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Financial Sector Approaches to Climate Change and the Economic Crisis

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Printwise campaign. 3. 02.27.2009 ... Research and establishment of Arc Finance. MFIs can finance clean energy and also offer mitigation projects (microsavings ... – PowerPoint PPT presentation

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Title: Financial Sector Approaches to Climate Change and the Economic Crisis


1
Financial Sector Approaches to Climate Change and
the Economic Crisis
  • Global Roundtable on Climate Change 6 Bruce
    Schlein, Citi, Environmental Affairs
  • February 27, 2009

2
Citi 50 billion 10-Year Climate Initiative 2007
5.7 billion 2008 contraction and sharpened focus
  • Investment Banking
  • Asset Finance Group
  • Infrastructure and Energy Finance
  • Global Portfolio Management
  • Operations Technology (OT)
  • Municipal Securities
  • Community Capital
  • Commodities (carbon trading)
  • Export Agency Finance
  • Alternative Investments (equity)
  • Commercial Banking (e.g. NYSERDA)
  • Data center consolidation (55 gt 24)
  • Server optimization/virtualization
  • Thin client
  • LEED certification retail prototype
  • Paper substitution
  • Travel substitution
  • Alternative work strategy
  • Printwise campaign

3
Renewables and Energy Efficiency (EE) 2008
examples
Noble Environmental Power
Sustainable Energy Utility
  • Citi joint bookrunner/administrative agent for
    largest wind financing in the US to date a 741
    million, 15 year construction and term loan
  • Three wind parks in NY state with total
    generating capacity of 330 MW (110,000 homes),
    utilizing 220 GE 1.5 MW SLE wind turbines
  • Construction delay risk during a PTC expiry year
    mitigated through flexible Class A Equity
    agreement / incremental contingent equity and
    sponsor support. Deal also included 10-year
    commodity hedge and 10-year fixed price contracts
    to purchase 95 of RECs (NYSERDA)
  • Citi developed financing plan, and hired as the
    underwriter and arranger for the Delaware
    Sustainable Energy Utility, the nation's first
    "utility" focused on demand side energy reduction
    for all fuels including transportation
  • Tax-exempt financing structure provides funding
    for EE projects for both traditional tax-exempt
    borrowers and private users, and utilizes a
    combination of shared/guaranteed savings in
    addition to the sale of RECs as revenue streams

4
Carbon Principles 2008 project finance to
corporate bonds
Overview
Implementation
  • Carbon Principles (CP) and Enhanced Due Diligence
    process developed with peer banks, clients and
    environmental groups
  • Encourage cost-effective energy efficiency,
    renewable energy and other low carbon
    alternatives to conventional generation
  • Evaluate the financial and operational risk to
    fossil fuel generation financings posed by the
    prospect of US domestic CO2 emissions controls
  • Training and integration into environmental and
    social risk management (ESRM) policies and
    procedures
  • In 2008 there were no project financings or
    corporate loans at Citi subject to the CPs, due
    in part to the distressed state of the capital
    markets.
  • All transactions at Citi in 2008 that were
    subject to the CPs were corporate bond issuances,
    with typical issuance (and diligence) in 3-5 days

5
Microfinance and Energy Services Research and
establishment of Arc Finance
  • MFIs can finance clean energy and also offer
    mitigation projects (microsavings and
    microinsurance)
  • Roughly 1.6 B people do not have access to
    electricity and 2.5 B people do not have access
    to clean cooking options
  • With affordable clean energy options, that do not
    require access to an electricity grid, the poor
    can see great improvements in the quality of
    their lives improved health, more time for
    education, access to clean water, and a better
    environment to live in.
  • Arc established to address 1) high up-front cost
    of energy systems 2) lack of energy enterprises
    that have products tailored to the poor and, 3)
    lack of access to financing to purchase the
    systems

6
Financial Education and Energy Efficiency Watt
Watchers savings leads to links with financial
education
  • Joint program of the Maryland Fuel Fund and The
    Caroline Center, a nonprofit welfare-to-work
    program.
  • Watt Watchers enables individuals and families
    that rely on the Maryland Fuel Fund for financial
    assistance to pay their utility bills with the
    information they need to be knowledgeable
    consumers.
  • The program teaches how to analyze utility bills
    and how to employ energy conservation methods.
  • Watt Watchers participants, as a result of
    realized cost-savings, had disposable income
    many for the first time in their lives.
  • Program leaders then sought to link their EE
    education with a financial education provider
    Citi to help participants effectively manage
    the gains.
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