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3-4 september 2012, Tunisia Ass. Prof. Amel Belanès High Institute of Management of Tunis – Tunisia Socio-economic development in the.

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Presentation on theme: "3-4 september 2012, Tunisia Ass. Prof. Amel Belanès High Institute of Management of Tunis – Tunisia Socio-economic development in the."— Presentation transcript:

1 3-4 september 2012, Tunisia Ass. Prof. Amel Belanès High Institute of Management of Tunis – Tunisia Socio-economic development in the era of renewable energies: Towards the creation of a research institution for the MENA region based on the DESERTEC concept

2 1. Conventional methods of projects financing 2. What attracts capital to finance renewable energy? 3. What are the renewable energy finance handicaps? 4. Supporting bodies of renewable energy 5.How do financial institutions contribute? 6. What are the factors determining the appropriate financing mechanism? 7. How can we innovate in financing sources and mechanisms? 2

3 Project financing Corporate finance Lease financing Subsidies 3

4 Project financing Limited recourse financing to the cash flows of the project Corporate finance Retained earnings otherwise paid to stockholders Equity financing Stock issuance Short-term borrowing from financial institutions Sale of long-term bonds Lease financing Subsidies 4

5 Regulatory compliance Direct business profits Indirect business benefits Not-business related benefits 5

6 Regulatory compliance Taxes, fines, polluter-pays principle, Subsidies Direct business profits Business opportunities Secure, sustain or reduce costs of key natural resource inputs required for business operations Securing license to operate and avoiding losses from protests 6

7 Indirect business benefits Green branding, marketing Improved staff pride and morale and enhanced recruitment Reflect broader business values of the corporation Not-business related benefits Philanthropy / Charity 7

8 Several barriers before penetrating the market Lack of technical capacity Lack of supportive policy frameworks Inadequate financing for installations or supporting businesses Lack of awareness and trust in the technologies by users and utility companies Benefits accrue on the long run Appropriate regulatory framework Provision of the infrastructure to make the local economy viable 8

9 Global Environmental Facility (GEF) The United Nations Development Programme (UNDP) The United Nations Environment Programme (UNEP) The world Bank Regional development banks Executing Agencies under the policy of expanded opportunities 9

10 Global Environmental Facility (GEF) Independent financial organization, established in 1991 Grants to developing countries for projects that benefit the global environment and promote sustainable livelihoods Removed barriers to developing markets for renewable energies wherever cost-effective Enabling policy frameworks, capacity for understanding and using the technologies Financial mechanisms to make renewables more affordable GEFs three implementing agencies : UNDP, UNEP and the world Bank 10

11 The United Nations Development Programme (UNDP) UN global development network, funded entirely by voluntary contributions from member nations in 1966 Solutions to develop local capacity and meet global and national development challenges Change and exchange of knowledge, experience and resources to help people build a better life Expert advice, training, and grant support to developing countries, with increasing emphasis on assistance to the least developed countries 11

12 The United Nations Environment Programme (UNEP) Programme rather than an agency of the UN found in 1972 Developing international environmental conventions, promoting environmental science and information and illustrating the way to be implemented Funding and implementing environment related development projects Assisting developing countries in implementing environmentally sound policies and practices 12

13 The world Bank UN agency created in 1944 and focus on economic growth Since the 1992 Rio Declaration, activities promoting the environment and human rights Safeguard policies: the minimum environmental and social requirements expected of borrowers, developed in the 1980s and gradually updated 2006, Sustainable Development Network 2010, a progressive access to information policy 13

14 Regional development banks The Asian Development Bank, Inter-American Development Bank, European Bank for Reconstruction and Development, and African Development Bank Development Business Programme 14

15 Invest directly in projects Provide direct budget support to government for policy reforms By injecting money directly into the government treasury, full discretion on how to use this money Leverage further investments By managing climate change trust funds that attract other investors Share knowledge By providing expert advice to governments and companies on sustainable development best practices 15

16 National level context Site-specific context Economics practices 16

17 National level context Institutional & Governance (vision + capacity) Stable political and economic environment Regulatory framework in place Environmental awareness Understanding of social and economic impact of unsustainable land management Site-specific context Economics practices 17

18 National level context Site-specific context Ecosystem type and use and current use of the land Capacity to enhance environmental services Local capacities (social capital, infrastructure, space for discussion) Land tenure situation Economics practices 18

19 National level context Site-specific context Economics practices Demand and supply Cost and cost-effectiveness Required time for development and implementation Amount of resources generated Synergies with other thematic priorities 19

20 Why innovative financing? What is innovative financing? Innovative financing models for renewable energy 20

21 Aim to : Increase resources availability Diversify the resource base Complement traditional funding Maximize the projects financial profitability Can provide direct incentives to engage in renewable energy projects 21

22 Innovative sources and mechanisms of funding are non-traditional modes of financing Innovative funding includes resources from internal, external, private or public sources Innovative funding can be mobilized through financial mechanisms and instruments 22

23 Clean Development Mechanism Dealer-Credit Model Consumer Credit Model Supplier Credit Model Energy Service Company Model Revolving Fund Green Venture Capital Fund 23

24 24 Developed countries (Annexes-1 ones) reduce emission in a flexible and cost-effective manner obtain Certificates of Emissions Reductions Developing countries (non-Annex I called the host countries) meet sustainable development objectives benefit in the form of investment, access to better technology, and local sustainable development

25 Ownership and maintenance of the equipment lies with the energy service company Customers pay for the energy service that is provided by an energy service company (ESCO) Energy becomes more affordable Less long-term risks

26 Investment model: socially responsible investing orthe triple bottom line Investments from GVCFs can be in : Loans: for small and medium enterprises which contribute to sustainable development Equity financing: to green entrepreneurs Links with supporting bodies Environmental Social Financial

27 27 Thank you for your attention

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