Slide1: GEF and the Role of the Private Sector


Structure of this presentation: Structure of this presentation Private sector awareness/Experiences Benefits of private sector partnerships Modalities Project examples Summary


Private Sector - Experiences/Awareness: Private Sector - Experiences/Awareness Business unaware of GEF, steps to partner vague, need basic information Traditionally role mostly procured equipment, services; advisory capacity Despite claims by government and GEF Focal Points, little progress Concerns that GEF could distort market


Importance of the Private Sector - Resource Mobilization: Importance of the Private Sector - Resource Mobilization Global Environmental Impact - Investments in energy greater than $100b/annually Private sector flows greater than $250b, development assistance $50b Source of co-financing and executing agencies


Importance of the Private Sector - Technology Transfer: Importance of the Private Sector - Technology Transfer Private sector develops and owns most of the environmental technology Joint ventures are a significant source of technology and knowledge transfer Public/private partnerships - China appliances/autos - local mfg., training, transfer of cleaner technology, products and practices


Importance of the Private Sector - Sustainability of Impact: Importance of the Private Sector - Sustainability of Impact Project replication, financial sustainability and long term impact dependant on private sector Implicitly, private sector the target of most GEF projects


Modalities to Engage the Private Sector: Modalities to Engage the Private Sector Barrier Removal - to the creation, entry or transformation of markets Non-grant Financing - concessional and contingent finance, loans and guarantees Alternative Investment Studies - up front investment studies Progressive Partnerships - long-term, shared information, quicker decision making


Modalities to Engage the Private Sector - Barrier Removal: Modalities to Engage the Private Sector - Barrier Removal Strategic thrust of GEF - address institutional, economic and social obstacles Private sector must be better engaged to address perceived barriers Highly diverse, depending on circumstances - information, credit, policy, tariffs, perf. GEF Conformity - broad experience


Modalities to Engage the Private Sector - Non-Grant Financing: Modalities to Engage the Private Sector - Non-Grant Financing Use when projects economic, incremental costs uncertain Options: contingent/concessional loans/grants, guarantees, insurance Effective monitoring is necessary Examples: Thai Chillers, IFC - SME GEF Conformity - country drivenness, incremental costs


Modalities to Engage the Private Sector - Alternative Investment Studies: Modalities to Engage the Private Sector - Alternative Investment Studies Resources typically not available to explore viable alternatives Cost share study, if project goes ahead; could use MSPs Examples: UNEP/EBRD RE/EE MSP GEF Conformity - initial costs, cost effectiveness/global benefits conditional on projects going forward


Modalities to Engage the Private Sector - Progressive Partnerships: Modalities to Engage the Private Sector - Progressive Partnerships Collaboration between GEF and a company or business association, may involve NGOs May require longer time lines to develop - typically complex, but highly effective Examples: - Ramu River in PNG TNC/WWF, Marine Electronic Hwy.


Private Sector Projects in the Pipeline: Private Sector Projects in the Pipeline EBRD Russia Geothermal - partial risk guarantee UNEP - Performance Insurance Initiative- partial reinsurance of technology performance risks JBIC - Thailand Biogas Demonstration


Private Sector Projects in the Work Program: Private Sector Projects in the Work Program WB Thailand chiller replacement program contingent zero interest loan IFC Brazil Biomass Gasification - contingent equity grant ADB China Agricultural Waste Utilization - partial risk guarantee AfDB/UNEP Cleaner Energy Investment Program - contingent grants


Types of Private Sector Projects with Climate Change Benefits : Types of Private Sector Projects with Climate Change Benefits renewable energy: geothermal, hydro, wind, biomass solar PV, solar thermal electric, advanced RE technologies, fuel cells energy efficiency companies (ESCOs) efficient lighting, motors, and transport market development initiatives


Types of Private Sector Projects with Biodiversity Benefits : Types of Private Sector Projects with Biodiversity Benefits sustainable agriculture sustainable forestry sustainable fisheries and aquaculture non-timber forest products eco-tourism (though definition not concretely defined)


Types of Private Sector Projects with International Waters Benefits: Types of Private Sector Projects with International Waters Benefits ship oily waste/ballast water treatment facilities marine electronic highway tradable water pollution permits Individual Transferable Quotas (ITQ) in fisheries management water conservation technologies cleaner industrial production technologies


Types of Private Sector Projects with POPs Benefits: Types of Private Sector Projects with POPs Benefits Hospital waste management Promotion of alternative pesticides PCB substitutes and transformers Alternatives to chlorine bleach in paper/pulp production


Slide18: IFC - GEF’s Key Private Sector Executing Agent MISSION: To promote private sector investment in developing countries which will reduce poverty and improve people’s lives Member of World Bank Group - owned by 174 governments IFC only invests in private-sector projects which are both commercially viable and promote sustainable development IFC approved US$ 3.5 bn of investments in 255 projects (FY 99)


IFC/GEF Examples: IFC/GEF Examples SME Program - small ventures, $1M max low-interest loans Terra Capital Fund - equity investments in LAC ventures in agric. forestry and eco-tourism. Renewable Energy and Energy Efficiency Fund (< 50 MW) RE/EE : commercial terms for large projects; non-grant financing for small projects Efficient Lighting Initiative grants accelerates market development in 7 countries (including RSA) Solar Development Group equity investments


World Bank/GEF Projects: World Bank/GEF Projects Argentina RE in Rural Markets Brazil Biomass Power Commercial Demonstration Project Hungary Szombathely CHP/biomass Cogen India Solar Thermal Electric Thailand Promotion of Electric Energy Efficiency Tunisia Solar Water Heating


UNDP/GEF Projects : UNDP/GEF Projects Chile ESCO Development China Coalbed Methane Resources Development Kazakhstan Barriers Removal for Wind Energy Philippines Bantangas Bay, Pollution Prevention Project Brazil Juruena Microenterprise Development for Non Timber Forest Products Thailand Barrier Removal for Biomass Power


Effective Partnerships with the Private Sector: Effective Partnerships with the Private Sector Key elements: Early collaboration and consultation Committed partnership between national, local/regional government, multilateral organization & GEF Learning by doing


Summary : Summary GEF seeks private sector partners GEF can fund ventures with private sector to achieve global environmental benefits Co-financing from IFC, WB, UNDP and UNEP, regional development banks and other partners may be available Implementing agencies work with business to obtain GEF funds