Following enforcement of the act to revise part of the Japan Finance Corporation Act (the Revised JFC Act) on March 31, 2010, JBIC has decided to expand its support for projects undertaken in developing countries that are having a favorable impact on the preservation of the global environment, including development of photovoltaic generation facilities and highly energy-efficient power plants drawing on advanced environmental technologies, as well as installation of energy-saving equipment. In doing so, JBIC will utilize its loan, investment and guarantee functions while seeking to mobilize private funds.
The Revised JFC Act extends the scope of the Japan Finance Corporation (JFC) missions and JBIC operations by adding a new responsibility: the promotion of the overseas business having the purpose of preserving the global environment, such as preventing global warming.
Although JBIC has supported the environmental sector to date, projects eligible for JBIC financing were limited to those directly aiming to maintain and improve international competitiveness of Japanese industries, such as projects involving Japanese firms' investment and machinery/equipment exports. Accordingly, projects dedicated solely to preservation of the global environment were so far not eligible for JBIC support.
Revision of the JFC Act has enabled JBIC to finance projects aimed at preserving the global environment, such as projects that significantly reduce greenhouse gas (GHG) emissions, under the financial instrument for global environmental preservation called GREEN (Global action for Reconciling Economic growth and ENvironmental preservation).
When providing financing under GREEN, JBIC will take into consideration the Hatoyama Initiative, which the Government of Japan announced in December 2009 pledging three-year assistance for developing countries up to the end of 2012.
Specific projects and programs supported by GREEN must aim at preserving the global environment, such as preventing global warming, and in principle must meet the following two requirements:
(1) The project has a favorable impact on preservation of the global environment such as significantly reducing GHG emissions; and
(2) With regard to the impact on preservation of the global environment stated above, the project proponent measures the level of impact (Measurement), reports the results of this measurement (Reporting), and then allows either JBIC or a JBIC-retained third party entity to verify the results (Verification).
For details, please see the Guide to Eligible Projects. Detailed confirmation items and an outline of the Measurement/Reporting/Verification process will be announced as soon as they are decided.
Methodology and Specific Examples
When providing loans, investments and guarantees under GREEN, JBIC will draw on its Untied Loan and Equity Participation methodology while seeking to mobilize private funds. Below are examples of JBIC financing under GREEN:
(1) Cofinancing with or guarantee for private financial institutions
JBIC extends a loan in cofinancing with private financial institutions, or provides a guarantee for the cofinanced portion, in support of a project expected to significantly reduce GHG emissions, such as the development of photovoltaic power generation and highly energy-efficient power plants.
(2) Cofinancing with multilateral financial institutions
When a multilateral financial institution extends a loan for a project in a developing country that is expected to significantly reduce GHG emissions, JBIC helps this institution by participating in cofinancing. (In this case, the loan is cofinanced not only with JBIC but also with the private financial institution.)
(3) Equity participation in the fund established by foreign companies and multilateral institutions
Given the significance of efforts by the international community for preserving the global environment, JBIC makes equity investment in the fund that foreign firms and multilateral institutions have established with the aim of reducing GHG emissions.
For details of Untied Loans and Equity Participation, please see below: