Page 1 The Costs of Going Green and the Role of Financing MSMEs Dr. Wolfram Hiemann GREEN FINANCING FORUM TAGBILARAN, BOHOL 29 APRIL 2013

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The Costs of Going Green

and the Role of Financing MSMEs

Dr. Wolfram Hiemann

GREEN FINANCING FORUM TAGBILARAN, BOHOL 29 APRIL 2013

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GREEN FINANCING FORUM - TAGBILARAN 29 APRIL 2013

Problem

Climate change, in particular global warming,

provoked by human activities

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Global warmingTemperatures of pavements without trees and sunshine protected

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Going Green

A common definition for green financing has still to be developed.

For example: Green finance relates to financing activities and investments that reduce man-made effects on

climate change growing green house gas emissions and CO2 level measures: EE, RE, (re-) forestation

environment deterioration e.g. pollution and degradation of air, water and soil measures: cleaning effluents, flaring methane gas, terracing, mulching, organic farming, etc.

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Reward

For investorSubsidy, tax exemptionsPreferential loans: lower interest rate, longer gestation period, reduced collateral requirementTechnical assistance (TA)

For banks and other financial institutionsImage gain as an environment-conscious institutionAttracting new medium- to long-term oriented customers (lower risk of revoking the business permit or conflicts with the neighboring community)Access to long term fundsAccess to consultancy and training

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Consciousness and individual responsibility towards our joint environment

Knowledge about feasible options (research, information, consultancy)

Knowledge management (applying knowledge, investment not required: switching off the electricity consumer the engine, selecting paint,)

Availability or accessibility of equipment, after sales service

Finance

Inputs required to go green

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Consciousness

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Examples for green measures for MSMEs

Non assets related

• Consultancy (walkthrough)

• Training

• Smart electricity management

• Waste reduction and segregation

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Examples for EE equipment for MSMEs

Major fields of investment in EE

• Lighting: outphasing of incandescent light bulb, fluorescence light, and compact fluorescence light (CFL) for LEDs

• Refrigerating and air conditioning: Inverter technology, heat absorbers for heating water (simultaneously: replacement of ozone depleting substances)

• Heating (using process heat)

• Green transport: reduced fuel consumption and lower CO2 emission, use of LPG, LNG

• Green building architecture and environment

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Equipment: Selecting the right color: transport

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Building design and material

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Building design and material

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Examples for RE equipment for MSMEs

Warm/hot water generation:

Solar heat collectors

150 l = about Ᵽ 30,000 to Ᵽ 60,000 without/with electric heaterserves two to three hotel rooms

Savings: about 3 kWh/day x Ᵽ 11 or about Ᵽ 10,000 per year

(Smaller and larger capacities available)

In Bohol only available at Citi Hardware, Tagbilaran City

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Examples for RE equipment for MSMEs and cooperatives

• Agricultural waste converting to electricity (rice husks, melasse, etc.)

• Biodigester

• Micro-hydropower: 100 kW, investment Ᵽ 10,000,000 and more depending on civil construction (dam) and distribution grid, serves more than 100 rural households

• Photovoltaic electricity generation: 100 kWp, investment Ᵽ 10,000,000 to

Ᵽ 20,000,000 or more depending on battery capacity + 1,000 m2 landAnnual income: 1.2 kWh/Wp x 100,000 Wp x Ᵽ 7/kWh = Ᵽ 840,000

(Income is higher when based on feed-in tariffs)

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LED lamp, rechargeable battery, solar panel : Ᵽ 8,000(Edward Marcs, Cebu)

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Promoting energy efficient LED lamps

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Replacement lighting Calculation model

Replacing 100 tube type lamps in shop and in office

Old: Tube type 8, 36 W, magnetic ballast

Replacement: 2 LED 7 W, bulb

Investment/tube: Ᵽ 1,200 + Ᵽ 1,000 for new fittings, total Ᵽ 2,200

Investment: Ᵽ 220,000 to replace 100 tubes

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Replacement lighting Calculation model

Savings

36 W – 2 x 7 W = 22 W x 12 hours/day x Ᵽ 11 / kWh = Ᵽ 2.9/day per tube

Total savings/year: Ᵽ 2.9 x 360 days x 100 tubes = Ᵽ 104,400/year

Payback period: 2.1 years

Further savings:

Less electricity consumption for AC: LEDs emit less heat

Replacement period for bulbs about 5 times longer

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Efficiency of air conditioners (AC)

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13.6 for inverter / 9.2 = 1.48

= 48% higher EER

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Model conventional inverter

Consumption W/h 900 700

Savings of inverter W/h 200

Running time h/day 8

Savings per day/year kWh 1.6 / 584

Electricity tariff Ᵽ/kWh 11.0

Savings Ᵽ/year 6,424

Price of new AC Ᵽ 16,000 25,000

Payback period of difference (Ᵽ9,000) Less than 1.5 year

Replacement of air conditioner for office/home

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Biogas from piggeries

Biogas/methane capture and electricity production facility

Investment cost: about Ᵽ 7 million for 1,000 sow level farm

Savings replacement of electricity from grid: 80% or Ᵽ 0.5 million (7.1%)

Carbon credits

1,000 sow level = 10,000 heads = 18,000 t CO2 equivalent/year

18,000 t x EUR 0.5 – 5.0 / t CO2 = EUR 9,000 – 90,000

or Ᵽ 0.45 – 4.5 million per year

This income has to be shared with the carbon credit arranger, e.g. bank.

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Access to financing institutions is easy, but access to green finance?

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Suggestion

Act environmentally consciously

Support environment friendly activities

We have only this planet, the next one is too far away

Thank you!

Documents

Page 1 The Costs of Going Green and the Role of Financing MSMEs Dr. Wolfram Hiemann GREEN FINANCING FORUM TAGBILARAN, BOHOL 29 APRIL 2013