale-up access to renewable energy Project Term: IBRD Financing: US$400 million Project ID: P Mitigation: Renewable energy Rampur Hydropower Project India produces 4% of the world s total CO 2 emissions annually. It is projected that the country will produce 13 % of the world s total emissions by 2031 under business as usual. India has committed to bring electricity to 100% of its population, however, and efficient electrical power in most rural regions is currently almost nonexistent. The goal of this project is to add renewable, low-carbon hydroelectric power to India s northern electricity grid, and improve the effectiveness and environmental and social sustainability of hydropower design and management in India. This scale-up effort will strengthen the government s plans to provide 100, ,000 megawatts of electricity with renewable hydropower by 2030, enabling power accessibility throughout rural areas where power is presently unavailable. This plant will be capable of generating about 1,770 GWh. The UNFCCC has registered the Rampur project as a generator of carbon credits under the Clean Development Mechanism. When completed, the project is projected to reduce1,407,658 metric tons of CO 2 eq per year from business-as-usual scenarios. Curt Carnemark/World Bank More Information: 11

12 Project Example in Indonesia Project Summary: Purpose: To improve government capacity for basin water resource and irrigation management. Project Term: IBRD Financing: US$150 million Project ID: P Adaptation: Improved water management and food security Water Resources and Irrigation Management Program Good water resources and irrigation management are essential for Indonesia's water and food security (the bulk of Indonesia s grain crops are from irrigated areas). Though Indonesia is in general a water rich country, climate change is increasing spatial and seasonal variation in water availability. This, combined with high pressure on land and water resources from urbanization and economic development, is leading to higher incidences of floods and landslides and reduced availability of water in dry seasons. This project focuses on developing capacity and infrastructure to improve river basin and irrigation management in selected areas of the country. Provinces involving 12 river basins are participating in the project. Activities will be implemented through partnerships between the responsible irrigation services and the Water User Association Federations. The project is expected to benefit 500,000 farmer households by providing more efficient and reliable irrigation water and thereby helping them increase their crop productivity. Curt Carnemark/World Bank More Information: 12

13 Project Example in Indonesia Project Summary: Purpose: To increase power generation from renewable geothermal resources. Project Term: IBRD Financing: US$150 million Project ID: P Mitigation: Renewable energy Geothermal Energy The project helps Indonesia increase power generation from renewable geothermal resources and reduce emissions of carbon dioxide that would otherwise be generated from its primarily fossil fuels-based power generation system. The project finances the confirmation of the geothermal resources and construction of a steam field system and 2 powers plants with a total capacity of 150 MW. The project is co-financed by the Clean Technology Fund and is expected to have transformational impact by reviving the development of geothermal energy, demonstrate an immediate potential for scale-up in geothermal projects, and help increase the confidence of other potential developers in the sector. In addition, the proposed fields are located on islands where there are currently considerable power supply shortages The project avoids the expansion of coal-fired power which is the predominant source of energy in Indonesia. The 150MW plant is estimated to avoid 1.1 million tons of CO2 per year or a lifetime emissions of 33 million tons of CO2 over 30 years. Curt Carnemark/ World Bank More Information: 13

14 Project Example in Tunisia Project Summary: Purpose: To promote better water management Project Term: IBRD Financing: US$30.6 million Project ID: P Adaptation: Improved efficiency in water use and increased capacity for watershed management Second Water Sector Investment The project promotes efficiency improvements in irrigation schemes, more reliable water supply in rural areas and increased capacity to plan for current and future water management challenges, including climate change. Compared to other states in North Africa and the Middle East and in spite of severe scarcity and stress in its aquifers, Tunisia has been able to capture and use more than 80% of the usable water thanks to infrastructure investments and good management policies. Climate change will exacerbate the problems of scarcity and reliance on already-stressed groundwater. The project promotes more efficient use of irrigation water and drinking water supply. By the end of the project about 25,000 hectares with irrigation and drainage systems are targeted to be rehabilitated and 10,000 households supplied with new drinking water service, among other outcomes. The project will also strengthen Tunisia's capacity to plan, monitor, and manage water in the future. Curt Carnemark/World Bank More Information: 14

15 Next Steps and Challenges Continue to raise awareness of the need for and support from private sector financing to tackle the climate challenge to improve incentives Continue to work with investors and intermediaries to create financial products that support climate change programs and meet investor demand, and encourage complimentary products (e.g. green indices, funds) Continue to work with World Bank colleagues to further develop the internal infrastructure/capacity to create and deliver new investment products 15

16 More Information Web site: crinfo.worldbank.org Bloomberg: IBRD <Go> 4 <Go> 16

17 Appendix Climate Change can be tackled on many levels. Investments in developing countries are part of the global solution. 17

18 Acknowledgements and Disclaimers All photos, graphics and content World Bank This presentation has been prepared by the World Bank (International Bank for Reconstruction and Development, IBRD) for information purposes only, and the IBRD makes no representation, warranty or assurance of any kind, express or implied, as to the accuracy or completeness of any of the information contained herein. No Offer or Solicitation Regarding Securities. This presentation may include information relating to certain IBRD securities. Any such information is provided only for general informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy any IBRD securities. All information relating to securities should be read in conjunction with the appropriate prospectus and any applicable supplement and Final Terms thereto, including the description of the risks with respect to an investment in such securities, which may be substantial and include the loss of principal. The securities mentioned herein may not be eligible for sale in certain jurisdictions or to certain persons. Consult with Advisors. Investors considering purchasing an IBRD security should consult their own financial and legal advisors for information about such security, the risks and investment considerations arising from an investment in such security, the appropriate tools to analyze such investment, and the suitability of such investment to each investor's particular circumstances. No Guarantee as to Financial Results. IBRD does not warrant, guarantee or make any representation or warranties whatsoever, express or implied, or assumes any liability to investors regarding the financial results of the IBRD securities described herein. Each recipient of this presentation is deemed to acknowledge that this presentation is a proprietary document of IBRD and by receipt hereof agrees to treat it as confidential and not disclose it, or permit disclosure of it, to third parties without the prior written consent of the IBRD. All content (including, without limitation, the graphics, icons, and overall appearance of the presentation and its content) are the property of the IBRD. The IBRD does not waive any of its proprietary rights therein including, but not limited to, copyrights, trademarks and other intellectual property rights. 18

19 19