2010/09/08

(BN) JBIC to Lend $2.5 Billion for Environmental Projects

yesterday

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JBIC to Lend $2.5 Billion for Environmental Projects (Update1)
2010-09-07 02:20:35.228 GMT


(Adds India's funding in sixth paragraph.)

By Shigeru Sato and Takako Taniguchi
Sept. 7 (Bloomberg) -- The Japan Bank for International
Cooperation plans to offer $2.5 billion in loans this fiscal
year for clean-energy and water-supply projects abroad to help
Japanese companies market their environmental technologies.
The state-controlled lender known as JBIC will seek to ally
with local commercial banks to provide syndicated loans totaling
about $5 billion for such projects in the 12 months through
March 2011, Takashi Hongo, head of the bank's environment
finance engineering section, said yesterday.
Japan is counting on exports of technologies such as smart
electricity grids, water-supply systems and power generators
requiring less coal to spur growth as demand weakens at home.
The International Energy Agency estimates the world must boost
spending on energy efficiency and clean technology by $400
billion a year in the next two decades to tackle global warming.
"The world needs a vast amount of money to invest in
infrastructure and fuel-saving power plants and other energy
projects, in particular in developing nations like India and
Indonesia," Hongo said in an interview in Tokyo. "Our role is
to take the initiative and attract private banks to finance
those projects."
Under a financing program dubbed the Leading Investment to
Future Environment Initiative, or LIFE, the bank lent about $2.7
billion last fiscal year as part of $5.4 billion of syndicated
loans. JBIC had originally planned to allocate the amount over
two fiscal years. Demand for financing through the program was
stronger than expected from Japanese investors, Hongo said.

India-U.S. Partnership

India has allied with the U.S. Department of Energy to
provide funding to local developers of clean energy projects.
The Indo-U.S. Joint Clean Energy Research and Development Center,
set up by the two governments, ran an advertisement in the Times
of India newspaper on Sept. 6 seeking applicants. Initial
priority areas are solar, advanced biofuels and energy
efficiency of buildings, the ad said.
JBIC lends for initiatives that involve Japanese companies
or use the country's resource-efficient technologies. In March,
it signed loan contracts for power plant projects in Indonesia
and Mexico that involved Tokyo Electric Power Co., Mitsubishi
Corp. and Mitsui & Co., according to a statement from the bank.

Carbon Offset

Hongo said he expects JBIC to further boost financing for
overseas projects as Japan seeks carbon-offsetting accords with
Asian nations including India, Indonesia and Vietnam. Under the
proposed agreements, Japan would earn emission-reduction credits
and offset its own pollution by investing in projects that cut
heat-trapping gases in the developing nations.
The 1997 Kyoto climate-protection treaty has a similar
program called the Clean Development Mechanism. Concerns have
grown over the possible end of the United Nation-brokered
mechanism when the Kyoto Protocol expires at the end of 2012.
Japan's economic recovery is losing steam as demand weakens
at home and abroad, Standard & Poor's said on Sept. 1. Exports
only have "limited scope" to keep driving growth because of
moderating expansions in Japan's largest overseas markets, the
rating company said.
"Expanding Japan's exports and creating jobs are the
missions that always come with our financing of overseas
projects," Hongo said.

For Related News and Information:
Top finance stories: TOP FIN <GO>
Top Japan stories: TOP JN <GO>
Japan and the environment: TNI JAPAN ENV BN <GO>

--Editors: Russell Ward, Philip Lagerkranser.

To contact the reporters on this story:
Shigeru Sato in Tokyo at +81-3-3201-3294 or
ssato10@bloomberg.net;
Takako Taniguchi in Tokyo at +81-3-3201-3048 or
ttaniguchi4@bloomberg.net.

To contact the editor responsible for this story:
Philip Lagerkranser at +852-2977-6626 or
lagerkranser@bloomberg.net.