Green Bond Market: The Role of the World Bank and Examples of Projects the World Bank Green Bonds Supports

World Bank Green Bond Issuance: • Approx. USD 8.5 billion raised • Over 100 transactions • 18 different currencies • Benchmarks in USD, EUR, and AUD

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World Bank Green Bonds

3 Images: © The Clearing/World Bank

•  Provide World Bank green bond products and engage with investors

•  Raise awareness for the need for private sector financing to tackle the climate challenge and improve incentives

•  Help develop a framework that other issuers can leverage to access the Green Bond Market

The Role of the World Bank in the Green Bond Market

4 Images: © The Clearing/World Bank

•  Work with issuers, investors, intermediaries and other market participants to create more financial products that support climate change programs and transparency around them (Ceres working groups, green bond principles, impact reporting)

•  Encourage complementary and new products to support market growth (e.g. green indices like Solactive, funds, securitization)

The Role of the World Bank in the Green Bond Market

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Key elements of the World Bank’s Green Bond Process

1) Defined eligibility criteria (with a second opinion)

2) Established project selection process.

3) Ring-fenced bond proceeds (held in a separate account) earmarked for eligible projects only

4) Reporting on projects supported including the positive climate impact

Transparency

Technologies to Reduce GHG Emissions

Solar Power Wind Power

Waste Management

Reforestation Sustainable Forest

Management

Transport Efficiency Energy Efficiency

Green Projects in borrowing

member countries

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Types of Projects Supported by World Bank Green Bonds

Mitigation •  Solar and wind installations •  Funding for technologies that result

in significant reductions in GHG emissions

•  Rehabilitation of power plants and transmission facilities to reduce GHG emissions

•  Greater efficiency in transportation, including fuel switching and mass transport

•  Waste management (methane emission capture)

•  Energy efficient building construction

•  Reforestation and avoided deforestation

Adaptation •  Protection against extreme events,

such as floods and droughts (including reforestation and watershed management)

•  Food security improvement and stress-resilient crops (to slow down deforestation)

•  Sustainable forest management and avoided deforestation

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...and can reverse economic progress So investments in developing countries are part of the global solution.

Examples of Projects in the Developing Countries that the

World Bank Green Bonds Supports

Climate Change affects us all…

Video “Turn Down the Heat”: http://www.youtube.com/watch?v=CQbOlI0YQNs#t=13

© Li Lou/World Bank

Country Challenge Energy efficiency and renewable energy are central in China's push to reduce the carbon footprint of its economy. Project Goals The “Sunshine Schools” Project will increase the share of clean energy in electricity consumption and demonstrate the viability of the renewable energy service company model by scaling up the deployment of rooftop solar photovoltaic systems in schools and other educational institutions in Beijing Municipality – the largest solar photovoltaic initiative in the country so far.

For more information: http://www.worldbank.org/projects/P125022/cn-beijing-energy-efficiency-emission-reduction-demo?lang=en Video: http://www.worldbank.org/en/news/video/2012/09/28/China-Sunshine-Schools-slideshow

Green Bond Criteria: Mitigation

To promote renewable energy in educational institutions.

Expected Results include:

• 100MW of renewable capacity installed serving 650,000 students

• 100,000 KWh of electricity generated by the installed rooftop systems at full operation (about 10 to 15% of the schools’ annual electricity use).

• 89,590 tons of CO2eq. emissions reduced annually.

IBRD Loan Amount:

US$120 million

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China - Beijing Rooftop Solar Photovoltaic Scale-Up Project

© World Bank

Country Challenge About 80% of Mexico's energy comes from fossil fuels (including imported gas). Residential electricity use is growing faster than Mexico’s GDP, or about 3.7 percent/year, and accounts for about a quarter of all electricity use. Air conditioning, home appliances, and electronics are expected to be the main growth areas. In response, the government has initiated energy efficiency programs for the residential sector. Project Goals The project financed the Programa Luz Sustentable and the appliance exchange program which supported free exchange of efficient light bulbs and a loan/subsidy program for efficient appliances targeting lower income households

For more information: http://www.worldbank.org/projects/P106424/efficient-lighting-appliances?lang=en&tab=overview Video: https://www.youtube.com/watch?feature=player_embedded&v=_cLgcYCQUPI

Green Bond Criteria: Mitigation

To promote the efficient use of energy and to mitigate climate change by increasing the use of energy efficient technologies in the residential sector.

Expected Results include:

Cumulative over 5 years (2-phase program): • 45.8 million inefficient light bulbs and 1.9 million old and

inefficient refrigerators and air conditioners replaced • 3.32 million tons of CO2eq. emissions reduced cumulatively • 50-60 % electricity saved in residential households. • 10,000 GWh cumulative energy savings.

IBRD Loan Amount:

US$250.63 million

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Mexico Efficient Lighting and Appliances

© World Bank

Country Challenge 75% of Colombia's population currently lives in cities and most of these urban residents rely on the public transportation system. Yet, public transportation is the cause of many of these cities’ problems, including serious traffic congestion, high incidences of accidents and crime, unhealthy air, and pollutants responsible for 62% of Colombia's carbon emissions. Project Goals. The Colombian government and the World Bank are continuing to work together through the support to the National Urban Transit Program (NUTP). Building on the success of Transmilenio, a rapid bus system in Bogotá, the project is designed to improve transport efficiency and accessibility, reduce fuel use per kilometer, as well as pollutant emissions in five additional cities: Barranquilla, Medellin, Bucaramanga, Cartagena, and Pereira.

For more information: http://www.worldbank.org/projects/P117947/support-national-urban-transport-program-project?lang=en Video (“National Urban Transport Program”): http://www.youtube.com/watch?v=_HzUjAZvviU

Green Bond Criteria: Mitigation

Greater efficiency in urban mass transport

Expected Results include:

• Reduction of average travel time for low income riders. • Reduction of accidents and pollution (including greenhouse

gases) associated with bus transport services •  Increased access to the disabled, and other riders with

special needs.

IBRD Loan Amount (in millions):

US$300 – 2nd Add Financing Integrated Mass Transit System US$350 – Support to the National Urban Transit Program

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Colombia National Urban Transit Program

© Olja Latinovic/World Bank

Country Challenge While electricity demand is growing fast in Montenegro, production is hampered by old structures, limited investments, and the running down of assets in the state-owned electricity company, Electric Power Company of Montenegro (EPCG), which has reported annual losses of about 1 percent of GDP since 2002. Project Goals. This project would finance about 27-29 energy efficiency subprojects in hospitals and health care centers throughout the country, and at the Clinic Center Montenegro in Podgorica. Typical energy efficiency measures in a building supported by the project include replacement of windows, thermal insulation of walls and roof, replacement of lighting systems and installation of temperature controllers and thermostatic valves.

For more information: http://www.worldbank.org/projects/P107992/energy-efficiency-public-buildings?lang=en

Green Bond Criteria: Mitigation

Improve energy efficiency performance in targeted public sector buildings.

Expected Results include:

Cumulative over 5 years: • Targeting approximately 27 buildings, the project is

expected to generate 150,000 MWh in energy savings and GHG emissions savings estimated at 60,750 MT of CO2 equivalent measured by project closing

IBRD Loan Amount:

US$9.4 million + US$6.1 million (additional financing)

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Montenegro Energy Efficiency

© World Bank

Country Challenge Turkey’s economic growth is driving high energy use with the associated increase in carbon emissions (total CO2 emissions were 256 million tons in 2005 of which the energy sector accounts for 77%). Yet, the country has untapped renewable energy resources. Project Goals The project finances renewable resources, such as small hydroelectric installations, and geothermal for heating and cooling purposes, and energy efficiency investments (the subsectors likely to be included are iron and steel, cement, ceramics, chemicals, and textiles). This project is co-financed by the Clean Technology Fund of the Climate Investment Funds, which finances programs with significant potential to be scaled-up for long-term greenhouse gas savings.

For more information: http://www.worldbank.org/projects/P112578/private-sector-renewable-energy-energy-efficiency-project?lang=en&tab=overview

Green Bond Criteria: Mitigation

To enhance renewable energy access and energy efficiency

Expected Results include:

• 950 MW renewable capacity installed. • 4,065,000 GWh energy efficiency savings. • 3.51 million tons of CO2eq. emissions reduced annually by

energy efficiency and renewable energy produced. • 28% of the country's total energy generation through

renewable energy.

IBRD Loan Amount:

US$500 million + US$500 million additional financing

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Turkey - Private Sector Renewable Energy and Energy Efficiency

© World Bank

Country Challenge Morocco has achieved strong economic growth and stability over the past decade. This has resulted in a substantial expansion of its energy demand which has been met by importing oil at an annual cost of US$80 billion. Project Goals This first project finances a solar plant using concentrated solar power technology that is part of Morocco's renewable energy scale-up initiative. The IBRD loan is US$200 million of a total financing package of US$1,427 billion.

For more information: http://www.worldbank.org/projects/P122028/ma-ouarzazate-concentrated-solar-power?lang=en

Green Bond Criteria: Mitigation

To replace fossil fuel-based electricity with solar power.

Expected Results include:

• 160 MW in new renewable capacity installed. • 240,000 metric tons of CO2eq. emissions avoided annually.

IBRD Loan Amount:

US$200 million

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Morocco Ouarzazate Concentrated Solar Power

© Steve Harris/World Bank

Country Challenge In China, millions of households rely on the agriculture sector for their livelihood. The agricultural sector, however, has had widespread negative impacts on the environment because of inadequate farming techniques involving misuse of land leading to desertification, over-use of synthetic pesticides and fertilizers without adequate environmental controls. In addition, agriculture is responsible for 50% of China’s methane emissions (a potent greenhouse gas). Project Goals This project supports cleaner, healthier farmyard environments, along with the reduction of greenhouse gas emissions through methane capture and combustion to generate energy, and the reduction of burning of coal and firewood.

For more information: http://www.worldbank.org/projects/P096556/eco-farming-project?lang=en&tab=overview Video: http://www.youtube.com/watch?v=z1Obm7vmXqg&feature=player_embedded

Green Bond Criteria: Mitigation

To reduce greenhouse gas emissions and deliver economic benefits through biogas systems in rural communities.

Expected Results include:

• CO2eq. emissions in the project area are expected to be reduced by 800,000 - 1,000,000 tons per year.

• 400,000- 500,000 rural households benefit with cleaner biogas-based cooking and heating systems.

IBRD Loan Amount:

US$120 million

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China Eco-Farming Project

Country Challenge Indonesia (population 250 million) has struggled to keep up with electricity demand and has underutilized its geothermal energy potential. Geothermal resources are ideally located on islands with major population centers with power supply shortages; however, the country lacks experience in developing these resources. Project Goals The project helps finance the confirmation of geothermal resources and construction of a steam field system and 2 powers plants with a total capacity of 150 MW. This capacity would have been developed with domestically abundant coal; thus, the projects reduces emissions and helps demonstrate the potential for scale-up in geothermal projects.

For more information: http://www.worldbank.org/projects/P113078/geothermal-clean-energy-investment-project?lang=en

Green Bond Criteria: Mitigation

To demonstrate the potential of power generation from renewable geothermal resources.

Expected Results include:

• 150 MW new renewable capacity constructed • 1.1 million tons of CO2 avoided per year

IBRD Loan Amount:

US$175 million

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Indonesia Geothermal Clean Energy Investment

© Curt Carnemark/World Bank

More Information

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Websites: http://treasury.worldbank.org/greenbonds http://crinfo.worldbank.org http://www.worldbank.org/en/topic/climatechange

Contact Information: Investor Relations World Bank Treasury Washington, DC, USA Tel. +1 202 477 2880 Email: debtsecurities@worldbank.org

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