V&V

1. V&V

2. Contents • Who, what, where • V&V • A typical day • Skills & Negotiate • “Educated Man” • Final thoughts

3. The European Bank for Reconstruction and Development:Regional Leader in its Countries of Operations 3 Founded in 1991 after the disintegration of the Soviet Union, EBRD’s region of operations cover most countries in Eastern Europe, Central Asia and, since 2008, Turkey and the SEMED region from 2012 (Egypt, Morocco, Tunisia, Jordan)

4. ROLE OF EBRDMission and Vision 4 Since its inception in 1991, EBRD’s operations are based on three principles: Promoting transition to market economies, private ownership and good governance Providing financing at reasonable terms, otherwise not available from private sources Investing in financially viable projects, together with the private sector Focusing on the triple-bottom line benefits: Economic,Social and Environmental

5. 5 EBRD Sustainable Energy Operational Approach:A Successful Holistic Strategy Via these three parallel activities SEI accounted for 24% of EBRD’s portfolio in 2010 Working with governments to support development of strong institutional and regulatory frameworks that incentivise sustainable energy Technical assistance to overcome barriers: market analysis, energy audits, training, awareness raising; grant co-financing to provide appropriate incentives and address affordability constraints Projects with numerous clients, public and private, with a range of financing instruments

6. EBRD‘s Sustainable Energy Initiative

7. EBRD Organisational Structure:The Role of the Energy Efficiency and Climate Change team 7 Energy Efficiency and Climate Change Agribusiness Audit Financial Institutions Governors Finance General Industry Directors Environment Municipal & Env. Infr. Banking President Natural Resources OCE Evaluation Power & Energy OCCO Property & Tourism Members OSG Transport * Non-exhaustive EBRD organisational structure

8. Launched in 2006 in response to the energy transition needs of EBRD’s area of operations. Its achievements up to 2011 were: EBRD’s sustainable energy investments to €8.8 billion, for total project value of 464 projects in 29 countries; Annual GHG emissions savings of 46 million tonnes CO2-eq p.a. and savings are equivalent of more than Azerbaijan’s emissions. SEI 6 areas of investment are: 8 EBRD’s Sustainable Energy Initiative (SEI) : Phase I, II, III • 2. Sustainable Energy Financing Facilities • 3. Power Sector Energy Efficiency • 1. Industrial Energy Efficiency • 4. Renewable Energy Scale-up • 5. Municipal Infrastructure Energy Efficiency • 6. Carbon Markets Development

9. SEI CUMULATIVE RESULTS 2006 - 2011SECTOR COMPOSITION

10. GOING FORWARD: Sustainable Resource Initiative (SRI) SRI: • Move to a integrated approach for energy-water-resources • The target annual carbon emission reduction is 30-35 CO2e million tonnes per annum • Develop methodologies, benchmarking tools/data to evaluate projects, footprints over a full lifecycle • More on http://www.ebrd.com/pages/sector/energyefficiency.shtml

11. V&V: Values & Value - Economic • Development: process to change social structures, popular attitudes and national institutions, to catalyse the acceleration of economic growth, the reduction of inequality and the eradication of absolute poverty. • “Better Life”: whole spectrum of change by which an entire social system, tuned to the diverse basic needs and desires of individuals and social groups, and that moves away from a condition of life widely perceived as unsatisfactory, toward a situation or condition of life as materially and spiritually "better". • “Values”: three basic components as core values should serve as a conceptual basis and practical guidelines for promoting the "inner" meaning of development: • Sustenance; • Self-esteem; • Freedom of choice; • Other values: religious, spiritual, personal, environmental, etc 12

12. V&V: Values & Value - Economic • Sustenance: life-sustaining basic human needs for food, shelter, health, safety, job security, etc • Self-esteem: a sense of worth and self-respect- of not being used as a tool by others for their own ends. Due to the significance attached to material values in developed nations, worthiness and esteem are now-a-days increasingly conferred only on countries that possess economic wealth and technological power- those that have developed. • Freedom of Choice: the advantage of economic growth is not that wealth increases happiness, but that it increases the range of human choice. The freedom to choose greater leisure. Various components of political freedom, freedom of speech/expression, politicalparticipation and equality of opportunity. • Development will then lead to Economic Value: future earnings to shareholders/society • Values & Value: Can these be aligned without compromising the basin human values? 12

13. 13 My typical day: “…trying to survive in a bankers world” • Actual case study: Croatia two refineries in Rijeka and Sisak • Corporate Loan to Investment program for meeting Euro V specs. • Dilemma: closure of one of the plants • Questions/Challenges: • Closure costs: environmental, technical, personel, financing, etc • Market: will this be better for the end consumer? • Financial: how will the capital markets react? • Local communities: what is better for them? • Economically: what is better for the shareholders? • Competitive: compete in the market in the next 10-20 years- cost structure? • National: what is better for the country? • Technically: are they in a position to meet future technical challenges? • Organizational Capacity/Leadership: do they have the human capital able to make changes and the drive-enthusiasm? Who will “Lead”? • Decision: personal – collective, at what level, implementation?

14. 14 My typical day: “…trying to survive in a bankers world” • My personal dilemma: did not know what to do? so back to the drawing board • Bottom-up approach: • Market Analysis: need to understand the market structure, the macroeconomic indicators both of the country, the market (regional and global)? • Technically: need to understand what is technically feasible, what not and how to implement it? • Environmentally/Socially: what is the current level of overall environmental footprint and what needs to be done further for the environment , what is the status with the local community? • Financially/Economical: develop financial model incorporating all outstanding obligations and future liabilities. • What brings all the above together: EnergyMass Balance Is this enough?? Of course not!! • Critical elements: • Perception of engineering time vs time value of money • Miscommunication – internal and external • Misunderstanding of the industry – or any industry for that matter • Misconception of risk

15. 15 My typical day: “…lock them-up” • Put them in a room as many times as it takes until they starting discussing substance • Be decisive: do not take NO for an answer • Negotiate: hard on strong points, give them something to feel that they gained while immaterial for you; • Devil in the details: make a sound proposition, articulate it properly and defend it! “KNOW WHAT YOU ARE TAKING ABOUT”! • Cultural Effect: Thrift, hard work, tenacity, honesty and tolerance are the cultural factors that make a the difference so you have to: Trust, Belief in the importance of individual effort, Morality and Autonomy; 2nd set of most important values • Technology itself will drive economic growth/development

16. 16 Final outcome • 6 months due diligence work and 4 months internal discussions • Both plants received finance – larger than originally predicted as both could not only survive but actually compete effectively in the market • Some typical measures that the technical work identified – 70 M Euros specifically for EE • Energy Management System • Fuel Switching • Rehabilitation of Steam Condensate System • Waste Heat Recovery on process furnaces • Electrical Improvements • Average payback 2-3 years and combined with other technical improvements will ensure that the refineries improve even further their operational efficiency so that they can be within the top quartile of their peer group.

17. 17 Educated Man - SOCRATES • Some argue that education will itself lead to sustainable economic development: • Experience says not but how is an educated man defined: • By knowledge or….??? • One who can control unpleasant situations, and not be controlled; • One who can face all events of life with bravery, logic and compassion; • One who is honourable in his everyday life; • One who has not been defeated by his own misfortune and has risen rom his failures; • One who has not been corrupted by glory and/or success • So education is not a matter of knowledge but daily behaviour, within our social surroundings trying to satisfy basic human needs/values • Sustenance • Self-esteem • Freedom

18. 18 Final Thoughts • Can we scale-up to an industry level? Or to policy level? • Can we align financial and political interests – can we live in a democratic society where the financial power is mis-aligned with political interests – the will of the people? • Can the engineer/scientist shape the financial agenda or lead the next wave of innovation and be ahead of the game? • Faraday case • Do we need to rethink our education system? • Do we as individuals or professionals do enough? • Do we as a collective society do enough? How is a society defined – it is a cooperative for profit? • Do we need more regulation? • ??

19. Things will not happen out of thin air “It is my duty, and mine alone, to save the earth. If it is not saved, then I alone am to blame.” & “A person needs a little madness, or else they never dare cut the rope and be free”

20. Thank you