Accompanying client efforts in mitigating and adapting to climate change

The 2015 Paris Agreement reasserted the urgent need to rapidly reduce worldwide greenhouse gas emissions to limit the rise in temperature to 1.5°C versus pre-industrial levels. To participate actively in this colossal challenge, Proparco has placed promoting low-carbon development, resilient to the impacts of climate change, at the heart of its 2020-2022 strategy. Despite the difficult economic context, some 26 projects with climate co-benefits have been signed 2021, i.e. 10 more than in 2020.

Loan In Nicaragua, expanding the capacity of a geothermal plant to supply clean and affordable power

With a 21.4 MUSD loan granted to Polaris Energy Nicaragua, Proparco is reiterating its support in the San Jacinto geothermal plant project. The refinancing operation comes with the construction of a 10 MW supplementary binary unit increasing the capacity to 82 MW. Classified as 100% climate, it will enable 175 000 tCO2eq per year of GHG emissions to be avoided throughout the project’s lifespan.

26 projects with climate co-benefits signed, adding up to 1,952,000 tCO2eq avoided per year

The projects signed in 2021 aim to avoid emissions up to 1.95 million tCO2eq per year on average, 53% of which through projects located in Sub-Saharan Africa. Representing 561 million euros of climate co-benefits, these correspond to: • ten credit lines fully or partially dedicated to climate change mitigation, with financial institutions in Nigeria, Armenia, Serbia, Turkey, Palestine, Mongolia and Vietnam (168 million euros in climate co-benefits); • nine infrastructure projects: seven energy infrastructure projects in Burkina Faso, Ivory Coast, DRC, Chad, multicountries in Africa, in Uzbekistan and Nicaragua and two public transport infrastructure projects in Colombia, for a total of 252.5 million euros of climate co-benefits. These projects, once operational, represent an installed renewable capacity of 312 MW and an annual expected production of renewable power of 1,150 GWh. • four investments: an equity investment in a company supplying decentralised solar energy to help it develop its activities in Kenya, Tanzania, Uganda and Nigeria and an equity investment in a company supplying solar energy to enterprises in Asia (35 million euros of co-benefits, installed renewable capacity once projects are operational of 236 MW and annual production of renewable power of 308 GWh); an investment in a fund dedicated to the development, construction and exploitation of projects to generate or stock renewable energy in Sub-Saharan Africa as well as a subscription of shares in a fund dedicated to purchasing green bonds issued by private-sector companies based in emerging

Asian, African and Latin American countries (52.5 million euros of climate co-benefits). • Three “enterprise” projects in the agri-business sector in Brazil and in industry in Morocco and Turkey (53 million euros of climate co-benefits, 4 million euros of which are adaptation co-benefits).

Loan Supporting a textile leader in Turkey to make sustainable investments

In 2021, Proparco granted a 37 M€ loan (25.9 M€ being climate recorded) notably enabling Sanko Textile to equip its factories with 33.5 MW producing solar panels, deploy plastic recovery equipment (76,500 tonnes of bottles reused in the manufacturing process), invest in a water filtering system and replace its coal-fired boilers by natural gas boilers. This project means 466,000 tCO2eq of GHG emissions will be avoided each year.

Increasing financial commitments in favour of private projects that contribute to adapting to climate change: 64 M€ of adaptation co-benefits recorded by projects approved in 2021

In 2021, Proparco approved 28 climate co-benefit projects, totalling 668 million euros in co-benefits.5 Among these, six projects are participating in adapting to or providing improved economic or population resilience to the effects of climate change, representing 64 million euros in adaptation co-benefits: • In Brazil, a loan granted to a Brazilian sugar-ethanol producer to build biogas production stations as well as to install wastewater treatment units (4 million euros of adaptation co-benefits; see opposite box); • In South Africa, two credit lines dedicated to climate mitigation and adaptation with a financial institution partnering with the Green Climate Fund (20% of the amount classified as adaptation, i.e. 36 million euros); • In Nigeria, Mexico and China, three credit lines partially dedicated to financing climate projects, with adaptation co-benefits representing 24 million euros.

5 By including FISEA projects, the total amounts to 677 M€.

The volume of avoided tCO2eq emissions at 128% of 2021 forecast

The volume of tCO2eq emissions avoided per year expected by the projects signed in 2021 is 1,952,000 tCO2eq, i.e. 128% of the adjusted forecast for 2021 which takes into account the effective volume of signatures in 2021. This adjusted forecast was surpassed thanks to results obtained in the Energy and Industry sectors, each pulled forward by a project. The evolution of expected results in terms of tCO2eq emissions avoided per year by projects signed since 2017 is presented below.

Atypical projects

PROJECTS SIGNED IN

Number of tCO2eq avoided per year

+1,070,000(1)

1,600,000 1,529,000 1,980,000

719,000 1,952,000 1,965,000

Adjusted forecast 1,524,000

2017 2018 2019 2020 2021 [Forecast for 2021]

(1) In 2019, the Engie Mexico project contributed 35% of the total amount of expected emissions avoided per year.

Loan Supporting sustainable agricultural investments in Brazil

In 2021, Proparco granted a third loan to a long term partner, Tereos Sugar And Energy Brazil, amounting to 25 M€. It will enable this company, one of Brazil’s largest producers of sugar-ethanol, to build biogas production stations in 3 of its sugar plants (26 000 tCO2eq avoided per year) and install wastewater treatment units to reduce the volume of water used by 25% by 2024. The project has been classified as 100% climate, with 85% mitigation co-benefits (about 21 M€) and 15% adaptation co-benefits (about 4 M€).