6th 7th December 2006, Beijing

1
6th / 7th December 2006, Beijing
CDM in China Opportunities for Sino-German
Cooperation

• Mr. Arne GoossDirector KfW Office Beijing

2
KfW Bankengruppe at a glanceKfW??????

• Promotional bank of the Federal Republic of
  Germany.
• Founded in 1948.
• Shareholders Federal Republic of Germany (80),
  German federal states (20).
• Balance-sheet total at the end of 2005 EUR 341
  billion.
• 3,500 employees at the end of 2005.
• Rating AAA/Aaa/AAA.

3
Brand Structure.????
????????
????
???? ? ????
??????? ?????????
4
KfW Bankengruppe in China China Track Record
since 1980 9 billion Euro ?1980???,?????????9
0???
5
KfW Carbon FundObjectives of the Fund. ?????

• Background ??
• European Emissions Trading System (ETS), Linking
  Directive
• National Allocation Plans
• compliance strategies of affected companies
• Provide a service instrument for German and
  European enterprises wanting to use
  project-based certificates for compliance
  purposes ????????????????????????????
• alternative to own measures and emissions
  trading
• no internal capacities required
• risk mitigation by diversification

6
KfW Carbon FundFund Concept. ?????

• Purchase programme (Buyers Pool) for
  project-based certificates ????????????
• Purchase of compliance tools for the ETS
  (CERs, ERUs, project-based EU-Allowances)
• commercial orientation
• KfW purchases as a trustee for participants
• KfW????????????
• in its own name, for the account of participants
• on the basis of individual Agency Contracts
  between KfW and each participant
• long term off-take contracts with suppliers of
  certificates (ERPA) ????????????????
• up to 2012 with option to extend
• payment on delivery pre-financing by KfW on a
  case by case basis

7
KfW Carbon Fund Contractual Structure. ????
Participant 1
Project 1
KfW Project Portfolio (KfWCarbon Fund)
ERPA
Agency contracts
Project 2
Participant 2
Project 3
Participant 3
Project n
Participant x
8
KfW Carbon FundFund Volume. ?????

• Fund volume ????? EUR 84 million, 8400 ???
• KfWs contribution from own funds KfW ????
  EUR 10 million, ?? 1000 ???
• German Government (seed money) ????(????)
  EUR 4 million, ?? 400 ???
• Acquisition of participants????? 1st tranche
  closed end of April 2006
• Second tranche in preparation target
  volume of EUR 80 100 million
• Launch of second tranche
  Q1 / 2007

9
KfW Carbon Fund Purchase Contracts (I). ????(I)

• Long-term purchase agreement (Forward
  contract) ??????
• KfW will buy in its own name (AAA
  Buyer) KfW????????(?A????)
• Guaranteed minimum offtake quantity ?????????
• Contract period up to 2012 with option to
  extend ????2012?,?????
• Market-based pricing (fixed or variable
  pricing)
• ??????(?????????)

10
KfW Carbon Fund Purchase Contracts (II). ????(II)

• Delivery options ????
• Early delivery option for seller ? early
  fulfillment of contract option to sell surplus
  amounts in later years in the market ???????????
  ??????
• Right of first refusal for buyer on Additional
  and Future Credits ??????????????????????
• Payment arrangements ????
• Payment on delivery as a rule??????
• Prefinancing on a case by case basis ????????

11
KfW Carbon Fund / KfW ????????? Investment
Policy. ????

• Eligible Project Types ???????
• Generally there are not specific limitations
• ?????????
• Exclusions in line with Kyoto and ETS
• ????,?????????????????, ???
• nuclear power projects
• large hydro power projects (as per objectives of
  World Commission on Dams)
• until further notice LULUCF-activities

12
KfW Carbon FundProject Selection Principles.
??????

• Objective ??
• building up a balanced project portfolio under
  the aspects of risk and return
• investment grade project portfolio
• Main criteria ????
• delivery risk (project, country, counterparty,
  Kyoto)
• price per ton of CO2e
• transaction costs (normally minimum of 50,000
  t/pa CO2e per transaction bundling possible)
• preparation status (delivery from 2008 at the
  latest)

13
KfW Carbon FundTime Schedule. ??????

• official launch (Floating of first CDM-tender)
  ???? June 2004, 2004?6?29?
• present status ????
• more than 200 project proposals received about
  30 projects shortlisted
• four ERPAs and six LoIs signed
• sectors renewable energies (hydro, wind,
  biomass) and methane abatement (land fill,
  mine gas)
• countries China, Brasilia, Egypt, Nepal, India
• conclusion of further ERPAs
  until mid of 2007
• delivery of certificates
  until 2012

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The KfW Carbon Fund???????????
For more information ???????????
www.kfw.de/carbonfund

• Mr. Bernhard Zander
• First Vice President
• KfW Carbon Fund
• Palmengartenstrasse 5 9
• 60325 Frankfurt
• Tel [phone]
• Fax [phone]
• carbonfund_at_kfw.de

Mr. Arne GoossDirectorKfW Office Beijing 1170,
Sunflower Tower 37 Maizidian Street Beijing
100026 China Tel. [phone] Fax
86(10) 8527-5175 kfwbeij_at_public3.bta.net.cn