Stefan Lutz Regional Office Director Central Asia

1. Stefan Lutz Regional Office Director Central Asia Fourth EU-Central Asia High Level Conference:Platform for Environment and Water Cooperation– Financing Climate Change Adaptation and Mitigation – KfW’s commitment and experience

2. Commitments 2012 by category 1.46 Other Projects 2.12 Mitigation Adaptation Environment (not climate) 0.70 0.65 Commitments for environment and climateBudget and designated purpose • In 2012 KfW Development Bank’s total commitments were EUR 4.9 billion, of which EUR 2.8 billion EUR (57 percent) fall under the category Environment and Climate. Of these commitments, EUR 1.5 billion were related to climate change mitigation and EUR 700 million to climate change adaptation. In addition, KfW Development Bank promoted environmental projects totaling EUR 650 million. Year / Total budget (number of projects) / for environment and climate: • 2012 EUR 4.9 bn. (305) / EUR 2.8 bn. (147) • 2011 EUR 4.5 bn. (292) / EUR 2.8 bn. (146) • 2010 EUR 4.5 bn. (231) / EUR 2.6 bn. (115) EUR 4.9 bn. Commitments for Environment and Climate - KfW Development Bank

3. Mio. € 1.456 Mitigation 695 Adaptation 650 Environment 2.115 Others Commitments for environment and climateCommitments 2012 by sectors and regions …Regions 33% Asia / Oceania Europe / Caucasus 22% Middle East / North Africa Sub-Saharan Africa 57% 22% Latin America 23% Transregional …Sectors (CRS-Sector) Energy 37% Water & Waste Multisectoral Financial 35% Forest & Agriculture Social Infrastructure & Transport 11% Others 18% Disaster prevention Commitments for Environment and Climate - KfW Development Bank

4. source Market funds Project finance e.g. RE-projekts Fund solutions EE- und RE-Finance (green credit lines) Promotional loans Concessional funds Development loans Loans at IDA conditions e.g. Adaptation-Projects, Capacity Building, REDD grants Public funds Performance of the partner countries and viability of the projects Range and Mix of Instruments in environmental & climate finance Instruments of Development Finance (grants, concessional funds) used for all climate-related projects and programmes Commitments for Environment and Climate - KfW Development Bank

5. Example I. Green savings accounts in Vietnam Lack of incentives for sustainable use of forests destruction of forest areas in the past almost no reforestation. Grant farmers the right to use certain forest areas Green Savings Accounts: Farmers receive savings accounts to reforest their areas. Complementary measures (e.g. consultancy services, forest management training etc.). Farmers earn higher incomes. Reforestation and long-term forest protection Increased carbon storage. Problem Approach Impacts Commitments for Environment and Climate - KfW Development Bank

6. Example II: Green credit lines for energy efficiency in Ukraine Increasing energy demand. High energy intensity outdated production techniques low energy efficiency in buildings. Economy's dependency on energy prices. KfW-credit line for local ProCredit-Bank. ProCredit provides low-interest loans for energy efficient projects by private households and SME. In addition KfW provides advisory services. Improved competitiveness of firms. Establishment of Know-how in financial sector. More efficient use of energy has a positive impact on climate. Problem Approach Impacts Commitments for Environment and Climate - KfW Development Bank

7. Climate challenges for central Asia • According to the current climate models and projections, the region is highly vulnerable to impacts of climate change. • In Tajikistan and Kyrgyzstan a warming up in the range of 2.7 to 5.1 °C for the end of the century is likely. For Uzbekistan a warming up between 2.5 and 4.5 °C is forecasted. • Furthermore, a strong increase in the duration of hot waves and a reduction in cold spell length are projected. • In addition the risk of environmental disaster like droughts, floods and mudflows increases. • This changes will have negative effects on water availability/quality, agricultural production, energy recovery, health of population. Commitments for Environment and Climate - KfW Development Bank

8. Additional challenges • Political priorities and commitments. • General Framework conditions/necessary institutions/incentives (e.g. in the energy sector; tariffs). • Country vs. external funds • Public vs. private funds (political choice; ability of financial sectors) • Concessionality; willingness and ability to take loans vs. grants • Credit risk for financing institution. Commitments for Environment and Climate - KfW Development Bank

9. Ongoing Financial Co-operation projects with environment and climate impact in Central Asia • Supporting energy efficiency and renewable energy use in various projects: small infrastructure, school building, hospitals. • Housing modernization programs. • Earlier committed energy efficiency credit lines via financial sector had to be reallocated to other projects due to market limitations. Commitments for Environment and Climate - KfW Development Bank

10. New Financial Co-operation adaptation project in Tajikistan • The projected threats by climate change will be reinforced by current deforestation and forest degradation. • Currently less than 3% of country area is forested. • Forested areas are important for water regulation and provide protection of floods and mudflows. • What can be done • Financial und technical support for the continuation of reforms in forest sector. • Increase forested areas to stabilize the water balance. • Inclusion of local people in agricultural management by a `Joint Forest Management´ (JFM) Model. • Providing financial incentives for an efficient use of forest areas by “account book approach” (see Vietnam), which in addition creates economic alternatives. • Project is grant-financed. Commitments for Environment and Climate - KfW Development Bank

11. Thank you for your attention Commitments for Environment and Climate - KfW Development Bank