Transcript Carbon Finance Program (CFP)

Climate Finance
and
Carbon Finance:
The Development Bank
of the Philippines
Experience

100% government- owned,
sources its own funds

DFI with universal banking
license

Main conduit for ODA funds

DBP’s Environmental Commitment
................................................................
Started in 1992 under the US $ 175 million
World Bank structural adjustment program
Facility to improve efficiency and international
competitiveness of Philippine industries with
component for environmental concerns.
Challenges
◦ Difficulties of borrowers related to
 Requirement to conduct environmental impact
assessments
 Compliance with environmental regulatory
requirements
◦ Inclusion of environmental risks in loan
evaluation
Challenges
◦ Delays in loan processing because of new
credit guidelines
◦ Identification of environmental projects
 Technologies to reduce waste, recycle or use of
cleaner technology not yet appreciated at that
time
Objectives
.....................................
DBP to influence industries to be more proactive in environmental management and
protection
Introduce a new mindset and new approaches
to Environmental Management for the Bank
and its clients
Strategies and Initiatives
Capacity building
1.
◦ Production of environmental manuals and
guidebooks
◦ Workshops and seminars
2. Financial credits and technical assistance
for environmental investments
◦
Strategies . . . .
3.
Establish Partnerships
 Government Agencies
 Non-governmental organizations and
peoples organization
 Academe
 Industry and businesses
4.
Promotion of good environmental
stewardship
Credit Strategies
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Require clients to conduct EIAs
Ensure client compliance with regulatory
requirements
Relate environmental policy reforms to
financial concerns
Impose environmental conditions in the
Omnibus Loan Term and Conditions
Credit Strategies

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Integrate environmental due diligence in
project evaluation
Introduce conduct of Environmental
Performance Monitoring (EPM) by
Account Officers (AOs) , PFIs and clients
Issuances of Credit Policy Memorandum
Climate and Environmental Loan Facilities
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Pollution Abatement and Control
Clean Technology
Solid Waste Management
Natural Resources Conservation
New and Renewable Energy
Rural Power and Electrification
Urban Water Supply and Sanitation
Watershed Management
Environment Development Program
Carbon Investment
General Loan Features
◦ Eligible borrowers
 Public and private enterprises with at least 70%
Filipino Ownership
◦ Maximum Loan Amount Per Project
 80 to 90 % of total project cost, in pesos to avoid
forex risk
◦ Interest rate
 Fixed rate
◦ Repayment Term
 Based on cash flow. Maximum of 15 years with
a maximum 5 years grace period
DBP supports clients with potential carbon credits
claim for their carbon offsets by registering them
with the Clean Development Mechanism (CDM).
The CDM is one of the 3 enabling mechanisms under the 1997
Kyoto Protocol of the United Nations Framework Convention
on Climate Change (UNFCCC). It allows Annex I countries to
reach their GHG emissions reduction targets by implementing
GHG abatement projects in developing nations.
November 21, 2003: Carbon Investment Banking Facility (CIBF)
1. Preparation, development, packaging and financing of projects
that provide solutions for environmental protection (i.e. GHG
emissions reduction and carbon sequestration) and sustainable
development
2. Registration with the CDM of projects that reduce emission of
greenhouse gases ( stand alone or bundling schemes)
August 10, 2010: Carbon Finance Program (CFP)
 Allows use of DBP internally-generated funds to finance the
registration of eligible CDM projects

Translates borrowers’ CDM projects into CER units
1.
2.
Enhancing project viability with additional revenues
Promoting environmental conservation and climate change
mitigation and adaptation

DBP acts as the CDM project managing entity and registers
with the UNFCCC CDM Executive Board for and on behalf of
the project owners

DBP puts together resources and requirements needed to
register, takes active role in project monitoring, initiates request
for the issuance of carbon credits and monetizes the carbon
credits
Current direction of assistance :
 Program of Activity (PoA) Scheme of Registration
PoA Scheme entails the design of a sector program under which
business or operational activities contribute to the reduction in
GHG emission.
• registration is made simpler through the enrolment of simpler
projects to a CDM registered PoA
• gives qualified small players the opportunity to financially
benefit from the CDM while contributing to the sustainable
development of host communities
Carbon
Market
DNA/ CDM
Executive
Board
DBP as CDM Project
Consolidator and
Managing Entity
MOA covering
registration
assistance and
sharing of
proceeds
CERs
DBP Carbon
Account
CER
Trading
CDM
Approval/Registration
CPAs under
PoA X
composed of
Proj 1
Pronj 2
Proj n
$$$
PoA X
(with
aggregated
CER gen. of
25,000
tons/annum)
MOA covering
registration
assistance and
sharing of
proceeds
CPAs under
PoA Y
composed of
Proj 1
Proj 2
Proj n
CERs
PoA Y
(with
aggregated
CER gen. of
25,000
tons/annum)
Distribution of Share
of CER Proceeds
(Peso)
Pro-rated
Distribution of CER
Sales to Project
MOA covering
registration
Owners
assistance and
sharing of
proceeds
CPAs under
PoA Z
composed of
Proj 1
Proj 2
Proj. n
CERs
PoA Z
(with
aggregated
CER gen. of
25,000
tons/annum)
CDM Registration Experience
1. Bundle of 3 mini-hydro power plants
2. Program of Activity (PoA) for Generation of
Electricity from micro and mini-hydro power
plants 1 MW and below
3. PoA for Composting
4. PoA for Methane Capture from Hog Farms
5. Heat recovery from blast furnace for power
generation
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Environmental projects such as mini-hydro power plants,
biomass-fueled power generating plants, solid waste
management projects, water sanitation, air and water pollution
control and carbon sequestration projects are perceived as
having high risks and low returns.

DBP pioneered in financing these projects in the
Philippines, showing that these projects are also viable
and have high returns for the environment.

Many other banks, esp. commercial banks, are now
following DBP’s path of climate finance and carbon
finance.
Year
2010
Award
ADFIAP, Environment Award for Rural Power Project
ADFIAP, 1st Sustainable Development Report
2005 - 2008
“A” Grade for Energy Conservation Program given by the Office of the
President, Department of Energy Efficiency and Conservation Program
in Government Buildings
2006
ADFIAP, Most Outstanding Environmental Development Project for the
DBP Forest Project
2003
ADFIAP, Technology Development Award
2002
ISO 14001 Certification of DBP’s Environmental Management System
by the SGS Switzerland SA. This made DBP the first Philippine Bank to
be EMS certified.
2001
ADFIAP, Environmental Development Award for DBP’s Environmental
Management System
Asian Banking Awards, New and Renewable Energy Financing Program
2000
World Bank Recognition of Excellence for DBP’s LGU Urban Water and
Sanitation Program
1999
4th Asian Banking Awards, Environmental Program Category
THANK YOU
MARIA ANA VISITACION M. DOMINGO
Assistant Vice President
Development Bank of the Philippines
Makati Avenue corner Senator Gil Puyat
Avenue, Makati City
Telephone No. - +632 8934912
Email – [email protected]