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Engaging Local Financial Institutions in Project Development and Implementation

Patrick J. D’Addario President Fiorello H. LaGuardia Foundation

presented at the UNFCCC workshop on Innovative Options for Financing the Development and Transfer of Technologies Montreal September 28, 2004

Fiorello H. LaGuardia 99th Mayor of the City of New York 1934-1945 Defined the Infrastructure of the City of New York – Holland Tunnel – Lincoln Tunnel – East and West Side Highways – Queens-Midtown Tunnel – Triborough Bridge – Brooklyn-Battery Tunnel – LaGuardia and Kennedy (acquired land) Airports – Unified Subway System

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LAGUARDIA, SECRETARY TO THE U.S. CONSUL GENERAL BUDAPEST, HUNGARY, 1903 COPYRIGHT: LAGUARDIA & WAGNER ARCHIVES

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LAGUARDIA, COMRADES, AND “CONGRESSIONAL SPECIAL” FOGGIA, ITALY, 1918 COPYRIGHT: LAGUARDIA & WAGNER ARCHIVES

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DIRECTOR-GENERAL UNITED NATIONS RELIEF AND REHABILITATION AGENCY (UNRRA), 1946 COPYRIGHT: LAGUARDIA & WAGNER ARCHIVES

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THE FIORELLO H. LAGUARDIA FOUNDATION, FOUNDED 2001 The Foundation focuses on three major areas: 1. Structuring Italian-US partnerships to invest in community-based sustainable development projects in selected developing countries, in part through creation of a sustainable development technical assistance fund with bilateral, multilateral, and philanthropic donors.

2. Fostering Italian-US investment in Italy, in particular Southern Italy and Sicily, and especially in the areas of sustainable agriculture, biotechnology, and renewable energy and energy efficiency.

3. Promoting academic exchange between universities in Italy and universities in the State of New York in biotechnology, agriculture, and medicine. In the context of academic exchange, the foundation seeks to promote intellectual exchange at the cutting edge of research in medical genetics, especially pertaining to childhood genetic diseases in Southern Italy; in agricultural technology to improve small scale farming efficiency; and in pharmaceuticals and genetic engineering to reduce environmental disease.

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Funding History

OAS Comune di Milano PREP-ASSIST Brazil India Him. Fin. Fac.

( IREED RABO/BTS BELVOIR) Blue Moon Brazilian Equity Fund REEEP Volkhart Fndt Sainsbury FCT Banca Etica Regione Toscana/Arte Continua Fondazione Cariplo UN Foundation Fondazione BMdPdS China Equity Fund Multilateral BRT

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Goal of MOSAICO

Catalyze Human, Institutional, and Financial Resources in Support of the Development of Locally Defined and Managed Enterprises Utilizing Sustainable Approaches and Infrastructures on a Significant Scale

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MOSAICO Characteristics

Local Resources - natural, human, institutional, and financial Leverage - Soft money used to facilitate entry of conventional private finance Replicability - demand side - bundling, multiplier groups supply side - financial, technical training Integration - financial and commercial chains Sustainability - environmental, social, and financial at project, program, and initiative levels

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MOSAICO Network

The Initiative is executed by a network with five nodes: The Global Environmental Institute - Beijing, China Environment, Energy, and Enterprise Ventures PLC - Delhi, India Instituto Eco-Engenho - Macei ó, Brazil

supported by

Energy and Security Group, Inc. - Washington, DC Fiorello H. LaGuardia Foundation - New York, New York Ecosoluzioni, Snc – Cortona, Italy

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MOSAICO Approach Basket I

(PREP-ASSIST) - community-based, rural, integrated agricultural projects

Basket II

- financing facilities for RE, EE, Organic agriculture projects 500kw- 15MW

Basket III

- strategic cooperation with financing programs of multilateral, bilateral or national institutions (often with Baskets I & II)

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BASKET I (PREP-ASSIST) Overview

•

Goal:

Increase access to financing for small-scale sustainable infrastructures supporting local economic activity •

Objectives:

Offer a network of financial intermediaries based in Brazil, Central America, China, and India that provide the following set of services : –

Project Preparation Assistance

–

Risk Mitigation for Financial Institutions

–

Small Carbon Sellers Facility

The network’s operations are supported by a set of technical experts that provide financial advisory services to local intermediaries and their interface with international markets for risk mitigation and environmental commodities.

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Approach: Basket I

Element One: Project Preparation Assistance Services

• Incubation Services • Preinvestment Funding For Projects • Credit Enhancements

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Approach: Basket I (cont’d)

Element Two: Mitigate Financial Institution Risk

• Short-term guarantees • Subordinated Loss Reserves • Project Bundling

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Approach: Basket I (cont’d)

Element Three: Greenhouse Gas (VER) Revenue Structures to Improve Returns

• Simplified Approach • Develop Baseline • Bundle and Register VERs • Market VERs

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NORDESTE Alagoas Bahia Ceará Paraiba Rio Grande Do Norte Maranhão Sergipe Pernambuco Piauí

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Brazil Program - Participants

BASKET I

-

solar water pumping for high value agricultural products in the

nordeste

•Banco do Nordeste •Cooperatives •Municipalities •CEMINA •REDH

BASKET II -

Equity and Guarantee Facility for small hydro and biomass generation in unconnected Amazon grid, energy efficiency •Tetrahedron •Eletrobras (?) •Institutional Investors •Bilateral Investment Funds

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Drip Irrigation - Alagoas

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• Yunnan Province • Guangxi Zhuang Autonomous Region

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China Program - Participants

Basket I

Provincial Poverty Alleviation and Development Office Rural Credit Cooperative Agricultural Bank of China Cooperatives Producer Associations

Basket II

Tsinghua Venture Capital Asian Development Bank (?)

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Investment Structure

RFP Team Service #1 Incubation & TA Services Service #2 Ordinary Shares RFP Seed Capital Fund Equity Capital 10% or lower Preferred Shares Venture Phase One Equity Capital 20% or higher Ordinary Shares Farmer Farmer Farmer

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RCC/ABC Loan 80% or lower Guarantee (Loan principal only w/asset trigger) RFP Guarantee Facility Service #3

Investment Structure

Venture Phase Two Preferred Shares Ordinary Shares

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Investment Structure

Venture Phase Three RCC/ABC Loan 80% or lower Guarantee (Loan principal only w/asset trigger) RFP Guarantee Facility Preferred Shares Preferred Dividends (return seed capital) Ordinary Shares Ordinary Dividends (ROI) RFP Seed Capital Fund Farmer Ordinary Dividends (return on advisory services) RFP Team

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The States of • West Bengal • Uttaranchal • Sikkim

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Withering Organic Tea – Darjeeling

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India Program- Participants

West Bengal - hydropower for organic tea •Darjeeling Tea Planters Association •Hydro Project Developers •Local Financial Institutions Uttaranchal - solar lanterns for productive uses •Central Himalayan Rural Action Group (Chirag) •Self Help Groups (SHGs) •Other Cooperatives •Tata/British Petroleum Solar, Inc Sikkim - hydropower for organic cardamom •Tribal Groups • Infrastructure Development Finance Company • Rabo India Finance

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MOSAICO VALUE-ADDED CHAIN

PREP-ASSIST (Himalayan Finance Facility) GUARANTEE $ TECHNICAL ASSISTANCE DEVELOPER ₤ VER s TECHNICAL ASSISTANCE Darjeeling Organic Tea Farm TEA ₤ HARROD’S BANK

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