Private and confidential

Kate McDougall August 2012

Standard Bank in Climate Finance

2 A Quick Introduction to Standard Bank Group / Stanbic

n  Over 150 years of experience in Africa

n  Largest bank in Africa by assets

–  Over 40,000 employees in Africa

–  Headquartered in Johannesburg

n  Unrivalled knowledge of sub-Saharan Africa

n  On-the-ground presence in 17 countries

n  Total Assets approximately $202 billion (Dec 10)

n  Emerging markets focus and global footprint: Brazil, USA, London, China, SE Asia, Russia

n  Active participant in CDM

–  In market since 2002

–  Financing CDM projects and portfolios

–  Trading

–  Working to assist the broader development of African CDM/carbon markets

n  Extensive renewable energy finance activity Standard Bank

3 Standard Bank in the carbon markets

Finance

n  Project

n  Transactional

n  Structured

Origination

n  Primary

Structuring

n  Purchase

n  Distribution

n  Trading

n  Structuring

Trading

n  Primary

n  Secondary

n  Structured

Structuring

n  EUA/CER Swaps

n  Repo Financing

Risk Management

n  Cross Commodity

CD

M P

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ct Tr

ader

s &

Fun

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Com

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nce

Buy

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4 Standard Bank: Ideal Carbon Partner in Africa

Size

n  Largest bank in Africa by assets

n  Largest and most sophisticated African bank in carbon markets

n  Holds the largest portfolio of African carbon projects worldwide

n  Presence in 17 Sub-Saharan African countries

n  Largest commodities team of all African banks

Specialists

n  Widely recognised as a world leader in carbon, award winning first to market transactions

n  Track record , been in the carbon markets in Africa since 2002

n  A track record of innovation

–  First African POA

–  First POA worldwide

–  Carbon Finance Deal of the Year, Global Trade Review Deal of the Year

n  Specialists in Africa, local presence, local knowledge

Key characteristics

5 Standard Bank: Ideal Carbon Partner in Africa (cont’d)

n  Largest African portfolio of credits globally

n  Developing more Programmatic CDM globally and single projects in Africa than any other carbon market participant

n  Largest renewable energy portfolio in South Africa

n  Only bank specialising in African CDM

n  Actively helping to build African carbon markets, including through ACAD (www.acadfacility.org), board membership of Climate Markets and Investment Association, and extensive high-level dialogue with policy makers in African and developed countries

n  Have been developing African carbon markets since 2002

n  Most extensive risk management capability of any bank in the CDM, globally and in Africa

Unrivalled carbon presence and experience in Africa

Through it’s position, experience and knowledge, Standard Bank believes it can offer clients unrivalled access to the carbon markets and help to develop carbon revenues from a wide range of project types in the most cost effective way

6

7 Standard Bank’s activity in programmatic CDM

n  Largest investor in programmatic CDM globally –  Over R100 million invested –  First and largest POAs in the world

n  Most activity in Africa – set up as open access. To make sure African developers can benefit from CDM revenues

n  Without a creditworthy CME, the POA is not bankable

CPA CPA CPA CPA CPA

POA

Creditworthy CME

Finance

Multiple Developers

Open access, proper setup

Makes POA creditworthy

Extensive financing opportunities

8 Programmes of Activity under Development

Over 20 POAs in areas such as:

n  Low pressure solar water heaters

n  High pressure solar water heaters + heat pumps

n  Renewable energy (grid, off-grid)

n  In-building/corporate efficient lighting

n  Efficient refrigeration

n  Household efficient lighting

n  Biomass generation

n  Clean cookstoves

n  Solar lamps (kerosene/paraffin replacement)

Some detailed examples follow

9 Renewable Energy Projects: Programme of Activities (POA)

n  Standard Bank is developing a Programmatic CDM registration (“PoA”) around various small and large scale renewable energy projects in South Africa.

–  Small scale projects below 15MW

–  Large scale above 15MW

–  Project types include hydro, solar, wind and geothermal

n  This type of ‘bucket’ registration allows multiple projects to use one registration to gain carbon credits

–  Registration process per project is quicker and simpler

–  Annual verification costs are reduced greatly, increasing income for project owner

–  CDM knowledge sharing as multiple projects implement similar monitoring methods lessons can be learnt and passed on

10 Efficient Lighting Retrofits and Upgrades

n  Standard Bank has developed an

–  Open access carbon project for energy efficient lighting upgrades and retrofits

–  That assists South African corporates in

►  Generating carbon credits from the reduced emissions resulting from their efficient lighting upgrades and retrofits; and

►  Accessing the carbon markets to generate revenue from these carbon credits

ESkom

CDM Carbon Credits

SA Corporate

Standard Bank

Carbon Revenue

Carbon Revenue

Carbon Revenue

Energy efficient lighting project

SA Corporate SA Corporate

Rebates/Subsidies

Typical structure

11 Efficient Refrigeration Plant Project

n  Standard Bank has developed an

–  Open access refrigeration plant efficient carbon credit project

–  That assists South African corporates in

►  Generating carbon credits from the reduced emissions from upgrades of refrigeration equipment; and

►  Accessing the carbon markets to generate revenue from these carbon credits

ESkom

CDM Carbon Credits

SA Corporate

Standard Bank

Carbon Revenue

Carbon Revenue

Carbon Revenue

Refrigeration efficient lighting project

SA Corporate SA Corporate

Rebates/Subsidies

Typical structure

12 Energy efficient brick kiln Installations

n  Traditional brick kilns tend to be highly inefficient

n  Installing a vertical shaft brick kiln can

–  Reduce fuel use

–  Save money

–  Reduce emissions

–  Generate carbon revenues

–  Reduces local pollution and improves health

n  Standard Bank is working with the first project of this type in South Africa to structure a programmatic financing solution

n  Standard Bank is working in collaboration with the Swiss Government, Swisscontact and Skat, who are working to establish, develop and promote the VSBK technology in Southern Africa.

n  Strong potential across Africa

13 Case Study: Standard Bank Low Pressure Solar Water Heater POA

n  Installation of low-pressure solar water heaters on low income housing

n  Standard Bank and IDC are helping to finance the rollout of over 250,000 units in South Africa, providing hot water to many people who would not otherwise have access to it

n  One of the two registered SWH POAs in South Africa – CDM work completed by International Carbon

n  Reduces power load, energy subsidy costs and avoids additional investment in generation

Government

Installer

Concession

Small Monthly Payment

Monthly Payment

Up-front Finance

Solar Water Heater

CDM

Carbon Credits

Utility/Billing Company Standard Bank

Typical structure

14

Typical CDM economics on a low pressure rollout under the SB POA

Year 1 2 3 4 5 6 7 8 9

Units installed 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 CERs generated (approx) 1.2 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 CERs delivered - 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 CER price (using current prices) 2.90 3.18 3.40 3.53 3.32 3.38 3.45 3.53 3.73

CER revenue - 76,320 81,600 84,720 79,680 81,120 82,800 84,720 89,520

Joining Fee - Annual Fee 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Monitoring and Verification Costs (est) 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000

Net Revenue - 61,320 66,600 69,720 64,680 66,120 67,800 69,720 74,520 ZAR/EUR 10.18Net Revenue (ZAR) - 624,238 677,988 709,750 658,442 673,102 690,204 709,750 758,614

NPV (10% discount) €324,740 ZAR 3,305,852

Price Sensitivity (euros) NPVNet revenue: Prices 50% higher €523,484 - 99,480 107,400 112,080 104,520 106,680 109,200 112,080 119,280 Net revenue: Prices 100% higher €722,229 - 137,640 148,200 154,440 144,360 147,240 150,600 154,440 164,040

Price Sensitivity (ZAR) NPVNet revenue: Prices 50% higher ZAR 5,329,071 - 1,012,706 1,093,332 1,140,974 1,064,014 1,086,002 1,111,656 1,140,974 1,214,270 Net revenue: Prices 100% higher ZAR 7,352,290 - 1,401,175 1,508,676 1,572,199 1,469,585 1,498,903 1,533,108 1,572,199 1,669,927

15

Case Study: Standard Bank Low Pressure Solar Water Heater POA Challenges and Successes

Challenges

n  Complexity of CDM and Programmatic methodologies

n  Lack of established processes/precedents

n  Lack of creditworthy CMEs

n  Lots to learn: M+V still at very early stages

n  CME set-up is still a learning process

Successes

n  It’s registered and popular!

n  Successfully simplifying monitoring after learning experiences from SASSA PoA

n  Still makes sense in current low price environment

n  Have financed >R10 million against SWH POAs so far

16 Key Factors in Preparing a Project

n  What stage of construction?

–  Planning, budgeting, construction, operating

n  Does the project have adequate funding?

–  Who is funding or is it currently looking for investors

n  Has the CDM cycle been started?

–  If so, what stage is the project currently?

n  What does the project need?

–  Assistance to start CDM

–  Buyer for carbon credits (spot or forward)

–  Up front payment against future flows

17 Finance deals completed on Programmatic CDM

Standard Bank has completed transactions with >R10 billion finance into CDM projects, including some of the most sophisticated and awarded transactions in the world

Transactions involving financing on programmatic CDM include:

n  CFL lighting, Mexico, R20 million financed; R35 million in progress

n  Solar water heaters, South Africa >R10 million

n  Solar lamps, sub-Saharan Africa, R8 million so far. Working with Carbonsoft to structure a MFI-based financing facility for R2-3 billion

n  VSBK CME costs, R5 million

18 Contact details

Kate McDougall

Carbon Sales & Trading

Standard Bank Plc

+44 20 3145 6890

Kate.McDougall@standardbank.com

19 Disclaimer

This presentation is provided for information purposes only on the express understanding that the information contained herein will be regarded as strictly confidential. It is not to be delivered nor shall its contents be disclosed to anyone other than the entity to which it is being provided and its employees and shall not be reproduced or used, in whole or in part, for any purpose other than for the consideration of the financing or transaction described herein, without the prior written consent of a member of the Standard Bank Group. The information contained in this presentation does not purport to be complete and is subject to change. This is a commercial communication. This presentation may relate to derivative products and you should not deal in such products unless you understand the nature and extent of your exposure to risk. The presentation does not include a personal recommendation and does not constitute an offer, or the solicitation of an offer for the sale or purchase of any financial product, service, investment or security. The investments and strategies discussed here may not be suitable for all investors; if you have any doubts you should consult your investment advisor. The investments discussed may fluctuate in price or value Whilst every care has been taken in preparing this presentation, no member of the Standard Bank Group gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information in this presentation Past performance is not indicative of future results. For the avoidance of doubt, our duties and responsibilities shall not include tax advisory, legal, regulatory accounting or other specialist or technical advice or services. 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