Ayako Okamoto

Deputy Director for Global Environment Division
New Energy and Power Finance Department II
Infrastructure and Environment Finance Group

Global Environment Division
New Energy and Power Finance Department II
Infrastructure and Environment Finance GroupAs GREEN operations launched in April 2010, JBIC developed J-MRV as a method to evaluate the greenhouse gas (GHG)

understanding among a wide range of countries on climate change mitigation projects.
Quantifying GHG
emissions reductions

Okamoto: Some of the formulas and concepts in
the J-MRV and its methodologies are highly techni-■ Confirmed GHG emissions reductions based on J-MRV Guidelines(As of end-March 2016)

Project Outlines
Signing date ofCountry /Borrower /Investee
Agreement
RegionMarch 2011
BrazilBNDESMarch 2011
Latin America
CAF
March 2011
India
ICICI Bank
October 2011
MexicoBANCOMEXTSouth Asia Clean
December 2011 South Asia
Energy Fund, L.P.
February 2012
India
ICICI Bank
*1

Total amount ofreduced
emissions (CO2 t/year)
Of lmited
Conformity
conformity
113,568ー
416,521ー
801,898ー
15,403ーRenewable energy projects in Brazil
Renewable energy projects in Latin American and Caribbean countries
Renewable energy and energy efficiency projects in India
Renewable energy projects, such as solar and wind power projects, in Mexico

Amount of loan /equity participation
USD180 million (loan) 1
USD180 million (loan) 1
USD120 million (loan)1
USD60 million (loan)1

Total no. ofverified sub-loans
71
81

Renewable energy and energy conservation businesses in South Asia

USD20 million (investment) 2

3

36,89250,000

USD180 million (loan) 1

4

206,869ー

Use of Loans

Renewable energy and energy efficiency projects in India

Guarantees provided by JBIC for other portions *2

Amount of equity participation by JBIC

Cover photo : Westermost Rough Offshore Wind Power Project (England)

URL: http://www.jbic.go.jp/en/

Applying J-MRV’s
quantification to Japanese
overseas investment

cal, so it may sometimes burden related parties,
such as the borrowers. This is why we ensure tooperate the J-MRV in line with the principle of“Simple and Practical.” We try the best to summarize the details in a way that is easier to understand, to simplify the procedures and to reduce any
operational burden on the parties involved.
On the other hand, we also take care of J-MRV
itself not to lose its credibility by over-simplifying
the procedures, reviewing them in accordance withinternational trends and technological advancement, as well as advice from external experts.
Sugimoto: The J-MRV has been originally developed as a tool to calculate how much GHG emission
reductions is from GREEN projects. Recently, however, it has been applied not only to GREEN projects
but also projects where JBIC supports overseas
businesses of Japanese companies through investment loans. The latter case will quantify how muchcontribution the Japanese projects make to the GHG
emission reductions, making their environmental
technologies more appealing. We look forward tohearing from Japanese companies that are considering carrying out projects abroad which contributeto the environmental preservation.

Tel. +81-3-5218-3100

Sugimoto: MRV, which stands for Measurement,
Reporting, and Verification, is a globally-usedmethod to calculate GHG emission reductions. “JMRV” was developed by JBIC as its own method toquantify the GHG emissions reduction in order toconsider whether each project financed under
GREEN operation contributes to the environmental
preservation. The J-MRV Guidelines outline its
concept and procedures.
Along with the basic concept and proceduresof quantifying the reductions, the J-MRV Guidelines includes individual methodologies for eachsector of the project and/or technology which varyfrom renewable energy even to transport.
At the point when GREEN operation just had
started, J-MRV had only three methodologies
for projects which were most in demand, including renewable energy and installation ofenergy-efficient industrial equipment. We thengradually developed new methodologies, andtoday the guidelines are equipped with as manyas ten methodologies.
With the methodologies, JBIC hopes to stimulate Japanese companies’ involvement in environ-mental preservation projects indirectly, focusing on
project and/or technology field where Japanesefirms have deep interests, conducted interviews
with the authorities like trade associations andthen developed and revised related methodologies.
Okamoto: In 2015, for example, we added amethodology for the Energy Management System (EMS), an advanced efficient system towards a reduction of GHG emissions, holisticallycontrolling the energy consumption from a project. At the same time, it is a relatively new service where the Japan’s advanced energy-efficient technologies can be applied to its output
controlling system.
JBIC develops the methodologies on sectors
where Japanese firms could contribute to global
mitigation goal with their advanced environmental
technologies and will continuously oversee and revise the J-MRV Guidelines to meet the progress oftechnologies, as well as global trends.

Press and External Aﬀairs Division, Corporate Planning Department, Corporate Group, Japan Bank for International Cooperation“Simple and Practical,” to ensure its smooth operation. JBIC hopes that J-MRV be a quantification tool for enhancing

4-1, Ohtemachi, 1-chome Chiyoda-ku, Tokyo 100-8144, Japanemission reductions in the projects which JBIC finances, based on J-MRV Guideline. The principle of J-MRV is to be

November 2016

Takashi Sugimoto

JBIC Today

Quantifying GHG Emission
Reductions by J-MRV

JBIC

November 2016

Today

Japan Bank for International Cooperation

Special Feature

Japan’s Role towards
Global Climate Change Resolution

Our Global Challenges

Saraya Co., Ltd. (Osaka, Osaka Prefecture)

Improving the sanitation, environmentand health of the world
through environmentally conscious products
Making unique efforts in social action and environmental conservation initiatives

News in Depth

SPOT LIGHT

Supporting Japanese Participation
in a Dutch Offshore Wind Power Project

Quantifying GHG Emission
Reductions by J-MRVSpecial Feature

Japan’s Role towards
Global Climate Change Resolution
Climate change is a grave threat to the economic andsocial sustainability of the global community. To tackle
this issue, countries across the world are now working
together to reduce the emissions of greenhouse gas
such as CO2. The key outcome of the COP 21 in Paris
was the adoption of a global framework for mitigation,
adaptation and support for 2020 and beyond, and theworld community has reoriented itself toward a newtarget – to keep the average global air temperature rise
below 2 degrees Celsius. Japan committed to scale up
its contribution by not only carrying out domestic
actions against climate change, but also promoting its
advanced environmental technologies and providing
funds to renewable energy and energy efficiency
projects across the world.

IPCC’s projections
Before announcing their noteworthy projections of future climate changes, the Intergovernmental Panel on Climate Change (IPCC)
pointed out in the Fifth Assessment Reportthat most of the observed increase in global
average temperatures since the mid-20th
century is very likely due to the observed increase in anthropogenic greenhouse gas(GHG) concentrations.

2November 2016 JBIC TodayThe IPCC projections estimated that if
additional climate initiatives are not taken (ascenario in which GHG emissions are veryhigh), the average surface air temperature is
likely to rise by 2.6 to 4.8 degrees Celsius by
the end of the 21st century compared to the
1986-2005 average. It will rise by 0.3 to 1.7
degrees Celsius if necessary initiatives aretaken (a scenario in which GHG atmosphericconcentrations will be about 450ppm in theyear 2100) (see Figure on P.3). The projections

also indicated that: 1) cumulative emissions of
CO2 largely determine global mean surface
warming by the late 21st century and beyond;and 2) global warming will increase the likelihood of severe, pervasive and irreversible impacts for people and ecosystems.
Every issue of the IPCC assessment report receives a great deal of attention fromthe world community due to the strong impact it has on international politics, as well as
on each country’s policy directions.

Global actions against
climate change
The IPCC was established in 1988 as an intergovernmental organization which provides scientific evaluation standards on the
climate change issue. They have been working since the 1990s to build the global framework for climate change issues based on the
IPCC’s scientific knowledge.
The starting point of this global framework was the United Nations Framework
Convention on Climate Change (UNFCCC), which came into effect in 1994.
The objective of UNFCCC is to stabilize the
GHG concentration level and preserve thecurrent as well as future climate. The UNFCCC’s supreme decision-making body is
the Conference of the Parties (COP), held
every year since 1995.
At the COP 3 in 1997, the Kyoto Protocol was adopted and came into effect in2005. It established obligations for developed signatory countries to set numericaltargets for GHG emission reduction toachieve between 2008 and 2012.
At the COP 15 held in 2009, the target
for climate finance (see N.B.1) was proposed
and officially agreed upon in Cancún in thefollowing year. Under the agreement, “Industrialized countries committed to provide
funds rising to USD100 billion per year by2020 to support concrete mitigation actions
by developing countries that are implemented in a transparent way. These funds
would be raised from a mix of public andprivate sources.” (Quoted from the UNFCCC official website.)
Then finally at the COP21 held in2015, the Paris Agreement was adopted,
opening a whole new stage for climatechange actions. This is praised as an epochmaking international agreement which set
a common cause among all of the 196 participating nations and regions toward ashared goal to establish a system and enhance the ambition of mitigation and adaptation efforts from 2020 and onwards.

Japan’s funds and technologies:
supporting developing countries’
countermeasures for climate change

JBIC’s commitment to preservation of the global environment
JBIC, a policy-based financial institution ofJapan, is moving forward with financial support for individual projects on the basis of theabove initiatives of the Japanese government.
In April 2010, for example, JBIC newly assumed the “Global action for Reconciling
Economic growth and ENvironmental preservation” (GREEN) (see N.B.2) as a new operation, and has actively supported projects indeveloping countries. These projects, such as
renewable energy and energy efficient projects utilizing advanced environmental technologies, are expected to have a reducing
effect on GHG emissions. The GREEN operations have already supported 29 projects,
amounting to approx. USD4.5 billion (as ofend-July 2016). Furthermore, in addition to
GREEN, JBIC also supports expansion ofvarious overseas businesses by Japanese companies which own excellent low-carbon technologies (see P.4 & 5).

While the world is actively taking steps
to address climate change, the Japanese government is also carrying out
various initiatives.
First, at the COP 15 in 2009, the Japanese government announced its intention
to provide developing countries with financial support totaling JPY1.75 trillion (approx. USD15 billion) over a period of three
years from 2009 to 2012. Then in 2013, it
set forth the Actions for Cool Earth: ACE,
in which the Japanese government would
support totaling JPY1.6 trillion (approx.
USD16 billion) over a period of three years
from 2013 to 2015.
In 2015, alongside the COP 21, thegovernment announced ACE2.0, proclaiming a two-pillar of contribution. The
first pillar pledged to support developing
countries by providing, in 2020, approximately JPY1.3 trillion (approx. 1.3 times
the previous ACE level) of Japanese public
and private climate finance to developing
countries. The second pillar of innovation
set forth the “Energy and Environment
Innovation Strategy” towards enhanced
development of innovative energy andenvironmental technologies.

NB1: Climate finance: a local, national or transnational
financing to support mitigation and adaptation projects
towards developing countries.
NB2: GREEN (abbreviation of Global action for Reconciling
Economic growth and ENvironmental preservation): an
operation in which JBIC provides loans, equity participation,and guarantees, while mobilizing private financing, toprojects in emerging-market countries that entail significant
environmental preservation effects by, for example,
developing solar power and energy-efficient power plants, orby introducing energy efficient equipment that utilizes
advanced environmental technologies.

■ Global average surface temperature change (relative to 1986-2005)（℃）
6

A rise of 2.6-4.8 degrees Celsius
when additional measures are not taken

4

20
A rise of 0.3-1.7 degrees Celsius when necessary measures are taken
-2
2000

2050

2100
Year

Source: created by JBIC from IPCC’s“Climate Change 2014 Synthesis Report Summary for Policymakers”

November 2016 JBIC Today

3Special Feature

Climate FinanceLeading Environmental
Tsutomu Sato
Technologies Beyond Borders

Working at the forefront of global
environmental preservation

Deputy Director General,
New Energy and Power Finance Department II
Infrastructure and Environment Finance Group-AndDirector for Global Environment Division

Diffusing Japan’s advancedenergy-efficient technologies
across the world
The Japanese government sets forth in the
ACE in 2013, as well as in the succeeding
ACE2.0 (see P3), the goal of contributing to
the worldwide initiative to reduce GHG emissions by disseminating the excellent environ-mental technologies of Japan across theworld. JBIC also vigorously engages in activities that contribute to achieve this goal.
The Japanese environmental industry
has a distinct competitive edge in not only renewable energy, such as geothermal power
generation, but also in wide-ranging energyefficient technologies, including waste energy
recovery facilities, waste incinerators, andwater recirculation systems at steelworks andother plants. While the majority of climatechange mitigation projects which have support from international financial institutions
are concentrated in the renewable energy sector, JBIC proactively focused on the progressive energy-efficient technologies of Japanesecompanies and on supporting related projects
to widely disseminate them.

Key Examples of JBIC's Financing for■ JBIC’s track record of environmental
activities (FY2012-15)

There are three schemes – export loans, overseas investment loans, and untied loans (underwhich the GREEN operations are conducted)– through which JBIC primarily supports theclimate change mitigation projects.
Of these schemes, GREEN started in2010 with the aim of preserving the environment, following the amendment of its statutory
law. In recent years, climate change has become such a serious issue for the global community that a number of international
financial institutions, such as the World Bank,

the European Bank for Reconstruction andDevelopment (EBRD), and the Asian Development Bank (ADB), have newly positioned
climate change measures as the key agenda.
Back in 2010, however, there were only a few
public financial institutions which were committed to environmental preservation as one of
their primary operations, and JBIC’s GREEN
was undoubtedly a path-breaking initiative.
Furthermore, corresponding to the launch of
GREEN, JBIC established the “J-MRV
Guidelines,” a unique quantification technique to measure the reduction effects of
GHG emissions. The projects to which wehave adopted the J-MRV Guidelines are esti-

13 Indonesia▶ Rajamandala Hydro Power Project14

1*N.B. These figures depend on the operation evaluation
report between FY2012 and FY2015.

2

4▶ Sarulla Geothermal Power Project3
Equity participation in MHI Holding Denmark
ApS (Denmark)C2C Wind and Solar Power Project(CANADA)

10

14 Canada

15

5▶ C2C Wind and Solar Power Project6
9

1 Iceland▶ Theistareykir Geothermal Power Project

16
11
Sarulla Geothermal Power Project(Indonesia)

12
Westermost Rough Offshore Wind Power
Project (England)

8

2 England

13

entities, investing in renewable energy andenvironmental projects

4

November 2016 JBIC Today▶ CO2 -EOR (Enhanced Oil Recovery) Project18▶ Loans to renewable energy projects through
BANCOMEXT (2nd and 3rd credit lines)

Rajamandala Hydro Power Project(Indonesia)▶ Fund investing in renewable energy and energy

5 Turkey

6 Jordan

9 India

10 China▶ Loan for a Turkish company to purchase Japanese-▶ Shams Ma'an photovoltaic power project▶ Loans to renewable energy projects through ICICI▶ Fund for energy efficiency and environmental projects

made geothermal equipment through Isbank▶ Loan to renewable energy projects through Turkiye
Sınai Kalkinma Bankasi▶ Loan to renewable energy projects through Türkiye

7 South Africa▶ Loan to renewable energy businesses throughStandard Bank of South Africa▶ Loan f or Turkish companies to purchase▶ Luchterduinen (Q10) Offshore Wind Power Project

15 USAefficiency projects

Kalkınma Bankası (2nd credit line)

4 Netherlands

CO 2 -EOR (Enhanced Oil Recovery) Project(USA)

16 Mexico
Shams Ma'an photovoltaic power project(Jordan)▶ Fund of funds managed by a UK fund and othera Danish company operating an offshore windturbine joint venture

177▶ Westermost Rough Offshore Wind Power Project▶ Equity participation in MHI Holding Denmark ApS,

mated to reduce a cumulative total of approximately 1.6 million tons (as of the end of March
2016) of GHG emissions (which is equivalent
to the amount of GHG absorbed by about 114
million fully-grown cedar trees) (please see the“SPOTLIGHT” on the back cover for further
details on J-MRV).
In the present days, efforts to combat climate change are being intensified all the moreby international financial institutions and governmental agencies across the world, on thebasis of the previous year’s Paris Agreement.
JBIC will continue to take further steps forward
in preserving the global environment, while cooperating with fellow organizations.

Environmental Preservation (FY2012-2015)

Number of loans, guarantees,
44
and equity participation
Estimated reduction of
60.73 million tons
GHG emissions

3 DenmarkJapan’s Role towards Global Climate Change Resolution

Japanese-made geothermal power facilities
through Yapi ve Kredi Bankasi▶ Loan for renewable energy projects throughDenizbank (2nd credit line)

Bank (3rd and 4th credit lines)▶ Loan to renewable energy projects through
IDFC Limited▶ Loan to renewable energy projects through StateBank of India▶ Loan to renewable energy projects through Banco

11 Laos

8 Southern Africa▶ Loan to renewable energy projects throughDevelopment Bank of Southern Africa

de Bogotá▶ Nam Ngiep 1 Hydro Power Project

18 Brazil▶ Loan for a company in India to purchase Japaneserenewable energy equipment through ICICI Bank

17 Colombia

12 Malaysia▶ Loan to renewable energy businesses through RHBBank Berhad▶ Loans to renewable energy projects through
BNDES (2nd to 4th credit lines)▶ GHG emission reduction project by PETROBRAS

November 2016 JBIC Today

5

Special Feature

Japan’s Role towards Global Climate Change Resolution

INTERVIEW

How JBIC operates in climate finance
Ryuta Suzuki
Director for Division 3,
New Energy and Power Finance
Department II
Infrastructure and Environment
Finance Group

Addressing Environmental
Challenges though a Diverse Menu
of Financial Instruments

JBIC supports environmental projects
by utilizing three of its various financial
instruments: overseas investment loans,
export loans, and GREEN operations.
Here we present a few examples of
JBIC’s past activities.
Overseas investment loans are a formof financing provided when Japanesecompanies are involved in overseas projects as investors. The loans are provided
to: Japanese companies (investors), local
subsidiaries of Japanese companies (including joint companies), or foreignbanks or governments which provide
loans to or invest in such companies. To
give an example of overseas investment
loans, there was an offshore wind power
generation project in Great Britain that
JBIC agreed to finance in August 2014.
The loan agreement was signed between
JBIC and WMR JV Investco Limited(WMR), a British company, in which
Marubeni Corporation invests (overall
co-financing amount: GBP369.5 million), to provide the loan in project financing to the offshore wind power
project. WMR as an investor participatesin this project carried out by a Danish
company, DONG Energy A/S (DONG),
8km off the coast of East Riding of Yorkshire in Great Britain, and together withDONG constructs and operates thepower plant and later sells the generated
electricity. The long-term loan which
JBIC provided in pounds sterling miti-

gates the foreign exchange risk entailedon the project operator’s loans.
Export loans provide financing for exports of machinery, facilities, and technologies of Japanese companies, and areextended to foreign importers or financial
institutions. As an example, JBIC signed aloan agreement in December 2015 to support the export of geothermal power generation facilities for Iceland. The loan wasprovided to Landsvirkjun, Iceland’s national power company, for its purchase of
the geothermal power generation equipment from FUJI ELECTRIC CO., LTD.
The equipment is utilized for its geothermal power plant (90MW) in Theistareykir
in the northeastern part of the country(overall co-financing amount: approx.
USD68 million).
Japanese companies possess some of
the world’s most advanced geothermal
power technologies and dominate about
70% of the global market share of geothermal power generation turbines. Securing stable supplies of electricity whilecurbing GHG emissions, geothermal
power generation is expected to be increasingly utilized in emerging countries
as well. This will open up business opportunities for Japanese companies.
On the other hand, GREEN operations are not necessarily applied only to
projects where the operators or exporters
are Japanese companies, but its primary
focus is to provide loans and guarantees,
as well as equity participation financing,
to projects which lead to prevention of
global warming. For example, JBIC es-

Bolli Thoroddsen,
Chairman of the Icelandic Chamber ofCommerce in Japan■ Cumulative total of GREEN projects by
sub-project sectors(As of end-June 2015)

Geothermal
Solar
Energy-efficiency(aluminum production,
CDQ, etc.)
Small hydroWind

Biomass

tablished a credit line based on untied
loans totaling USD100 million with theDevelopment Bank of Latin America(CAF) in April 2016. This credit line wasintended to finance through CAF thenecessary funds for renewable energy
and energy efficiency projects in CAF
shareholding countries in the Latin
American and Caribbean region.
Cooperation with each country’s
government and governmental financial
institutions helps us realize support for
projects which cannot be covered by
JBIC alone. We hope to achieve an evenstronger partnership with such organizations, as well as cooperation with thehost countries from the initial stage ofthe project formation, to expand our
support for renewable energy and otherprojects which contribute to environment preservation.

The Continuing Growth of Iceland’s Geothermal
Power Industry in Synergy with Japanese Companies
In Iceland, almost all generated electricity comes from renewable energy sources, and the geothermal power, along with hydropower, has been
widely utilized for decades.
In December 2015, JBIC signed an agreement to finance up to USD34 millions for assisting the export of geothermal power generating equipment
made by FUJI ELECTRIC CO., LTD. to Landsvirkjun, Iceland’s leading national power company which produces the largest domestic market share.
Japan and Iceland celebrate the 60th anniversary of their diplomatic ties in 2016, and it is anticipated that the advanced Japanese geothermal
power generation technologies will continue to be applied in Iceland. Mr. Bolli Thoroddsen, the Chairman of the Icelandic Chamber of Commerce inJapan, speaks in the following interview as a key promoter of the cooperative relationship between Iceland’s power utilities and Japanese companies.
The electricity in present-day Iceland is produced and supplied
mostly from renewable energy sources (75.5% from water and24.5% from geothermal power (as of 2014; based on data from
Iceland’s National Energy Authority). This is at least partly a result of the severe airpollution from which the country suffered in
the 1920s due to heavy dependence on coal, as well as of the oil
price hike in the 1930s. These circumstances triggered the government to take the initiative to switch incrementally to local renewable energy sources. There was some initial opposition fromthe general public, but we continued with perseverance to makegradual changes leading to renewable energy, starting from energy production like district heating, and this eventually persuaded many people to understand the possibility and value ofgeothermal power generation plants.
The history of technological cooperation between Iceland andJapan in the field of geothermal power generation dates back to
1977. These long-lasting bonds began when a Japanese company
shared its geothermal power technologies with engineers in Iceland. The Japanese engineers not only delivered and set up the facility, but also taught Icelanders the know-how of operation andmaintenance. The geothermal power facility set up by engineers of
Mitsubishi Heavy Industries at Krafla power station is high-quality
and of advanced technology, and is operating smoothly to this day.
Over the past 40 years, Japanese companies have played an important role in the development of geothermal power generation in
Iceland. The majority of the power generation equipment used at
Icelandic plants (total generated power: 665MW (2015); based ondata from Iceland’s National Energy Authority) is made in Japan. You
could say that Iceland is a showroom of Japanese geothermal power
technologies. The technological cooperation was further enhanced
especially after the Japan-Iceland Foreign Ministers’ Meeting in2010. Through active cooperation, geothermal power generation
continues to be developed to an even higher level of technology andefficiency, such as enabling power generation from a stratum withhigh salinity. Such power generating technology will also be useful inprojects in other countries, such as developing countries. In Iceland,

the hot water, steam, and products which are created by the geothermal power generation are used in other domestic industries (including hotbaths, hospitals, laboratories, and gyms), and the cumulative
amount of CO2 emissions reduction by the use of geothermal energy has reached approximately 140 million tons (as of 2014; basedon data from Iceland’s National Energy Authority). With this commitment to environmental preservation, the geothermal power
generation facilities have attracted increasing numbers of visitors,
contributing to the tourism industry in Iceland which has beenbooming in recent years. In such ways, geothermal power generation has grown to become a major industry supporting the whole ofIceland. I believe we have many examples which can be used as reference for replication when developing geothermal power in Japan.
The loan agreement signed between JBIC and Landsvirkjun
marked the first-ever loan JBIC has granted to an Icelandic company, and the first loan from a Japanese financial institution for Iceland, since the financial crisis in 2008. It was also the first time that
JBIC provides an officially-supported export credit for a renewableenergy project in a developed country. It therefore attracted a lot of
attention from the media, and was even recognized as the “Deal of
the Year” by The Trade Finance Review, a financial magazine.
Japanese financial entities are known to have strong due-diligenceprocesses for financing, and the fact that the Icelandic public company Landsvirkjun acquired this loan helps to increase the international credibility of Icelandic companies in general, and hence isvery significant for us. This year, we celebrate the 60th anniversaryof diplomatic relations between Iceland and Japan. I am very
pleased that this project was realized, thanks to JBIC’s support, atsuch an appropriate time. And it provided a great opportunity tostrengthen our bilateral relations even more and our friendship. Iceland has not only geothermal but other renewable energy power
projects in the pipeline, so we have high expectations for continued
cooperation and support, from JBIC in future projects. I would also
be very honored if the experiences gained in projects in Iceland
would become useful for Japanese companies. Experience theymight use when taking part in projects in other countries.

Theistareykir Geothermal Power Project, Iceland

6

November 2016 JBIC Today

November 2016 JBIC Today

7

Our Global Challenges

Saraya Co., Ltd. (Osaka, Osaka Prefecture)

Improving the sanitation, environmentand health of the world
through environmentally conscious products
Making unique efforts in social action and environmental conservation initiatives

Founded in 1959, Saraya Co. Ltd. (SARAYA) is a small and medium-sized enterprise (SME) engaged in the production and sales ofsanitation products. Since its establishment, it has pursued product development and management that are grounded on environmentally conscious innovations, and has evolved into a company which is committed to improving the sanitation, the environmentand health across the world. The company has actively expanded overseas with the concept of “connecting with the world throughthe global supply chains.” Not only does it provide products and services across the globe, but SARAYA also engages itself in
unique commitment to the society, such as social action businesses aimed at raising sanitation awareness in developing countries,
as well as environmental preservation activities in Borneo Island to achieve harmony between the environment and industries.

Thailand factory where the products are being produced.

Connecting with the world
through the global supply chains

T

Commitment to environmentallyconscious products“O

ur business first started during adysentery epidemic in post-war
Japan when we created antibacterial liquidsoap made from palm oil and distributed it
along with dispensers. The business fieldthen diversified naturally into food and public sanitation, as well as the environment andhealth,” Mr. Saraya, the president, looks
back at his company’s growth.
As proven by the fact that the businessstarted with palm oil soap, SARAYA commits to “environmentally conscious products.” One such symbolic product is the“Yashinomi Detergent,” a botanical kitchen
detergent launched in 1971. It was the firstever botanical detergent when water con-8

November 2016 JBIC Today

tamination by petroleum-based synthetic
detergents had been a growing social concern at the time. It has been one of the longest selling products, and has become
SARAYA’s flagship product. “The coconut
and palm-oil based cleansing ingredientsare purely botanical. The detergent contains no added fragrance or colors which
are unrelated to its cleansing effect. So it ismild on skin, and the wastewater can bequickly biodegraded by microbes, reducing
the damage on the environment.”
The company’s environmental considerations also extend to the source of the ingredients themselves. The production ofpalm oil, one of the product’s botanical ingredients, continues to escalate due to theworld’s growing demand for food. The response to this demand has led to disordered
expansions of plantations, cutting down therainforests and aggravating various environmental and social problems in regions including Borneo Island, Malaysia. Taking an
initiative to “start with what we can do for abetter environment,” SARAYA began collaborating in 2004 with a number of organizations to work on rainforest restoration andbiodiversity conservation in the Sabah stateof Borneo Island, which is one of the sourceareas of the detergent’s ingredient, while inviting consumers to participate in the “Borneo Explorers,” an initiative aimed at raisingconsumers’ environmental awareness.
As the motivation for his goal to achievea harmony between business and the environment, Mr. Saraya explains: “our company’s supply chain system is connectedacross the world, so I need to be responsible
for all steps of the supply chain process,from the backyard to our customers.”

he passion to connect with the world
through the supply chains can be seen
in SARAYA’s active overseas business expansion. Since the establishment of its U.S.
sales office in 1995, as well as production
bases in China, Thailand, and U.S. in the
2000s, the global network of the SARAYA
Group has now expanded to 25 offices in 15
countries/regions across the world (6 factories and 19 sales offices).
One of its commitments to the society is
the social action business aimed at improving sanitation in developing countries. In
Uganda, for example, the company launched
the “Wash A Million Hands” project in 2010
to promote communities’ awareness for handwashing. Then in 2011, SARAYA established a local subsidiary in Uganda with theaim of improving the pour sanitation environment of local medical facilities. In 2014,
the company began the local manufacturingof alcohol hand disinfectants and started delivering the products to Kenya the following
year, in pursuit of a sustainable business
which addresses Africa’s social issues, while
creating local employment.
Besides Africa, SARAYA has also been
carrying out the “Happy Handwash Project” in Cambodia since 2013, a social action business which promotes education onproper hand sanitation, as well as the use ofantibacterial liquid hand soap and alcohol
hand disinfectant.

Increasing the production
capacity for improving
the sanitation, environment andhealth of the worldD

emand for sanitation products suchas liquid soap, detergent, and handdisinfectant has recently been soaring withthe economic growth of Thailand and surrounding countries in Asia. SARAYA responded to this demand by expanding thefacilities of its factory in Thailand, themain manufacturing base for detergent
products, and utilized the funds financed
by JBIC. Mr. Saraya expresses his praise
for JBIC, “we are grateful for being able toprocure the funds denominated and in
local currency mitigate currency risks,”
and added: “JBIC provides medium tolong-term funds based on the Japanese
government policy, without being affectedby the changing economic environment.
In addition to its financial function, we
would also like to rely on JBIC as one ofour vital information sources for regions
such as Africa, where Japanese privatebanks have not yet expanded to.”“Supplies from our factories in Japancannot catch up with the surging demand.
We would have to consider building a newfactory in a few years.” With commitment toimproving the sanitation, environment, andhealth of the world through its wide-ranging products and services, SARAYA strides
forward with firm, unwavering steps.

Yusuke Saraya
President

Saraya Co., Ltd.

Company Profile
Name

Saraya Co., Ltd.

Established

1959

Capital

45 million yen

President

Yusuke Saraya

Businesslines

Development, manufacturing, andsales of health and sanitation
products and services
Consultation of food andenvironmental sanitation
Development, manufacturing andsales of food products

Headquarters
address

2-2-8 Yuzato, Higashisumiyoshi-ku,
Osaka 546-0013, Japan

Factories

Osaka and Iga (domestic); China,
Thailand, U.S., and Malaysia(overseas)

In July 2015, JBIC signed a loan agreement amounting to THB25 million with Saraya MFG. (Thailand)

RelationshipCo., Ltd. (SMT), a Thai subsidiary of Saraya Co., Ltd. The loan is cofinanced with Mizuho Bank, Ltd.,

with JBIC

with the overall cofinancing reaching THB40 million. It is intended to finance necessary funds inlocal currency for SMT to expand production facilities of hygiene products.

November 2016 JBIC Today

9Behind the scenesof media coverage

Project Financing for
Offshore Wind Power
Generation Projectin The Netherlands

News in Depth

Supporting JapaneseParticipation
in a Dutch Offshore Wind
Power Project

Supporting Participation of Japanese Company
in Offshore Wind Power Generation Project■ Global installed wind capacity 2000-2015
432,883
450,000 MW
400,000
369,705
Cumulative Installed Wind Capacity
350,000
318,463
Annual Installed Wind Capacity
300,000
282,842
238,089
250,000
197,946
200,000
159,016
120,690150,000
93,924
100,000
59,091 73,957
51,752 63,467
50,000 174,00 23,900 31,100 39,431 47,620 14,703 20,310 26,874 38,445 39,058 40,628 45,034 35,797
3,760 6,500 7,270 8,133 8,207 11,531

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: GLOBAL WIND ENERGY COUNCIL Global Wind Report 2015

■ Developers’ share of 2015 annual instalation

Renewable energy power projects continue to attract high expectations from the world, along with ever-fiercer competition forthe projects’ concession contracts. Amid such trends, Mitsubishi Corporation’s first full-fledged participation in the offshore
Others
1,054MW
34.9%

wind power generation project is a significant first step towards the future of Japanese companies’ overseas renewable energy
businesses. The Japanese government positions renewable energy projects as one of the new frontiers for public support andadvocates the advancement of low-carbon technologies in the “Action for Cool Earth: ACE 2.0” (see p.3). We interviewed JBIC’s
staff in charge for an insight into the present state of offshore wind power and about the challenges they faced in providing the
project finance (PF) for this new business domain that is in line with the Japanese policy.
An article related to this project was published in the morning edition of The Nikkei on March 11, 2016.

RWE Innogy
344MW 11.4%

EnBW
288MW

Vattenfall
148MW 4.9%
Trianel
200MW

E.ON
515MW
17.1%

6.5%

9.5%

Stadtwerke München
236MW 7.8%

The Japan Bank for International Cooperation (JBIC; Governor, CEO: Hiroshi
Watanabe) signed on March 9 a loan agreement totaling up to approximately
EUR244 million (JBIC portion) with Clusius C.V. (CLUSIUS), a limited partnership in the Netherlands invested in by Mitsubishi Corporation (MC). This loan
is provided in project financing for an offshore wind power generation projectin the Netherlands. The loan is cofinanced with private financial institutions,bringing the total cofinancing amount to approximately EUR443 million.
The loan is intended to provide the long-term financing that is necessary
for CLUSIUS, jointly established by MC and Eneco Holding N.V. (Eneco), oneof the largest Dutch power and energy company, to operate the Luchterduinen(Q10) offshore wind farm and sell the generated electricity to Eneco Energy
Trade B.V. (a wholly-owned subsidiary of Eneco) over a period of 20 years.
MC is committed to the development of renewable energy sources which
create sustainable environmental value, and has set out a policy to aggressively work on wind power generation projects, particularly in Europe where theintroduction of renewable energy sources is actively promoted. These projects
include onshore wind power generation projects, in addition to the offshore
projects which enable large-scale development. With offshore wind power generation being one of the new frontiers of renewable energy, Japanese companies have not yet managed to build a track record in such projects overseas.
JBIC’s support for Japanese companies to participate in such projects throughlong-term financing will contribute to maintaining and strengthening the international competitiveness of Japanese industries.
Renewable energy projects are positioned as part of the new frontiers ininfrastructure that are subject to support in the Japanese government’s strategy, which aims at promotion of Japanese involvement in projects including
the design, construction, operation, and management of infrastructure. Suchprojects are also in line with an initiative announced by the government in
December 2015,“Actions for Cool Earth: ACE 2.0”
, which promotes the advancement of low-carbon technologies.
As Japan’s policy-based financial institution, JBIC will continue to support
the development of overseas infrastructure projects by Japanese companies,
by drawing on its various financial facilities and schemes for structuring projects, and performing its risk-assuming function.
* Press release of JBIC, March 11, 2016

DONG Energy 234MW 7.8%

Source: The European offshore wind industry - key trends and statistics 2015

—What are some of the main features of this project?
▶Miyaguchi First and foremost, it is that this project supports a Japanese company’s overseas business expansion in the field of renewableenergy. The EU has set forth its policy target to make the best use ofrenewable energy, and the member states are promoting a number ofrenewable energy projects under each country’s own initiative. Given
the active development of wind power generation projects, including
offshore companies, foreign companies are facing fierce competition
for projects’concession contracts, not to mention the challenge forJapanese companies to participate in such projects. I believe that JBIC’s
support amid such an environment for an offshore wind power project,
one of the new fields of renewable energy for Japanese corporates toparticipate, has a great value.
Mitsubishi Corporation (MC) is putting a lot of effort into renewable energy, such as solar and onshore wind power in the power generation investment in Europe, and this is their first-time ever to invest
in an offshore wind power project. It will prove to be a significant
move for MC’s future renewable energy business expansion to develop a business together with Eneco Holding N.V., a national energy
supplier of the Netherlands.

▶Kuramoto The second distinctive feature is that, unlike usual proj-

10

November 2016 JBIC Today

ects, the loan is provided in PF after the completion of the power plant.
In usual cases of providing PF before the project completion, the lenders (financial institution(s)) would have to assume due construction
risks, but as the sponsors themselves requested for a post-completion
PF for this project, the risks on the lenders’side are reduced.

—What difficulties did you face in the post-completionproject financing?
▶Kuramoto We first started from researching the legal and administrative framework for renewable energy projects in the Netherlands,
because it varies among European countries. The Dutch government
subsidies for renewable energy applicable to this project are partly exposed to market risks, so we spent a long time evaluating how to handle
such market risks during the process of building a security package
which involves project proponents with various aspects.
As JBIC began to consider financing for the project before the cofinancing banks were selected, we made our way to the actual projectsite a number of times and negotiated with the project company, as
well as the Dutch government. The most crucial stage of the due diligence process was the documentation (contract negotiation), challenging us to find the best way to coordinate the interests among nearly ten stakeholders, but because JBIC’s loan accounted for the largest
proportion and its stance as a governmental financial institution would

be given much weight, we tackled the negotiations while paying consideration to how we can best support the future business expansionsof MC and Japanese financial institutions.

—Does JBIC plan to continue to support offshore
wind power projects in which Japanese companies participate?
▶Miyaguchi There has recently been advancement in the technological innovation of offshore wind power turbines, and each unit is generating more power. Each of the 43 windmills used in this project produces 3MW (megawatt), so the total capacity amounts to 129MW.
Meanwhile, windmills with a capacity of 8MW per unit are being commercialized in recent days, substantially increasing the scale of offshore
wind power projects, whose total capacities sometimes exceed 500MW.
The offshore wind power industry is full of promise. Compared toonshore wind farms, the offshore benefits from better wind conditions. The offshore also benefits from having no restriction of land use
or road, as its expansion becomes relatively easier and also with theupsizing made relatively easy. After all, its market scale is expected toreach 66GW (gigawatt: 1GW=1,000MW) by 2030 in Europe alone,
and there are plans for projects exceeding 1,000MW per plant.
With such trends of upsizing scale and costs of wind farm projects,
as well as the positive attitude shown by Japanese companies towards

participating in the offshore wind power generation projects, I believe
public financial institutions like JBIC will see growing opportunities toextend financial support.
Project finance (PF): a financing scheme in which repayments are made solely from the cash flows
generated by the project and secured only on the project assets.

Tomoyuki Miyaguchi

Deputy Director
Division 2
New Energy and Power Finance Department I
Infrastructure and Environment Finance Group

Atsuhiro Kuramoto(then) Division 1 -cum- 2
New Energy and Power Finance Department I
Infrastructure and Environment Finance Group

November 2016 JBIC Today

11