US – BRAZIL INDUSTRIAL ENERGY EFFICIENCY WORKSHOP

Rio de Janeiro, BrazilAugust 2011

Introducing IFC

• Established in 1956, most of our 3,354 staff work from about 100 offices in 86 countries.

• We invest, advise, mobilize capital, and manage assets. Committed portfolio for FY10: $38.9 billion; 1,656 firms. Investments in FY10: $12.7 billion for IFC’s own account, $5.3 billion

mobilized Under management within the Asset Management Company: $4 billion. Advisory expenditure for FY10: $286 million

• IFC started formal environmental and social screening of its investments in the early nineties and became the acknowledged world leader on these issues when the Equator Principles were launched in 2004.

• The biggest challenge to development today is climate change. While public policy is key, the private sector must also play a leading role. That is why

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We create opportunity for people – to escape poverty and improve their lives

Climate Business is a core priority for IFC

In FY10 IFC invested $1.6 billion for its own account: 84 projects; total climate investment of $7.6 billion.

Infrastructure & Natural Resources finance on/off-grid renewable capacity; resource efficiency in power, transport & information and telecommunications; water

Manufacturing, Agribusiness & Services finance resource efficiency across sectors; climate industry equipment and supply chains; agribusiness and forestry

Financial Markets works through banks, leasing companies, funds and other intermediaries to finance small/medium investments

Clean Technology – investments in innovative, transferable, scalable climate technologies

Climate Financial Products & Funds to better serve companies and attract more capital across all sectors

IFC plans to double its commercial Climate Business investment by FY13 to

$3.2 billion …

FY10 (act)

FY11 FY12 FY130

500

1,000

1,500

2,000

2,500

3,000

3,500

Projected Climate In-vestments

$ m

illio

n

3

06 07 08 09 10 11 12 130

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Infra, Nat. Res.

Mfr., Agri., Services

Fin. Mkts.

Cleantech

Clim. Fin. Prod. & Funds

Syndication

Special Facilities and Donor Funds

$ m

illio

n

Mobilizaton

FY

Advisory spend forecast to triple to $47 million by FY13

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... and increased mobilization will accelerate Climate Business investment growth.

Commercial Equity, Debt and Mezzanine Finance• Renewable energy generation capacity• Resource efficiency investments• Climate industry equipment and supply chains• Carbon sequestration and avoided deforestation• Lenders • Climate Change Private Equity Funds• Cleantech growth capital

Carbon Finance Concessional Finance Advisory Services Convening industry players for research /

standard setting

How does IFC work with firms on Climate Business?

We combine innovation, mobilization and integration to scale our impact…

Innovation

Mobilization

Cleantech Innovation Transfer Fund

Debt/Mezz Facility

CP3 Fund

New tech and business models - venture capital

AS-IS Integration

GEF, CTF

Trade Finance

Cleaner Production Facilities

Wholesaling through FIs

Strategy, Metrics and Knowledge Management

Carbon Delivery Guarantees

Green Bond

Post 2012 Carbon Facility €150m

Enabling environment

Resource efficiency: TA and benchmarks Standards

KfW

Risk assessment

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… for example, IFC can intervene in multiple ways in a sector like green buildings.

• Country-wide

• Deal-by Deal

• Wholesale

Approach

• Banks • Leasing • ESCOS • Green Mortgages

• Debt, Equity • Cleaner Production Lending

Facility

• Building Codes

Advisory

• Audits• In-house advice

• TA to lenders• Sector studies

(design, benchmarks)

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Investments

Project Example #1 – Glass Sector ClientWhy Important for Client?

Global market demand for flat glass, mainly consumed in construction and automotive sectors, is negatively impacted by financial crisis. Client focuses on cost reduction & positions itself for new business opportunities.

Project: US$170 million corporate program developed between IFC and the client during furnace cold repair targets strategic opportunities in energy efficiency and renewable energy (client puts expansion plans on hold).

IFC Investment:

US$70 million

Benefits: • Enter new business segments - Solar and energy efficient glass (for use in “Green Buildings”)• Improve efficiency – New, energy efficient furnace and Waste Heat Recovery for boiler to generate electricity (pilot which can be replicated)• Better environmental performance. Secondary control systems use best available technology to reduce polluting air emissions. • Long-term financing. Provided for capital intensive and cyclical sector at a time when the client could not obtain local commercial bank financing.

Project Example #2 – Mexico: Optima Energia Client: Celsol, S.A. de C.V. (Optima Energia) owned 49.7% by the Gomez-

Junco family, 38.9% by Grupo Financiero , and 11.4% by private investors.

Business: Energy/utility service company providing energy (and water) saving services to clients, mainly in hotel sector. It conducts in-depth energy analyses of hotel properties, designs energy efficient solutions and installs required equipment—which it helps finance and maintains for multi-year contract period.

IFC Financing:

US$10 million loan to support up to six energy efficiency projects

Some Typical Opportunities:

Installation of generators for use at times of peak tariff, high efficiency air conditioning chillars with recovery of waste heat for hot water; efficient heat pumps for hot water, reverse osmosis of seawater to provide potable water.

Benefits: • Optima enters into performance-based contracts with clients whereby savings in energy/water costs from project during contract period are used to repay capital investments. Savings shared between the hotel and Optima.

• Since 2000, Optima has saved for its clients 24 million litres liquefied gas, 20 million litres diesel, 8 million m3 litres potable water, 145 million kWh electricity, 186,000 tons CO2e- for estimated savings of US$14 million p.a.

Significance:

IFC’s first direct investment in an energy services company in Latin America & Caribbean; financing vehicle to support energy and water saving projects

Project Example #3 – Colombia: Cartones America (CAME) CPLP

Client: Leading family-owned Andean manufacturer of packaging products; around 90% of CAME raw material is based on recycled waste paper

IFC Relationship:

Projects in 2003 and 2007

CP assessment:

IFC- supported energy efficiency assessment of CAME‘s Cali paper mill

Project: Series of investments targeting improvements in electric drives and motors; steam and pumping systems; cooling and lighting systems

Expected Benefits:

• Improve energy efficiency of Cali plant by approximately 16.5% (expected to translate into an estimated 11% p.a. in energy cost savings)

• Reduce emissions at plant site by approximately 4,300 tons CO2 p.a.

• Expected payback around a year after implementation of 0.5 to 1 year.

CP Loan: $756,000

Project Example #4 – Brazil: Bauducco CPLP

Client: Leading family-owned Brazilian food producer (baked food products)

IFC Relationship:

Projects in 2007 and 2009

CP assessment:

IFC- supported energy efficiency assessment of Bauducco’s Bonsucessomanufacturing site.

Project: Series of investments targeting Utility Management System implementation, Burner Optimization, Compressed Air Leakage Reduction, Water Management and Boiler System Improvements

Expected Benefits:

•The company can potentially save 23% of its annual energy and water cost, equivalent to USD 637,000 and reduce yearly GHG emissions by 670 tons CO2 equivalents• From discrete projects with paybacks of less than 2 years, the company has potential to reduce its utility costs by USD 204,000 representing 7% of the 2007 utility costs.• Through improvements to utility management procedures and processes and though raising staff awareness, a further USD 111,000 of savings would be possible, which would represent a further 4% of 2007 utility costs.

Recent Renewable Capacity Investments

$13,500,000

Subordinated Debt

and Debt

Colombia

Lender

May 2008

Century Caruqia

Small Hydro

$75,000,000

Sub Debt and Debt

MexicoWind

Eurus

$30,750,000

Loan Project Financing

Chile

Lead Lender of

US$60.75m financing

February 2009

Wind

Norvind

Lead Lender of

US$375m financing

May 2010

$52,000,000

Loan Project Financing

BulgariaWind

Lender

December 2008

AES Kavarna

US$23,200,000

Loan Project Financing

ChinaHydro

Lender

October 2009

Zhongda Hydro

$3,100,000

Loan Project Financing

India

Lender

December 2009

Biomass

Auro Mira

US$1,700,000

Equity

Thailand

May 2010

Solar

Solar Power Company

$750,000

Equity

Senegal

June 2009

Solar

Office National d’Electriciie

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commercial finance

Recent Investment in Resource Efficiency, Sustainable Energy Supply Chains and Sequestration

India: VicatSagar (cement) $9m loan(*)

Apollo Tires III (low rolling resistance tires and waste heat recovery) $30m loan

Jain Irrigation (micro/drip irrigation systems) $60 million loans/equity

Philippines:Sunpower (solar cells) $75m loan Mexico:

Optima Energia(hotel ESCO)US$10m loan

Tanzania:Green Resources(biomass/plantation)$18m loan

Turkey:Trakya Cam (energy efficiency and solar glass) $55m loan

Russia: Borets(energy efficient motors/pumps)$33m loan(*)

Ghana:Ashesi University(“green building” incl. biogas use)$0.2m loan(*)

Note (*) financing for climate friendly project; was part of a larger total IFC investment

China:Suntech (solar cells) $50m convertible debt

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commercial finance

Climate Change and Sustainability Investments through Lenders to date

• Trade in Latin America

• Network of over 600 clients• Total volume over $1.25

billion through over 40 lenders

• Leverages over $2.5 billion• Supports SME EE and small

renewable energy14

commercial finance

IFC has invested $154 million in 8 Climate Change Funds

South Asia:GEF South Asia Clean Energy Fund, $10mAloe II (Green Investment Asia Sustainability Fund I) $19.2m

China: China Environment Fund III, $15m

Southern Africa: Evolution One Fund, $20mGEF Africa Forestry Fund, $20m

East Asia:Asia Environment Partners, $25mClean Resources Asia Growth Fund, $25m• Asia Water Fund,

$20m

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commercial finance

Recent Growth Capital Investments in Cleantech

India: Husk Power (biomass-fired microgrids) $0.4m Applied Solar (sustainable energy for mobile base stations) $15.4mAzure Power (grid-connected solar) $10mAttero Recycling (e-waste recycling) $5m

China:Shuoren (furnace energy efficiency) US$8mTianjin Haitai (green asphalt) US$8m

For portfolio updates: www.ifc.org/cleantech

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commercial finance

Significant experience in carbon markets*

DeqingyuanChina

€3,500,0002008

Biogas to power

ING BankUkraine

550,000 ERUs2007

Coal mine methane

EnerconIndia

€6,600,0002006

Wind farms

Brascan EnergeticaBrazil

€ 8,500,0002005

Run-of-river hydros

EcopowerSri Lanka

€3,600,0002005

Run-of-river hydros

PhasconChina

€16,000,0002008

Landfill gas to powerIndia Hydropower

Development CompanyIHDC

IHDCIndia

€4,800,0002006

Run-of-river hydros

AgCert International PlcMexico/Brazil

€7.7 million equity2005

Animal waste management

Omnia FertilizerSouth Africa

900,000 CERs2008

N2O destruction

Rain CII Carbon (India) Ltd.

India850,000 CERs

2007Waste heat recovery

Estre Ambiental S.A.Brazil

$20 million senior loan$4.5 million sub debt

2009Solid waste management

Carbon Delivery Guarantee

Carbon Delivery Guarantee

IFC recently launched the €150M Post-2012 Carbon Facility to extend carbon markets and increase access for projects that reduce emissions.

* Selected credit purchase, delivery guarantee, and carbon-linked financing transactions shown.

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carbon finance