GEF and the

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• GEF and the
• Role of the Private Sector

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Structure of this presentation

• Private sector awareness/Experiences
• Benefits of private sector partnerships
• Modalities
• Project examples
• Summary

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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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

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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

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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

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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)

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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

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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

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IFC - GEFs Key Private Sector Executing Agent
MISSION To promote private sector investment
in developing countries which will reduce
poverty and improve peoples 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)
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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
  (lt 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

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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

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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

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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

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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