The Development of Environmental Projects in Lebanon Setting up the NEEREA A Joint Initiative of the Central Bank of Lebanon (BDL) J ( ) and the United Nations Development Programme (UNDP) Beirut, Lebanon December 2009 1
BDL and UNDP Teams BDL team: M Mr. Wael Hamdan W l H d Mr. Mohamad Jabri UNDP team: Mr. Edgard Chehab Mr Charbel Rizk Mr. Charbel Rizk Ms. Jihan Seoud Mr. Pierre El Khoury 2
1 ‐ Why Environmental Projects? y j Yearly National Energy Bill $M (1993-2009) $4 000 $4,000 $3,500 663.52 $3,000 $2,500 Asphalt 497.01 F Fuel Oil l Oil 1,651.82 354.16 $2,000 Kerosene 406.52 Gasoil (Mazout) Gasoline $1,500 899.36 286.15 Liquid Gas 948.42 948.42 819.11 264.64 $1,000 270.17 634.36 267.28 266.45 1,179.98 239.45 194.23 485.15 217.00 350.88 909.17 165.86 337.52 360.93 $500 94.21 759.00 246.71 274.76 185.00 185.00 136 26 136.26 661.22 661 22 115.63 179.09 503.02 0.00 0.00 109.75 402.60 369.57 312.15 299.37 291.00 280.75 239.62 268.77 240.97 224.67 174.78 $0 0.00 0.00 0.00 3 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2 ‐ Why Environmental Projects? y j According to David O’Reilly, CEO, Chevron: “It t “It took us 125 years to use the first trillion barrels of oil; k 125 t th fi t t illi b l f il We’ll use the next trillion in 30.” “Energy efficiency is the cheapest form of new energy we have.” gy ff y p f f gy According to International Energy Agency (IEA): “On average an additional 1$ spent on more efficient electrical equipment On average, an additional 1$ spent on more efficient electrical equipment, appliances, and buildings avoids more than 2$ in investment in electricity supply” In Lebanon, 1 kWh of energy supplied by Electricité du Liban (EDL) costs the consumer around 0.11 USD while it costs the Government of Lebanon (GoL) around 0.32 USD. Accordingly, every 1 USD saved by the consumer is effectively 2.9 USD saved by GoL. 4
3 ‐ Why Environmental Projects? y j The energy audit at the Beirut International Airport (BIA): An investment of around 4.65 Million USD can lead to annual energy A i t t f d 4 65 Milli USD l d t l savings of around 2.13 Million USD (a reduction of around 42% of the total energy bill), thus a simple payback period of 2.18 years . gy p p y p f y The energy audit at Casino du Liban (CDL): An investment of around 650 000 USD can lead to annual energy savings of An investment of around 650,000 USD can lead to annual energy savings of around 488,000 USD , thus a simple payback period of 1.33 years. The environmental projects market in Lebanon needs investments in Th i t l j t k t i L b d i t t i the range of millions of US Dollars. 5
4 ‐ Why Environmental Projects? y j .. Because environmental projects help protect the environment! (every 1 kWh consumed in Lebanon emits 0.833 kg of CO 2 ) 6
In Summary: y Developing environmental projects has a lot of benefits: 1 D 1 ‐ Decreasing the country’s energy bill, and thus helping the i th t ’ bill d th h l i th national economy; 2 ‐ Reducing the depletion of natural resources and investing in cheaper types of energy; 3 ‐ Leveraging considerable local investments and decreasing the burden on Lebanese institutions and industries; 4 ‐ Ensuring a healthier approach to development and protecting the environment (reduction of GHG emissions) p g 7
Why NEEREA? y Investments Investments of Millions Financial Support Support of the of USD in of the Ministry of GoL- Ministry of Finance Finance Energy Energy the the Lebanese BDL Intermediary Grant market UNDP Funding Funding Technical Technical (environm ‐ ( i Circular No. 197 by EU and Knowhow ‐ ental others Expertise projects) LCEC LCEC fi financed by d b LCEC Awareness: Marketing local Banks & the Beneficia ‐ Program commercial ries banks NEEREA is simply a WIN ‐ WIN vehicle! 8
DEFINITION The “National Energy Efficiency and Renewable Energy Account” (NEEREA) i (NEEREA) is a national vehicle/mechanism/platform built on the Circular ti l hi l / h i / l tf b ilt th Ci l No. 197 launched in June 26, 2009 by the Central Bank of Lebanon (BDL). NEEREA is dedicated to support the financing of energy efficiency and renewable energy (EE and RE) projects all over Lebanon. NEEREA aims at the effective implementation of EE and RE projects in p p j Lebanon by Lebanese commercial banks through offering both technical and financial support. NEEREA is managed by the Central Bank of Lebanon (BDL) and the United Nations Development Programme (UNDP) with the support of the Ministry of Finance the Ministry of Energy the European Union and the Ministry of Finance, the Ministry of Energy, the European Union and other potential organizations. 9
Players Involved y The Central Bank of Lebanon (BDL) Th U it d N ti The United Nations Development Programme (UNDP) D l t P (UNDP) The Ministry of Finance (MoF) The Ministry of Energy (MEW) y gy ( ) The Lebanese Center for Energy Conservation (UNDP ‐ LCEC) The European Union (EU) The Ministry of Environment (MoE) The Ministry of Environment (MoE) The Banks Association of Lebanon The Lebanese commercial banks Oth Other international organizations i t ti l i ti Other local NGO’s 10
Basic Concepts of NEEREA p Commercial Banks Reserves at BDL P Process available il bl through the Circular At 0% “interest” No. 197 by BDL Investment by Banks in Environmental Investment by Banks in Environmental Projects Covered by NEEREA (EU and/or MoF (EU and/or MoF 3% spread 3% “spread” funding) Risk Guarantee Equal Installments Covered by NEEREA (UNDP/LCEC (UNDP/LCEC Technical validation technical team) Covered by NEEREA Covered by NEEREA Loans by Banks to Beneficiaries to Loans by Banks to Beneficiaries to (BDL/UNDP implement Environmental Projects coordina./ marketing) 11
Accounts within BDL Ministry Ministry The The 10 Million USD 15 Million USD European of Account to cover Grant Account to Union Finance the risk cover the “spread” (EU) Annual Financial Bank Reserves to be used in Commitment of EE and RE Projects 500K USD (Target of 100 Million USD ‐ over 5 years) UNDP Lebanese Commercial Banks LCEC UNDP UNDP Validation Validation LCEC Promotion Marketing Private 3 rd Party Beneficiary Companies (Loan at 0% interest, no risk) 12
An “Environmental Project” j ‐ For NEEREA, an “environmental project” is a project in energy efficiency and renewable energy ffi i d bl ‐ For NEEREA, an “environmental project” is a actual implementation p j p project including engineering activities, supply and installation of products (studies do not qualify) ‐ For NEEREA, an “environmental project” is a construction project (excluding wind farms, landfills, street lighting in villages, etc.) ‐ For NEEREA, an “environmental project” is either a new construction project or an existing one (covering incremental costs) p j g g 13
Selecting “Environmental Projects” g j Existing Construction New Construction P oject Project P oject Project Building design (consultancy work) Conduct an energy gy “Green Building” g audit design component Review and approval Review and approval Review and approval Review and approval by NEEREA team by NEEREA team Qualify as a NEEREA Q lif NEEREA Qualify as a NEEREA Q lif NEEREA project project 14
“Existing Project” in Details g j ‐ An existing facility is operational and has an annual energy bill ‐ A qualified ESCO (Energy Service Company) conducts a A lifi d ESCO (E S i C ) d t comprehensive energy audit to the facility ‐ The results of the audit shows that a certain investment in energy gy efficiency and renewable energy systems can lead to considerable annual savings ‐ The selected implementations are reviewed by LCEC The selected implementations are reviewed by LCEC ‐ The LCEC approves the implementations to be financed by NEEREA ‐ The beneficiary submits an application form to any commercial bank t to get the loan t th l 15
“Existing Project” in Details (cont’d) g j ( ) National Energy Efficiency and Renewable Energy gy y gy LCEC Bank Account ‐ Account (NEEREA) (Starting 500,000 USD) Bank to return 50% to LCEC ‐ after loan release Lebanese Center for Energy Lebanese Center for Energy Conservation (LCEC) Commercial Commercial Commercial Bank 1 Bank 2 Bank N B Beneficiary to fi i t LCEC to pay 70% to ESCO ‐ after study submit: Beneficiary to pay ‐ Approved 50% of audit cost to LCEC to pay 30% to ESCO ‐ after loan release launch the study LCEC Report including g Investment Beneficiary . . . needed ESCO 1 ESCO 2 ESCO 7 ‐ ESCO to conduct Energy Audit at the Beneficiary’s Sustaining the Sustaining the facility facility ‐ ESCO to prepare Energy Audit Report Audit Market! 16
“Existing Project” in Details (cont’d) g j ( ) ‐ LCEC: more than 120 energy audits all over Lebanon; numerous offer huge energy savings and attractive investments ff h i d tt ti i t t ‐ The list includes: City Mall, Hotel Dieu, Ain WeZein Hospital, y p Haykal Hospital, Phoenicia Hotel, Nabatieh Hospital, Studio Vision, Sour Rest House, Lefico, PPB Structures, Pepsi Cola, Coca Cola, Pampa Pampa 17
18 For 58 Facilities:
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