JBIC’s Engagement to Kyoto Mechanisms and Japan Carbon Fund (JCF) ＹｕｓｕｋｅＩＴＯ Deputy Director for Carbon Finance ＪＥＲＢＡＣＤＭＩＮＶＥＳＴＯＲ

JBIC’s Engagement to JBIC’s Engagement to Kyoto Mechanisms Kyoto Mechanisms

andand

Japan Carbon Fund (JCF) Japan Carbon Fund (JCF)

Ｙｕｓｕｋｅ　ＩＴＯDeputy Director for Carbon Finance 　

ＪＥＲＢＡ　ＣＤＭ　ＩＮＶＥＳＴＯＲ　ＦＯＲＵＭSeptember ２２－２４　２００４

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Contents

1. JBIC at a Glance2. JBIC and GHG Pollution Prevention Projects3. General Outlines of Japan Carbon Fund (JCF)4. Advantages of JCF5. Characteristics of CDM/JI Projects

ref.) Project Information Note (PIN)

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• Established as an Official Financial Institution of Established as an Official Financial Institution of Japan in October 1999 by the Merger of :Japan in October 1999 by the Merger of :

The Export-Import Bank of Japan (JEXIM: The Export-Import Bank of Japan (JEXIM: est. est. 1950) and Overseas Economic 1950) and Overseas Economic Cooperation Cooperation Fund, Japan (OECF: est. 1961)Fund, Japan (OECF: est. 1961)

• PurposePurpose

A) Promotion of Japan’s international Trade and A) Promotion of Japan’s international Trade and other international economic Activities other international economic Activities

B) Stabilization of the international financial Order B) Stabilization of the international financial Order

C) Economic and social Development and/or C) Economic and social Development and/or Stability of developing Areas Stability of developing Areas

1. JBIC at a Glance

1. JBIC at a Glance 4

• OperationsOperationsA) Export LoanA) Export LoanB) Overseas Investment LoanB) Overseas Investment LoanC) Untied LoanC) Untied LoanD) GuaranteeD) GuaranteeE) Equity ParticipationE) Equity ParticipationF) ODA LoanF) ODA Loan


• Geographical Distribution of Outstanding Loans of JBIC (as of March 31, 2003)

JBIC Total$181.1 billion

Asia

64%

Oceania

1%

Europe

4%

Middle East

7%

Af rica

6%

North America

4%

South America

11%Multilaterals,

others

3%

Asia

Oceania

Europe

Middle East

Africa

North America

South America

Multilaterals, others


• Overseas Network (26 Representative Offices)

[Asia] Beijing, Hong Kong, Bangkok, Hanoi, Jakarta, Kuala Lumpur, Manila, Singapore, Colombo, Dhaka, Islamabad, New Delhi, Sydney (13)

[Europe] Moscow, Frankfurt, London, Paris (4)[Africa] Cairo, Nairobi (2)[North America] New York, Washington (2)[South America] Bogota, Buenos Aires, Lima,

Mexico City, Rio de Janeiro (5)

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2. JBIC and GHG Pollution Prevention Projects

• JBIC is actively supporting Projects to alleviate GHG Effect through Financing Operations, for example

A) Renewable Energy

– Northern Luzon Wind Power Project, Philippines (ODA Loan)

– Upper Kotmale Hydropower Project,

Sri Lanka (ODA Loan)


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– Zafarana Wind Power Project ,Egypt

(ODA Loan)

＊ The necessary Procedures for the Application

　　　 of the CDM have already been started.

B) Natural Gas

– Beijing Environment Improvement Project, China (ODA Loan)

– Severnaya Natural Gas-Fired Combined Cycle Power Plant Project ,Azerbaijan (ODA LoⅡan)


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C) Energy Saving / Energy Efficiency– Rehabilitation of Coal-Fired Thermal Power (C

o-generation) Plant Project, Romania (Export Loan)

– LD Gas Recovery System Project, Brazil (Export Loan)

– Shaanxi Province Xian Co-generation Project, China (Export Loan)

– Shanxi Coal Bed Methane Collection & Power Project (currently under Negotiation )

＊ The necessary Procedures for the Application 　　 of the CDM have already been started.

2.JBIC and GHG Pollution Prevention Projects

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D) Forest Conservation, etc.

• JBIC’s contribution to Prototype Carbon Fund (PCF)

• Cooperation Agreement with:

A) IETA (International Emissions Trading Association) on Dec. 2003

B) Mexican DNA on Apr. 2004

C) BCIE （ Banco Centroamericano de Integración Económica) on Jul ｙ .2004

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3. General Outlines of Japan Carbon Fund (JCF)

• Objectives: To purchase CER and ERU issued, and VER verified before 2012 from CDM/JI Projects at reasonable Price

• Size: Approx. USD 100 million• Equity Provider: JBIC, DBJ* and Japanese Private

Enterprises * Development Bank of Japan

• Location: Tokyo, Japan• Expected Establishment: October 2004　　

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• Sector Portfolio: Never exceed approx.35% of total Investment to one Sector

　 Examples A) Renewable Energy B) Waste Management C) Energy Efficiency D) Fuel Switching E) Fugitive F) Chemical Industry• Country Portfolio: Never exceed approx.30%of the

total Investment to one Country• Maximum Size of a Project: approx.20% of the

total Investment to one Project• Targeted Purchase Price: T.B.D.

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• Timing of Purchase : Payment on Delivery (Upfront Payment is to be made on case-by-case basis)

• Project Development Cost (PDD Preparation, Validation etc): to be borne by Project Sponsor in principle, but to be borne by JCF on case-by-case basis

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4. Advantages of JCF (1)

• Ratification Risk of Kyoto Protocol (whether it will enter into Force): To be assumed by JCF

• Intermediary Functions: Close and tight Relationship with Japanese Industry having Interest in CDM/JI Projects

• Smooth Implementation of Projects: JBIC’s Support through its strong Relationship with Host Government

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4. Advantages of JCF (2)

• Possibility of Parallel Purchase: Other Japanese Equity Provider for JCF may purchase a 　 part or all of the remaining Carbon Credit after the Purchase by JCF.

• Collaboration and Support with/from JBIC: Underlying Financing, such as;

A) Export Loan, B) Overseas Investment Loan, C) Untied

Loan, D) ODA Loan, etc.

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Strong Partnership

Co-financing with

commercial banks

Host Country Monitoring of

project flow

Co-financing with

commercial banks Strong Partnership

Credit Payment Equity Credit Strong

Partnership

Credit 排 Credit

Equity Equity

J BIC

26 J BIC Representative Offices

Worldwide

CDM / J I Project

J apan Carbon Fund

(J CF) Development Bank of

J apan (DBJ )

Private Equity Provider

in J apan

Commercial

banks

-- Project Scheme --

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ProjectEntities

Japan CarbonFinance ，Ｌｔｄ．

(tentative name)

Japan 　ＧＨＧReduction 　Ｆｕｎｄ

(tentative name)

Japan Carbon Fund

ER Credits

Payment Payment

ER Credits

Emission Reduction Purchase Agreements (ER

PAs)

Emission Reduction

Resale Agreement

-- ER Purchase Structure --

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5. Characteristics of CDM/JI Projects -- Hints --

• Un-used Resources in the Surroundings

Example)

A) Agricultural Residue

(Bagasse, Rice Husk, Wooden Chips)

B) Wastes and Garbages

C) Methane Gas

(Cattle Excrements, Landfill)

6. Characteristics of CDM/JI Projects

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--Merits--• Landfill Methane Collection and Power as an

Example A) Safety (Prevention of Explosion) B) Reduction of ill Odor C) Prevention of Ambient Air Pollution D) Improvement of Water Quality E) Increase in Energy Supply F) Employment G) Additional Revenue by Carbon Credit


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-- Renewable Energy (1) --• Small Scale Hydropower:

A) Run of River Type, mainly,

B) Utilization of Dam for Irrigation currently w/o

Power Station• Middle Scale Hydropower:Coordination with NG

Os is essential• Windpower: Highly dependent on Wind Conditio

ns; Promising in strong Wind Area• Photo Voltanic: Promising in remote Area and Isl

ands


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-- Renewable Energy (2) --

• Geothermal Power: Not realized unless it is registered as CDM/JI Projects?

• Agricultural Residue (incl. Co-generation): Variety in Residue; to be more advantageous if Methane Reduction verified; Really Waste?


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-- Energy Efficiency --

• Energy Efficiency in Factories: To explain Additionality, Technological Barrier rather than Investment Barrier; Variety in Cost

• Demand Side Management: Energy Control in Office Buildings and Hotel, for Example


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-- Fuel Switching --

• Energy Switching: Manufacturing Industries; from Coal to Natural Gas

• Fuel Switching of Coal-fired Power: Availability of Fuel; Environmental Regulations?

• Fuel Switching to Biomass in Steel Factories: Wooden Chips supplied by themselves?


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-- Fugitive -- • Oil Field Associated Gas Recovery and

Utilization: Regulations on Flaring; Large Investment for Construction of Pipelines

• Coal Mine Methane Recovery and Power: For Safety; Utilization of Fugitive Energy

-- Transportation -- • Fuel Switching, from Fossil Fuel to

Alcohol, for Example


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-- Waste Management --

• Landfill Methane Gas Recovery and Power: Utilizing Global Warming Potential (GWP) of Methane; from small to large Scale; lower Project Cost and Typical and good Potentiality for CDM/JI Project

• Cattle Excrements: Relatively low Cost with Methane Reduction Effect

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ref.) Project Information Note (PIN)-- What is PIN? --

• Project Information Note (PIN): Basic Information about Project, Short Form (8 pages, excl. Attachments), First Contact between Project Proponents and JCF

• Template: (Hard Copies and FD to be provided to Recipients)

• Purpose: Project Screening and Clarification


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-- Submission, etc. --

• Submission of PIN (1) -- By Hard Copies--: To JBIC’s Oveaseas Rep. Office or Loan Departments in charge (Regional Dept. or Corporate Finance Dept.)

• Submission of PIN (2) -- By E-mail --: To [email protected]

• Request for Distribution of PIN: For Finding Project Candidate


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-- Basic Points --

• Project Description

• Type of Technology

• Identification of Project Participants

• Institutional Arrangement for Project Implementation: Project-related Contracts


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-- Key Criteria at Review of PIN(1) --

• Project Additionality: Project would not be realized unless it is registered as CDM/JI Project (Investment Barrier, Technological Barrier, Barrier due to prevailing Practice and other Barrier; Detailed Description expected)

• Methodology (Baseline Study and Monitoring Plan): Approved or not approved, in Process?

• Baseline Scenario: Calculation Basis for Expected Emission Reduction (Detailed Description expected)


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• Validation Procedure (incl. PDD Preparation): Validated or not validated, in Process?

• Contribution to Sustainable Development of Host Country: Prerequisite of Kyoto Protocol

• Environmental and Social Safeguards: Compliance with Local Environmental Laws, Regulations, etc.


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• Creditworthiness and Competence of Project Participants

• Capital Mobilization: Equity, Underlying Financings and Existence of Financial Gap

• Commercially Viable Proven Technology

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For More Information, contactJBIC

Director 　 General for Carbon Finance and Japan Carbon FundMr. Hitoshi KURIHARA

Deputy Director ： Mr. Yusuke ITO TEL: +81-3-5218-9784E-mail: [email protected]

Representative Office in ParisTEL: +331-4703-6190

Chief Representative: Mr. Motonori TSUNO (E-mail:[email protected])

Representative: Ms. Akika 　 ICHIKAWA(E-mail: [email protected])

Documents

JBIC’s Engagement to Kyoto Mechanisms and Japan Carbon Fund (JCF) Ｙｕｓｕｋｅ ＩＴＯ Deputy Director for Carbon Finance ＪＥＲＢＡ ＣＤＭ ＩＮＶＥＳＴＯＲ

JBIC’s Engagement to Kyoto Mechanisms and Japan Carbon Fund (JCF) ＹｕｓｕｋｅＩＴＯ Deputy Director for Carbon Finance ＪＥＲＢＡＣＤＭＩＮＶＥＳＴＯＲ