1. Bank aus Verantwortung
Lessons From Replication and Scaling-up
of Climate Finance
Katrin Enting
Competence Centre Environment and Climate
KfW Development Bank
OECD, CCXG Global Forum
Paris, 18 March 2014

2. 2
Outline
I Generating Lessons Learnt
II Experiences With Green Credit Lines
III Case Studies
IV Challenges and Opportunities
5

3. 3
I. Generating Lessons Learnt
• Monitoring
• By operating departments
• Annual reporting and on-site
progress assessments
• Final inspection mission
• Evaluation
• By independent evaluation unit, external director, report directly to
Board of Managing Directors
• Post-project evaluation 3-5 yrs after technical completion
• Comparison of actual outcomes against envisaged outcomes and
state of the art benchmarks
• Focus on development impacts using DAC key criteria: relevance,
effectiveness, efficiency, impact and sustainability (score 1-6 i.e. 4)
• Systematic and thematic reviews of evaluations
Sample average 2010-2012
80,3 80,9
0
10
20
30
40
50
60
70
80
90
100
Number of projects Aggregate volume
Sucessquotain%(rating1-3)

4. 4
II. Green Credit Lines – Domestic Experiences as a Role Model
• KfW Group: New commitments in climate & environment in 2013:
EUR 27.8 bn, thereof EUR 3.4 bn in developing countries
• Dominate domestic working modality: on-lending through regular banks
that do appraisal and build on local and long-standing customers relations
Lessons Learnt:
 Efficient use of budget funds and large potential to mobilize private
climate finance
RE/EE finance works best
as part of a promotional
system incl. information and
consulting, legislation, rules
and regulations and technical
standards

5. 5
II. Green Credit Lines – Experiences in Development Finance
Credit Lines to support local financial intermediation (simplified):
Basic characteristics:
› Provision of long-term liquidity for climate-related investments of SMEs &
private households
› Building up and consolidation of climate-related portfolios of local banks
through appropriate re-financing (indirect financing mechanism)
› Focus on institutional development of partner bank: TA for product
development, project scouting, development of positive list and
measurement tools, dedicated marketing, training of employees
› Use of local structures (distribution channels and contacts to customers and
producers/importers) for broad coverage
Financial
Intermediary
KfW
concessional
loan
Debt
SMEs /
Priv. Househld.
BudgetFunds
Investment
Equity
Mobilization of
additional funds
Mobilization of
additional funds

6. 6
II. Green Credit Lines – Experiences in Development Finance
› Incentive for investments into green technology (EE + RE) and promotion of their
implementation and broad distribution
› Introduction of specialized credit products in local banks for investments into
green technology
› Support of economic and private sector growth in the host country
Direct private finance mobilization effects
› Support of local markets for green technology incl. the development of local firms
in related sectors (e.g. consulting firms, technology firms, production capacities)
› Long-term anchoring of climate protection in the product portfolio/ strategy of local
banks
› Raising of public awareness and consciousness about the climate change (bank
employees function as multipliers for knowledge transfer)
› Successful implementation of green technology with single clients can have a
signaling effect and create further interest among the broader public
Indirect transformational effects

7. 7
II. Green Credit Lines – Experiences in Development Finance
• Scaling-up and replication over time: started with 2 climate credit lines in
2007 to 71 active climate credit lines in 2/2014 (replication) of which 16
are follow-up lines (up-scaling)
• Green lines overall volume (closed, ongoing, preparation): EUR 3.4 bn
• Key sectors: Energy efficiency in SME, renewable energy production,
emissions reduction (only 2 credit lines with adaptation purpose)

8. 8
II. Green Credit Lines – Experiences in Development Finance
Lessons Learnt (1/2)
• Limitations: i) still many pilot projects, ii) no systematic ex-post evaluation
yet since projects started very recently, but mid-term evaluations & final
termination mission, iii) private finance mobilized not as objective/indicator
• General:
• Most effective as part of a promotional system incl. regulation and
information/consulting; Fossil fuel/electricity price subsidies lower
attractiveness of scheme
• Amount of finance mobilized depends on project design & context
• Negative abatement cost favor financial sustainability (sustainable
demand and supply)
• Balance political ambition (no BAU), market acceptance (the less
proven, the more concessionality required) and sustainability
 Establish credit lines as workhorse for climate finance in small-scale
investments

9. 9
II. Green Credit Lines – Experiences in Development Finance
Lessons Learnt (2/2):
• Achieving, measuring and monitoring climate impact:
• Targeted CO2/energry savings on average reached
• Standardization and harmonization btw. donors to avoid duplication of
work and dilution of standards
• Simple eligibility criteria
• User-friendly tools avoid errors in data collection, processing & entering
• Effort to measure and monitor must not be prohibitive for bank & client
• Financial institutions:
• Even in case of negative abatement costs, grant element needed for
initial institutional development of partner bank
• Require, incentivize and monitor for process innovations and innovative
financing products
• Management commitment and staff incentives are critical factors

10. 10
III. Case Study (1/2) - Credit Line
EE housing, India
1) Pilot programme –First credit line for EE housing in India
• EUR 50mn concessional loan to National Housing Bank (NHB) which
refinances to commercial banks that provide loans for EE homes
• Capacity building and research to adopted a European calculation
model for energy assessment to Indian conditions (active+passive)
• More than 1900 home loans
2) Second phase (in preparation)
• EUR 100mn concessional loan to NHB
• Support NHB to define and introduce a EE label
using the German EE housing label as a role model
Lessons Learnt/Success Factors
• Adapt a simple but robust tool to Indian conditions
• Identify residential projects with potential, advise developers
• Strong support by Indian government and NHB fully engaged

11. 11
III. Case study (2/2) – Project finance / PPP
Wind power, Morocco
• National Wind Plan 2010
• Objective 2000MW by 2020, total investment cost USD3.5bn
• 3 components: I) 280 MW already in operation (KfW support
of 2 wind parks, 200MW), II) 720 MW privately financed,
III) “Integrated wind programme”: 1000 MW financed as PPP,
1st phase: Taza (KfW concessional loan for public equity and
debt), 2nd phase: 5 locations (KfW support for 3 wind parks jointly
with EIB (NIF), AfDB/CTF)
Lessons Learnt/Success Factors
• Strong national political engagement & legislation (credible policy
signals): National Energy Strategy 2009 (increase of RE), Renewable
Energy Law 2009 (feed in of privately produced RE electricity)
• Explicit PPP approach in integrated wind programme
• Long-standing cooperation: 20yrs of Moroccan-German cooperation
in the energy sector incl. German-Moroccan Energy Partnership,
various TA activities, KfW’s energy portfolio in Morocco € 1.1bn

12. 12
IV. Challenges and Opportunities
Challenges Opportunities
No common definition of mobilized
private finance
Limited systematic ex-post evaluations yet Increase mid-term evaluations
Very case-specific, few generic lessons Share lessons across institutions
Most lessons are not climate-specific Make use of lessons leant in other areas of
development cooperation
Not all projects, sectors and countries
where private finance can be mobilized
are suitable for large scale private sector
investments and entire private sector
takeover of interventions
Target areas with highest private sector
attractiveness for big numbers; Scaling up
and replication of national public support as
alternative objective
Move from projects to programmes, careful
assessment of impacts of (enhanced) direct
access, ensure stable frameworks (incl.
regulations and support schemes)

13. Bank aus Verantwortung
Thank you !
Katrin Enting
Competence Centre Environment and Climate
KfW Development Bank
Palmengartenstrasse 5–9
60325 Frankfurt am Main
Katrin.Enting@kfw.de