MOSAICO

Engaging Local Financial Institutions in Project Development and

Implementation Patrick J. D’Addario

PresidentFiorello 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

MOSAICO

LAGUARDIA, SECRETARY TO THE U.S. CONSUL GENERAL BUDAPEST, HUNGARY, 1903

COPYRIGHT: LAGUARDIA & WAGNER ARCHIVES MOSAICO

LAGUARDIA, COMRADES, AND “CONGRESSIONAL SPECIAL” FOGGIA, ITALY, 1918

COPYRIGHT: LAGUARDIA & WAGNER ARCHIVES MOSAICO

DIRECTOR-GENERAL UNITED NATIONS RELIEF AND REHABILITATION AGENCY (UNRRA), 1946

COPYRIGHT: LAGUARDIA & WAGNER ARCHIVES MOSAICO

THE FIORELLO H. LAGUARDIA FOUNDATION, FOUNDED 2001

The Foundation focuses on three major areas:

1. Structuring Italian-US partnerships to invest in community-basedsustainable development projects in selected developingcountries, in part through creation of a sustainable developmenttechnical assistance fund with bilateral, multilateral, andphilanthropic donors.

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

3. Promoting academic exchange between universities in Italy anduniversities in the State of New York in biotechnology, agriculture,and medicine. In the context of academic exchange, thefoundation seeks to promote intellectual exchange at the cuttingedge of research in medical genetics, especially pertaining tochildhood genetic diseases in Southern Italy; in agriculturaltechnology to improve small scale farming efficiency; and inpharmaceuticals and genetic engineering to reduce environmentaldisease.

MOSAICO

OAS

Brazil India

Blue Moon

Comune diMilano

China

REEEP

Him. Fin. Fac.

Equity FundMultilateral BRTBrazilian Equity Fund

Volkhart FndtSainsbury FCTBanca Etica Regione Toscana/Arte ContinuaFondazione CariploUN FoundationFondazione BMdPdS

Funding History

(IREED RABO/BTS BELVOIR)

PREP-ASSIST

MOSAICO

Goal of MOSAICO

Catalyze Human, Institutional, and Financial Resourcesin Support of the Development of Locally Defined and

Managed Enterprises UtilizingSustainable Approaches and Infrastructures

on a Significant Scale

MOSAICO

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 groupssupply side - financial, technical training

Integration - financial and commercial chains

Sustainability - environmental, social, and financial at project, program, and initiative levels

MOSAICO

MOSAICO Network

The Initiative is executed by a network with five nodes:

The Global Environmental Institute - Beijing, ChinaEnvironment, Energy, and Enterprise Ventures PLC - Delhi, IndiaInstituto Eco-Engenho - Maceió, Brazil

supported by

Energy and Security Group, Inc. - Washington, DCFiorello H. LaGuardia Foundation - New York, New YorkEcosoluzioni, Snc – Cortona, Italy

MOSAICO

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)

MOSAICO

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.

MOSAICO

Approach: Basket I

Element One: Project Preparation Assistance Services

• Incubation Services

• Preinvestment Funding For Projects

• Credit Enhancements

MOSAICO

Approach: Basket I (cont’d)

Element Two: Mitigate Financial Institution Risk

• Short-term guarantees

• Subordinated Loss Reserves

• Project Bundling

MOSAICO

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

MOSAICO

NORDESTEAlagoasBahiaCearáParaibaRio Grande Do NorteMaranhãoSergipePernambucoPiauí

MOSAICO

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

MOSAICO

Drip Irrigation - Alagoas

MOSAICO

• Yunnan Province• Guangxi ZhuangAutonomous Region

MOSAICO

China Program - Participants

Basket IProvincial Poverty Alleviation and Development Poverty Alleviation and Development

OfficeOffice Rural Credit CooperativeAgricultural Bank of ChinaCooperativesProducer Associations

Basket IITsinghua Venture CapitalAsian Development Bank (?)

MOSAICO

Investment Structure

VenturePhase One

Ordinary Shares

Incubation & TA Services

Equity Capital

20% or higher

RFPTeam

Farmer

Farmer

Farmer

Equity Capital10% or lower

RFPSeed

Capital Fund

Preferred Shares

Ordinary Shares

Service #1

Service #2

MOSAICO

Investment Structure

RCC/ABC Loan80% or lower

RFPGuarantee

Facility

Guarantee(Loan principal only

w/asset trigger)

VenturePhase Two

PreferredShares

OrdinaryShares

Service #3

MOSAICO

Investment Structure

RCC/ABC Loan80% or lower

RFPGuarantee

Facility

Guarantee(Loan principal only

w/asset trigger)

VenturePhase Three

Farmer

RFPTeam

PreferredShares

OrdinaryShares

Ordinary Dividends(return on advisory services)

RFPSeed Capital

Fund

Preferred Dividends(return seed capital) Ordinary

Dividends(ROI)

MOSAICO

The States of• West Bengal• Uttaranchal• Sikkim

MOSAICO

Withering Organic Tea – Darjeeling

MOSAICO

India Program- ParticipantsWest 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

MOSAICO

MOSAICO VALUE-ADDED CHAIN

Darjeeling OrganicTea Farm

HARROD’STEA

₤

BANK

TECHNICAL ASSISTANCEDEVELOPER

TECHNICAL ASSISTANCE

GUARANTEE $

VERs ₤

PREP-ASSIST (Himalayan Finance Facility)

MOSAICO